2019 proposed budget - north mankato

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2019 Proposed Budget November 19, 2018

Agenda• Budget Highlights• Property Tax• Tax Base

– Taxable Market Value, Tax Capacity, Tax Levy, Tax Rate – Tax Impact on Homes & Businesses– Comparable City Tax Rates

• Council Member Freyberg Comments• Capital Investment

– Annual Allocation– Infrastructure and Maintenance– 2019-2028 CIP Discussion

• Equipment and Vehicle Replacement• Facilities Replacement• Caswell Investment

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Agenda

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• Budget Highlights• Property Tax• Tax Base





Budget Highlights

• North Mankato is growing – Updated from County – 9% increase in market value ~102 million

• New construction ~14 million (14% of increase)• Annexations ~1 million (1% increase)• Value increases account for balance

• Based on updated Assessor figures, tax rate estimated to decrease 0.8% to 51.3%– $600K in new taxes to be captured

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Budget Highlights, cont. • All funds meet budget reserve policies as

established by the City Council• No new FTEs for 2019, but includes new street

and police employees approved in 2018 being added to budget moving forward

• Utility Rates– Recycling rate increases

All sizes - $1.00/month

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Budget Highlights, cont. • Expenditure highlights – Overall increase of $992K• Net of transfers increase of $652,000 (3%)

– 2010C Refunding Payment Increase ------------ $400,000– Facilities Replacement ----------------------------- $250,000– New Street Employee -------------------------------- $80,000– Employee Merit Pool (3%) -------------------------- $63,000– Temp. Labor - Parks & Fire Dept. Rental Insp. -- $53,000– Parks Plan Budget Increase ------------------------- $50,000– Health Insurance Increase (7%) ------------------- $46,000– Swim Facility Operations ---------------------------- $30,000– Pavement Management Plan Increase ---------- $20,000

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Budget Highlights, cont.

• Revenue highlights, cont.– Utility Funds – $399K increase

• Water Utility collections ------------------------ $45,000• Water Fund interest collections --------------- $49,000• Wastewater Utility collections ----------------- $35,000• Wastewater interest collections ----------------- $9,000• Solid Waste Utility collections -------------------- $6,000• Recycling Utility collections and facility rent - $65,000• Recycling Transfer from D/S ---------------------- $30,000• Storm Water Utility collections -------------------- $9,000• Storm Water One-time Transfer from D/S --- $150,000

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• Revenue highlights, cont.– Capital Facilities Fund transfer ---------- $250,000– Joint Econ Dev. Fund transfer ------------ $250,000– CDBG Fund activity ------------------------- ($67,000)– Debt Service Fund assessments --------- ($56,000)– Debt Service tax levy ----------------------- ($23,000)– Construction Fund Bond Proceeds -- ($2,670,000)

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Adopted Preliminary Tax Levy

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• The total general property taxes proposed by the City of North Mankato for 2019 is $6,934,509

• General Fund $ 5,290,719• Port Authority $ 75,000• Debt Service $ 1,375,458• Abatement Levy $ 193,332

• Preliminary 2019 levy dollar amount is $646,000 more than the 2018 levy

• Tax Rate = Tax Levy/Total Tax Capacity • Total tax capacity increase is larger than the tax levy increase

which leads to a decrease in tax rate

52.124 51.6002018 2019

Property Tax, cont.

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2018 Amount 2019 AmountDollar

Amount % Change

General Fund Levy $ 4,621,889 $ 5,290,719 $ 668,830 14.47%

Port Authority 75,000 75,000 $ - 0.00%

Debt Service 1,370,848 1,375,458 $ 4,610 0.34%

Tax Abatement 221,014 193,332 $ (27,682) (12.52)%

Total Tax Levy $ 6,288,751 $ 6,934,509 $ 645,758 10.27%

Property Tax, cont.

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4,814,154 5,152,123 5,383,784 5,383,784 5,596,414 5,794,404 5,910,292 6,288,751

6,934,509

45.425%50.598%

54.566%54.009% 53.620% 53.606%

52.485%52.124%51.600%

0.000%

10.000%

20.000%

30.000%

40.000%

50.000%

60.000%

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

TAX

RATE

TAX

LEVY

Total Levy

Property Tax, cont.

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Tax Payble Taxable Market Total Tax Change in Total Tax

Year (1) Value Capacity Tax Capacity Levy Rate

2011 874,093,000 10,244,392 -3.3% 4,814,154 45.425%

2012 870,672,800 10,177,574 -0.7% 5,152,123 50.598%

2013 934,541,100 9,861,666 -3.1% 5,383,784 54.566%

2014 856,913,400 9,963,464 1.0% 5,383,784 54.009%

2015 898,283,600 10,402,923 4.4% 5,596,414 53.620%

2016 920,184,000 10,809,230 3.9% 5,794,404 53.606%

2017 974,012,800 11,255,834 4.1% 5,910,292 52.485%

2018 1,041,251,400 12,373,308 9.9% 6,288,751 52.124%

2019 Proposed 1,134,308,600 13,438,971 8.0% 6,934,509 51.600%

2020 Est. 1,156,994,772 13,707,750 2.0% 7,073,199 51.600%

Agenda

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• Budget Highlights• Property Tax• Tax Base


