City of Hopkins

2012 Preliminary Levy and Budget

Truth and Taxation Process

Process changed in 2009 Council adopts a proposed levy. Council sets budget meeting dates to discuss budget and receive public comments Recommended budget meeting dates

Budget

Meeting Tuesday, December 6th Budget Approval Tuesday, December 20th

Legislative changes effecting local governments

Local Government Aid (LGA)

$50,000

earmarked for the Arts Center Unallotted since 2009

Market Value Homestead Credit (MVHC)

Unallotted

for 2009, 2010 & 2011 Program eliminated for 2012

No levy limits for 2012.

No

levy limits in 2005-2008 Levy limits for 2009-2011

City Planning
City council and staff have been meeting and discussing options for maintaining a balanced budget in 2012 and beyond. Options include budget cuts, use of reserves, taxes and new revenue sources. The 2012 General Fund budget details will be outlined prior to adoption of the final budget and levy in when we hold our budget meeting in December 2011.

Why do levies go up?

Increased spending and/or decreases in non tax revenue sources Spending may increase for several reasons
Inflationary increases Additional or enhanced programs Infrastructure improvements New debt levies

Non tax revenue sources may decrease

Slow economy Reduction in government aids Reduced revenues due to economic Reduced interest earnings

factors

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 to the citizens. 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 2012 preliminary levy

Levy

set at $10,348,328 Proposed increase of $209,914 or 2.07% over the 2011 levy.

The increase is primarily a result of decreases in revenue sources and inflationary increases in expenditures. Expenditures will increase 2.14%

Tax Levy Options

The levy set this evening will be the maximum levy for 2012. 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.

2012 Proposed General Fund Budget and 2012 Preliminary Levy

2012 General Fund Budget $10,519,463
This is a increase over last years budget of 2.14% The increase is due to inflationary increases.

2012 Levy $10,348,328

This is an increase over last years levy of $209,914 or 2.07%. Increase is due primarily to loss of revenue

Budget Challenges
Change in market value homestead credit program Flat or decreasing property values Decrease in several revenue sources

police and fire aid court fines

Decreased interest income

Budget Impacts
Reduced spending across all departments Delayed hiring of staff vacancies Reduced capital expenditures Focus on savings and efficiencies

Development and Taxes

City property taxes for 2012 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.
Recently

decertified TIF District 2-1 Added over $500,000 to the tax base in 2011

Additional projects in the planning stages will add to the citys tax base for 2013 and beyond.

Fiscal Disparities

Changes in the Fiscal Disparities Program affects the tax rate for Hopkins properties.
Year Contribution 2012 2011 2010 2009 2008 2007 2006 2005 3,092,328 3,324,078 2,858,921 2,766,202 2,450,063 2,116,466 1,952,996 1,526,509 Distribution 2,650,437 2,645,025 2,913,208 2,840,070 2,405,483 1,997,455 1,836,753 1,673,106 Net Gain/(Loss) (441,891) (679,053) 54,287 73,868 (44,580) (119,011) (116,243) 146,597

Financial Impacts
Arts Center debt paid off 8 years early Construction project bids have been very favorable due to low bids New bonds issued have low interest rates Recent bond refundings have saved us over $535,000 in interest expense