HomeMy WebLinkAboutVII-01 - Public Hearing - Truth in TaxationCity of Hastings 101 Fourth Street East Hastings, MN 55033-1944 Phone: 651-480-2350 www.hastingsmn.gov
To: Mayor Hicks & City Councilmembers
From: Melanie Mesko Lee, City Administrator
Date: December 3, 2018
Item: Truth in Taxation Hearing for 2019 Recommended Budget
Council Action Requested:
Conduct the Truth in Taxation hearing for the 2019 budget. The Council will be asked to consider
adopting the final budget at their December 17, 2018 meeting.
Background Information
Purpose of the Budget
The budget represents the financial plan and priorities of the City of Hastings. It is intended to clearly
communicate the City’s goals and how resources are allocated to those priorities in an easy to
understand manner. The recommended budget is the result of an ongoing process whereby priorities
and goals are established and funded in alignment with Council directives and our CORE values.
Council and Committee Meetings
The Finance Committee (Vaughan*, Balsanek, Braucks) met in a workshop on May 14, 2018 to discuss
preliminary 2019 budget projections and to provide broad direction for the coming year’s budget
process and outcomes. The Finance Committee met again on two separate dates — August 16th and
November 15th-- to review 2019 budget information and proposals. Between those meetings,
Departments prepared their budget requests for consideration. Comprehensive information on
revenues, expenses, and department requests for capital, new initiatives, and personnel were brought
forward for discussion and explanation.
The full City Council then met on two separate dates – June 18th and August 16th –to review the
preliminary budget recommendations and provide further direction on the final levy and budget items.
At the August 2nd Finance Committee Workshop, staff was directed to develop a 2019 budget with a
tax rate under 60% and balanced operations. This calculates to a 2019 preliminary tax levy of
$14,233,201.
A 2019 Council Workshop was held on August 16th which met those directives. Capital project requests
and funding was reviewed, along with the tax impact of the proposed 2019 levy.
VII-01
P a g e | 2
The Finance Committee met on November 15th to make a recommendation for the 10% budgeted for
health insurance (which increased 0%). It was recommended to use the $100,000 in the insurance
fund. This fund is used in case of liability exceeding the City’s insurance coverage. It is a fund being
created in 2019 to help minimize the City’s liability exposure in future years.
Historical Information
The City experienced its largest tax capacity increase since 2015 for the 2019 year. Overall City
tax capacity will increase by over 8% in 2019 to $21,297,719.
In alignment with a City Council’s goal, staff has prepared a budget which reduces the City’s tax
rate in 2019. The tax rate has been declining from a high of 68.99% in 2013 to a projected
59.55% with the proposed 2019 tax levy. Additionally, the City’s debt levy (the portion of the
tax levy needed to make debt payments) has averaged approximately $3,100,000 over the past
six years.
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
2013 2014 2015 2016 2017 2018
proposed
Local Tax
Capacity
Levy
LGA
Tax Rate
Year Tax Rate
2014 66.25%
2015 62.58%
2016 63.58%
2017 62.52%
2018 60.86%
2019*59.55%
* proposed rate
Year Debt Levy
2014 2,700,000$
2015 2,800,000$
2016 3,035,000$
2017 3,349,999$
2018 3,424,475$
2019*3,141,681$
* proposed rate
VII-01
P a g e | 3
Recommended Budget
The recommended budget is the result of many meetings with our department staff and
following Council direction to responsibly take care of our current assets. The recommended
budget is balanced operationally and makes use of Local Government Aid for necessary one
time projects and initiatives to support our services to the community. As part of the proposed
levy and budget, we have the following significant items identified within the
recommendations:
Aquatic Center equipment updates
Medical and fire equipment
Computer/IT updates
Two squad cards for the police department, and an ambulance remount
Arena building repair
City Hall maintenance and remodel
Economic development initiatives
o Branding initiative
o Block 1 cleanup
Infrastructure improvements
o Neighborhood improvement project
o Pedestrian crossing enhancements
o Highway 61 scoping study
o Continue sanitary sewer trunk lining program
o Continue water meter replacement program
o Continue mill and overlay program
Impact on Taxpayers
The City Council has
consistently shown a
high sensitivity to
how budget
decisions impact the
Hastings taxpayer.
Accordingly, we have
prepared the
following analyses:
Homeowners
The City’s median
home value for 2019
is approximately
$218,300 and would
pay an estimated
$1,195 in City property taxes annually at the 2019 proposed tax rate.
VII-01
P a g e | 4
Businesses
Property taxes
for commercial
properties are
impacted by a
variety of factors
including
valuation, fiscal
disparities and
tax classification,
such that a
comparison by
property value
alone (as for
homeowners)
does not provide
an accurate
picture of tax
impact. The
comparison
below looks at
the tax history of
a sampling of
actual properties that represent the various types of commercial properties that exist within
the City. Impacts from the proposed 2019 levy are under $100 for the 2019 tax year for all
three property classes.
Additional Information
Additional detail on the 2019 proposed budget is available in the attached “2019 City of
Hastings Budget at a Glance” and online at www.hastingsmn.gov/budget .
Next Steps
Following the Truth in Taxation hearing on December 3rd the Council will be asked to consider
the full and final 2019 budget, levy, and HEDRA levy at their next regular meeting on December
17th.
I would like to extend a sincere appreciation to the leadership of the Finance Committee as well
as our staff for their work and involvement thus far on the 2019 budget. We continue to
approach the budget process in a strategic and holistic manner—balancing many needs with
limited resources. I am proud of our staff’s creativity and innovation in providing these services
in alignment with Council policy goals.
VII-01