• Capital Investment– Annual Allocation– Infrastructure and Maintenance– 2019-2028 CIP Discussion


Taxable Market Value History

832,560,000

929,989,400

847,806,500

975,204,800

1,041,251,400

1,134,308,600

600,000,000

700,000,000

800,000,000

900,000,000

1,000,000,000

1,100,000,000

1,200,000,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Proposed

Taxable Market Value

Tax Capacity & Tax Rate

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Tax capacity is a unique property taxing tool that is equivalent to multiplying the taxable market value of a property by its relevant class rate. The local tax rate of a taxing jurisdiction is determined by dividing the jurisdiction’s levy by the jurisdiction’s taxable net tax capacity. Rates often move in the opposite direction of tax capacity as shown in the chart above.

40.000%

42.000%

44.000%

46.000%

48.000%

50.000%

52.000%

54.000%

56.000%

9,000,000

9,500,000

10,000,000

10,500,000

11,000,000

11,500,000

12,000,000

12,500,000

13,000,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Tax

Rate

Tax

Capa

city

Tax Capacity & Tax Rate

Tax Capacity Tax Rate

North Mankato Property Types

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3,911, 78%

17, 0%

242, 5%664, 13%

175, 4%

2, 0%

Property Type Breakdown

Residential

Agriculture

Commercial/Industrial/Public Utility

Rental/Non-homestead (apartments, MF. Homeparks, etc.)

Exempt properties

PILOT Properties (tax forfeited)

North Mankato Taxes Paid by Property Type

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3,692,923.89, 57%

24,751.60, 0%

1,907,692.01, 30%

827,586.30, 13%

212.67, 0% 0.00, 0%

City Taxes Paid Breakdown

Residential

Agriculture

Commercial/Industrial/Public Utility

Rental/Non-homestead (apartments, MF. Homeparks, etc.)

Exempt properties

PILOT Properties (tax forfeited)

Median and Maximum City Taxes Paid

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839.72 1,283.03

3,307.79

180.87 -

500.00 1,000.00 1,500.00 2,000.00 2,500.00 3,000.00 3,500.00

Median Taxes Paid

Median Taxes Paid

5,764.91 3,421.94

65,827.40

49,050.77

- 10,000.00 20,000.00 30,000.00 40,000.00 50,000.00 60,000.00 70,000.00

Max Taxes Paid

Max Taxes Paid






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Council Member Freyberg Comments

• Population has grown 7% while total tax levy increase of 28% and general levy increase of 50% in 10 years

• Only new construction and annexation should be used in growth calculation; not market value increases (too volatile)

• Local option sales tax and lodging tax trending down• Average age increasing • Need to create budget with modest increases

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Council Member, cont.

• Scenario of using only new construction for calculating tax rate and levy– Market Value increase of $15 million vs. $102 million– Tax Capacity increase of $160,000 vs. $1 million – Tax levy increase of $178,000 vs. $645,000– $467,000 to cut from budget

• Recap of expenditure highlights – Possible cuts in red total $320,000

• Tax rate decrease from 51.6% to 48.1% a decrease of 3.5%

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Budget Highlights, cont. • Expenditure highlights – Overall increase of $992K• Net of transfers increase of $652,000 (3%)

– 2010C Refunding Payment Increase ------------ $400,000– Facilities Replacement ----------------------------- $250,000– New Street Employee -------------------------------- $80,000– Employee Merit Pool (3%) -------------------------- $63,000– Temp. Labor - Parks & Fire Dept. Rental Insp. -- $53,000– Parks Plan Budget Increase ------------------------- $50,000– Health Insurance Increase (7%) ------------------- $46,000– Swim Facility Operations ---------------------------- $30,000– Pavement Management Plan Increase ---------- $20,000

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• Comparing population growth to tax levy growth is not an indicator of fiscal restrain

• Measure of two different variables• Tax levy increase 1998-2008 of 70%• Tax levy increase 2008-2017 of 35%• The average increase over this timeframe was

$290,000/year• When factoring in labor costs, capital set asides and

inflation these

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• Development since 2008:– 292 single family homes– 8 twin homes– 95 townhome units– 18 apartments and assisted living facilities totaling

103 units– 300,000 sq. ft. of industrial/commercial

development

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• City activity since 2008:• LGA allotments in 2008 & 2009• LGA reduction in 2010 & 2011• LGA freeze 2012 & 2013• Parks: Benson Park expansion, Reserve Park, Caswell North

constructed• Taylor library expansion• Trail expansions• Increased Caswell Sports activities• Public art• Downtown parking lot

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• Question of how to develop policy• THe policy question is how to you want the

budget developed:– One side indicates only taxable growth– The other side consists of department head and

citizen input, strategic plans, and funding flow impact of needs

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Capital Investment Annual Allocation

