Workshop Item Joe Huss, Finance Director/Asst. City Manager
Title
Title
2022 Preliminary Tax Levy and General Fund Budget
end
Background
Over the last month, Staff has met with Councilmembers to discuss the 2022 tax levy and General Fund budget. From these discussions and in consideration of budget proposals submitted by department heads, staff has developed the initial 2022 tax levy proposal and Preliminary General Fund Budget. At this stage, the preliminary budget is still under review and development and is not being presented as a recommendation.
2022 Preliminary Tax Base and Levy Estimates
The preliminary 2022 tax levy is based on the city’s guiding principle of capping the levy at an amount such that the combined tax rate of all Blaine tax levies is equal to the tax rate of the previous year. Current tax base estimates indicate an overall growth in taxable market value of 6.4%. Most of the growth in tax base is from residential property, which saw a $461 million increase (7.3%) from 2020 to 2021. Roughly 2% of the increase in residential value is from new construction. Estimates for commercial/industrial property indicate an increase of $44 million (3%) increase in value, with $6.6 million of that increase coming from new construction.
After factoring in tax base adjustments for tax increment financing (TIF) and Fiscal Disparities, a conservative estimate for the increase in the City’s tax capacity for 2022 is 5%. These preliminary, conservative, tax base estimates would allow for an overall levy increase of $1,540,000 (4.5%) to $35,725,000. This levy would maintain the previous year’s combined tax rate of 35.834%.
Allocating the 2022 Tax Levy
Going back several years the allocation of the City’s levies has been very consistent, with 82-83% being allocated to the General Fund; 12-13% allocated to the city’s debt service levy; 1-3% for the EDA; and 2-3% for levies for pavement management, parks improvements, and other council-directed strategic priorities. Current allocations for the 2022 preliminary levy are shown in the chart below. Under this scenario, the General Fund would receive just over 83% of the 2022 levy and, unlike 2021, the current allocation would provide no additional levy capacity for strategic priorities beyond the purposes for which the City has historically levied.
|
|
2021 Levy |
2022 Additional |
2022 Preliminary |
|
|
|
Levy Allocation |
Levy |
|
General Fund |
$27,735,000 |
$1,990,000 |
$29,725,000 |
|
PMP |
$ 100,000 |
-0- |
$ 100,000 |
|
Debt Service |
$ 4,900,000 |
($ 100,000) |
$ 4,800,000 |
|
EDA |
$ 700,000 |
$ 50,000 |
$ 750,000 |
|
Parks, Trails |
$ 350,000 |
-0- |
$ 350,000 |
|
Bandshell |
$ 75,000 |
($ 75,000) |
-0- |
|
Strategic Priorities |
$ 325,000 |
($ 325,000) |
-0- |
|
|
|
|
|
|
|
$34,185,000 |
$1,540,000 |
$35,725,000 |
|
|
|
|
|
|
Tax Rate |
35.834% |
|
$35.826% |
2022 Preliminary Budget Profile - Revenues
The 2022 Preliminary General Fund Budget provides total revenues of $38,859,800, an increase of $2.6 million (7.2%) over the 2021 Adopted Budget. The portion of the levy allocated to the General Fund would rise from $27,735,000 in 2021 to $29,725,000 in 2022. While this represents a 7% increase in the General Fund allocation of the levy, the total levy increases only 4.5%.
Based on post-pandemic trends that indicate a level of economic recovery, other revenue categories - Licenses & Permits, Intergovernmental Revenue, and Charges for Services are expected to recover to levels similar to the pre-pandemic levels of 2019.
At this stage of budget development, all revenue sources and categories continue to be monitored.
2022 Budget Profile - Expenditures
The 2022 Preliminary budget contains total appropriations of $38,672,595, a $2.7 million (7.5%) increase over 2021. Major components of this increase and the relative share of the percentage increase is broken down as follows:
|
Salaries, Wages - Cost of Living Adjustments (COLA) |
$714,000 |
2.0% |
|
Compensation Plan adjustments |
$615,000 |
1.7% |
|
Benefits adjustments |
$146,000 |
0.4% |
|
Workers Compensation insurance increase |
$ 92,500 |
0.3% |
|
2022 Elections |
$145,000 |
0.4% |
|
Decision Packages |
$756,400 |
2.1% |
Additional detail regarding expenditures are provided later in this document.
2022 Budget Profile - Safe Margin
The 2022 Preliminary budget provides for a safe margin of revenue over expenditures of $187,200.
2022 Preliminary Budget Decision Packages
Department Heads submitted 18 separate requests that were classified as Decision Packages. The requests included eight personnel requests that would add 11 positions (one decision package includes a request for four additional patrol officers). Three positions - an Elections Assistant and two support positions at MAYC (a Receptionist and a Building Coordinator) - are part-time. Thus, the personnel-related decision package requests represent 8.5 FTE. Of the remaining 10 packages, five are for enhanced employee development programs totaling $21,000; three relate to technology enhancements and total $65,000; the other two decision packages would provide an additional K-9 officer ($27,000) and continue the city’s Emerald Ash Borer program ($175,000).
Initially, total appropriations for all Decision Package requests equaled $984,305. However, five of the new position requests (the Victim/Witness Advocate and the four patrol officers) have been amended to reflect delayed implementation. These amendments reduce the Decision Packages total by $227,900 to $756,405. These adjustments are reflected in the current Preliminary Budget.
All Decision Packages are still under review.
Staff Recommendation
Staff is requesting Council review of the Preliminary Tax Levy and Preliminary General Fund Budget before moving to the next step - the City Manager’s Preliminary 2022 General Fund Budget.
Attachment List
Presentation