2011 Preliminary Levy and Budget

City of Hopkins

Truth and Taxation ProcessCouncil adopts a proposed levy. Council sets budget meeting dates to discuss budget and receive public commentsBudget meeting dates

Budget Meeting – Tuesday, December 7th

Budget Approval – Tuesday, December 21st

Legislative changes effecting local governments

Local Government Aid (LGA)$50,000 earmarked for the Arts CenterUnallotted for 2009 & 2010Back in for 2011

Market Value Homestead Credit (MVHC)Unallotted for 2009, 2010 & 2011

Levy limits in place for 2009 to 2011.No levy limits in 2005-2008

City PlanningCity council and staff have been meeting and discussing options for maintaining a balanced budget in 2011 and beyond. Options include budget cuts, use of reserves, taxes and new revenue sources. The 2011 General Fund budget details will be outlined prior to adoption of the final budget and levy in December.

Why do levies go up?Increased spending and/or decreases in non tax revenue sourcesSpending may increase for several reasons

Inflationary increases Additional or enhanced programs

Infrastructure improvementsNew debt levies

Non tax revenue sources may decrease Slow economyReduction in government aidsReduced revenues due to economic factorsReduced interest earnings

How do levies go down?The City may reduce its tax levy by decreasing costs or increasing non tax revenue sources.

To decrease costs the city could eliminate programs or services it currently provides. The City may also outsource certain city services at a lower cost.The City may cancel or delay capital projects

Increased revenues are derived primarily from new fees and increased charges for services. The City may receive grants for specific programs.

What are our tax needs?The 2011 preliminary levy

Levy set at $10,138,414Proposed increase of $212,729 or 2.14% over the 2010 levy.

The increase is primarily a result of decreases in revenue sources and unallotment of MVHCExpenditures will increase 2.24%

Tax Levy Options

The levy set September 7 will be the maximum levy for 2011.Levy can be reduced but it cannot be increased.Staff continues to evaluate the budget and the final levy and budget may include additional reductions.

2011 Proposed General Fund Budget and 2011 Preliminary Levy

2011 General Fund Budget

$10,299,327

This is a increase over last years budget of 2.24%

The increase is due to inflationary increases.

2011 Levy$10,138,414

This is an increase over last years levy of $212,729 or 2.14%.

Increase is due primarily to loss of revenue

Budget Challenges

Unallotment of MVHC - $232,850Decreased building permit fees due to economyDecreased interest incomeFlat or decreasing property values

Budget Impacts

Reduced spending across all departments Delayed hiring of staff vacanciesReduced capital expendituresFocus on savings and efficiencies

Development and Taxes

City property taxes for 2011 are going to be affected by decisions that were made over past years for various development projects that continue to be added to the tax base.

Decertified TIF District 2-1Added over $500,000 to the tax base

Additional projects in the planning stages will add to the city’s tax base for 2012 and beyond.

Fiscal DisparitiesChanges in the Fiscal Disparities Program affects the tax rate for Hopkins properties.

NetYear Contribution Distribution Gain/(Loss)2011 3,324,078 2,645,025 (679,053) 2010 2,858,921 2,913,208 54,287 2009 2,766,202 2,840,070 73,868 2008 2,450,063 2,405,483 (44,580) 2007 2,116,466 1,997,455 (119,011) 2006 1,952,996 1,836,753 (116,243) 2005 1,526,509 1,673,106 146,597

Fiscal DisparitiesLocal units of government in the Twin Cities metropolitan area are part of a property tax base sharing program. Under this program, a portion of the growth in commercial and industrial property value of each city is contributed to a tax base sharing pool. Each city then receives a distribution of property value from the pool based on market value and population in each city.

The Cargill project resulted in Hopkins’ becoming a net contributor.

Financial Impacts

Arts Center debt paid off 8 years earlyConstruction project bids have been very favorable due to low bidsNew bonds issued have low interest ratesRecent and planned bond refundings have saved us over $535,000 in interest expense