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2015 2016 2017 2018 2019

Parks Plan $ 75,000 $ 200,000 $ 345,000 $ 350,000 $ 400,000

Street Maintenance Plan $ 200,000 $ 350,000 $ 400,000 $ 380,000 $ 400,000

Vehicle & Equipment Replacement $ 222,000 $ 830,000 $ 151,500 $ 393,000 $ 233,000

Building Maintenance $ 30,000 $ 110,000 $ 423,300 $ 82,000 $ 297,000

Sidewalk Maintenance $ - $ - $ - $ 5,000 $ 24,000

Water Fund $ 165,000 $ 165,000 $ 367,800 $ 297,300 $ 300,000

Sewer Fund $ 300,000 $ 145,000 $ 245,500 $ 250,000 $ 250,000

Storm Water Fund $ 42,500 $ 42,500 $ 32,500 $ 30,000 $ 40,000

TOTAL $1,034,500 $1,842,500 $1,965,600 $1,787,300 $1,944,000

Infrastructure & Maintenance

• Street Life Cycle– Construct– Seal Coat every 5-7 years– Mill & Overlay every 15 years– Hydrant, valves, manholes,

and catch basins testing and inspections every 1-2 years

– Repairs as needed

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• Facilities Life Cycle– Construct– Inspect every year– HVAC 5-10 Years– Furnishes and finishes 5-10 years– Re-Roof 10-20 years– Windows 10-20 years– Parking Lot Maint. – follow streets

2019 Equipment & Facilities Replacement

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Project or Activity Strategic Program Area

2018-2022 2019-2023 Variance

Loader Infrastructure 150,000 150,000 -

General Equipment - Trucks, Skid loaders, Mowers, etc. Infrastructure 240,000 240,000 -Police Cruiser Public Safety 190,000 190,000 -Squad Cameras Public Safety 35,000 - (35,000)Detective Squad Public Safety 40,000 40,000 -Land purchase 233 Wheeler, 231 Wheeler Comm. Dev. 284,000 272,000 (12,000)Truck Community Development Comm. Dev. 25,000 25,000

Sirens - Upgrade (from 2012), Plant #2, Expansion, City Shop Public Safety 54,000 54,000 -

Tandem Dump Truck with Plow, Wing and Sander (3) Infrastructure 675,000 500,000 (175,000)Roller (2) Infrastructure 60,000 (60,000)

Street department roof / Public Works Yard Evaluation Infrastructure 20,000 - (20,000)Mechanics Shop - update doors Infrastructure 15,000 - (15,000)

Front Desk and Community Development Desk Remodel Admin/Leg. 50,000 - (50,000)Lower Level Remodel Admin/Leg. 15,000 (15,000)Fire Engine Public Safety 110,000 110,000 -Overhaul Air Pack/Work Room - 40,000 40,000 Overall FD Community Room Kitchen 25,000 25,000 Parks Mower Replacement 180,000 180,000

Sub-Total Cash / Capital Facilities & Equipment Replacement 1,938,000 1,826,000 (112,000)

2019 Equipment & Facilities Replacement

• New for 2019-2023– Mowers: $90,000/unit – 2019 & 2020 – Snow Plows: $250,000/unit – 2020 & 2022. One

purchased in 2018– Truck for Community Development: $25,000– Squad Cameras purchased in 2018– Land purchase final payments– Rollers allocated to future years– Street shop part of bigger project

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CIP Discussion

• $2,000,000 used as annual capital set aside in CIP and debt issuance

• Projects Identified for 2019:– Tyler Ave. Reconstruction ---- $ 500,000– Commerce Dr. City Portion --- $ 500,000– TBD Project ----------------------- $1,000,000

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CIP Discussion, cont.

• Aging City Facilities– Public Works Facility– Facilities maintenance plan

• Ravine Maintenance– Heavy rains lead to ravine slough – Ravine maintenance plan

• Recreational Facilities – Caswell over 30 years old– Sales tax extension, partly toward recreational facilities

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CIP Discussion, cont.

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Project or Activity Strategic Program Area

2019 PROPOSED

2020 FORECAST 2021 FORECAST 2022 FORECAST 2023 FORECAST Estimated 5 year costs

Tyler Ave. Reconstruct Infrastructure 500,000 500,000

PW Building Infrastructure -

Caswell Park Improvements Recreation -

Safe Routes to School - Dakota Meadows Infrastructure 151,000 151,000

Safe Routes to School -Monroe/Bridges Infrastructure 168,000 168,000

Commerce Dr. City Portion Infrastructure 500,000 500,000

TBD Project Infrastructure 1,000,000 - 1,000,000

TBD Project Infrastructure - 1,849,000 1,849,000

TBD Project Infrastructure 1,832,000 1,832,000



Sub-Total Bonds 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 10,000,000

2019 Debt Service Funds

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0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Current & Future G.O. Debt of $2.0 Million/Annually

Total Existing 2018A 2019A 2020A 2021A 2022A

Next Steps

• Proposed Levy and Date(s) for Truth-in-Taxation (TnT) approved at Regular Meeting

• TnT – December 3rd 7:00 PM• Final Levy and Budgets adopted – December

17th

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2019 proposed budget - north mankato

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