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Home My WebLink AboutIX-03 Public Hearing Truth in Taxation for 2022 BudgetCity of Hastings  101 Fourth Street East  Hastings, MN 55033-1944  Phone: 651-480-2350  www.hastingsmn.gov To: Mayor Fasbender & City Councilmembers From: Dan Wietecha, City Administrator Date: December 6, 2021 Item: Truth in Taxation Hearing for 2022 Recommended Budget Council Action Requested: Conduct the Truth in Taxation hearing for the 2022 budget. The Council will be asked to consider adopting the final budget either at this meeting or at their December 20, 2021 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 City Council met in a workshop on June 21, 2021 to discuss preliminary 2022 budget projections and to provide broad direction for the budget process and outcomes. The Finance Committee met with Department Heads about the proposed budget on August 17. The Council then held a budget workshop on September 7th. At this meeting, Administration presented overall comprehensive budget information including revenues, expenses, department requests for capital, new initiatives, and personnel. Departments presented their individual budget requests in more detail and addressed Council’s questions. The Finance Committee (Vaughan-Chair, Folch, Fox) met on October 26th to review the preliminary budget recommendations, updates from staff on several items, and to provide further direction on the final levy and budget items. The Committee elected to keep the tax levy at the proposed level, and directed staff where to allocate the remaining dollars. At the November 15th City Council meeting, the Council approved recommendations from the Finance Committee’s October 26th meeting. The 2022 preliminary tax levy of $16,294,085 remained unchanged from September. IX-03 Page | 2 Historical Information The City experienced continued tax capacity growth in 2022. Overall City tax capacity will increase by nearly 4% in 2022 to $24,652,576. The majority of this capacity increase is due to higher valuation of existing properties. 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00% - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 2017 2018 2019 2020 2021 2022 proposed Local Tax Capacity Levy LGA Tax Rate In alignment with a City Council’s goal, staff has prepared a budget which increases the levy minimally in 2022. The tax rate declined from 2014 through 2021. The 2022 proposed budget includes a tax rate of 58.61% for the proposed 2022 tax levy. The primary area of focus for this levy increase is addressing capital needs. Year Tax Rate 2014 66.25% 2015 62.58% 2016 63.58% 2017 62.52% 2018 60.86% 2019 59.61% 2020 57.39% 2021 57.35% 2022*58.61% *Proposed Rate IX-03 Page | 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. As part of the proposed levy and budget, we have the following significant items identified within the recommendations: • Phase 2 of Police and Fire Emergency Response Radios • Ambulance Replacement • Three New Police Squad Cars • Dump Truck • Finance System • Comp and Class Study Implementation • Economic development initiatives o Implement façade improvement program o Purchase property for Vermillion Street Corridor Redevelopment o Sale of downtown property for apartments o Sale of industrial park land to enhance job creation • Infrastructure improvements o Annual Neighborhood Improvement Project o Public Works Storage Building o Water Tower Painting 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 2022 is approximately $238,258 and would pay an estimated $1,304 in City property taxes annually at the 2022 proposed tax rate. IX-03 Page | 4 Businesses Property taxes for commercial properties are impacted by a variety of factors including valuation, fiscal disparities and tax classification, such that a comparison by property value alone (as for homeowners) does not provide an accurate picture of tax impact. The comparison below looks at the tax history of a sampling of actual properties that represent the various types of commercial properties that exist within the City. Market Value of our Commercial Industrial properties increased on average about 2.38%. Property Value Market Value Increase City Estimated Tax 2022 City Tax 2021 Difference Industrial 994,900$ 5.10%7,117$ 7,055$ 62$ Industrial Preferred 1,624,800$ 1.98%11,354$ 11,596$ (242)$ Commerical Preferred 189,600$ 0.05%1,088$ 1,133$ (45)$ Additional Information Additional detail on the 2021 proposed budget is available in the attached “2022 City of Hastings Budget at a Glance” and online at www.hastingsmn.gov/budget . Next Steps Following the Truth in Taxation hearing on December 6, the Council will be asked to consider the full and final 2022 budget, levy, and HEDRA levy. I would like to extend a sincere appreciation to the Finance Committee as well as our staff for their work and involvement on the 2022 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 dedication in providing these services in alignment with Council policy goals. IX-03 2022 Truth In Taxation Hearing December 6, 2021 IX-03 Truth in Taxation meeting Purpose of meeting is to present budget to public Receive public comment Purpose is not to address market values ◦Market value determination is part of County process in the spring December 6th or 20th –City Council will be asked to adopt the final budgets, levies, and capital plans IX-03 Budget Process Begins with Council direction during work sessions in May Staff prepares budget to address Council Goals and operational needs Finance Committee discusses the budget with departments City Council workshops to discuss budget Preliminary budget and levy adopted in September County sends notices of Estimated Tax Impacts Truth in Taxation Hearing in December Council adopts budget and levy in December IX-03 Budget Principles Focus on the provision of basic City services and fund their provision at adequate levels. Estimate anticipated revenues at realistic levels. Retain adequate reserves to protect against fiscal uncertainty. Demonstrate strong stewardship of existing infrastructure and plan for its repair/replacement in a proactive manner. Foster CORE values when creating the budget ◦Communication ◦Optimal Service ◦Respect for Resources ◦Enthusiasm Provide support for Strategic Initiatives IX-03 Summary What’s In the Budget Tax levy rate will increase slightly from 2021 Prioritization of Capital Needs (CIP/CEP) Neighborhood Project 2022 Police and Fire Radios –Phase 2 Ambulance Dump Truck Realigning Building staff to promote cross-training and succession planning Add Parkskeeper position Add Fire/Rental Inspector position Recycling position shared with the City of Rosemount and Farmington 3.0% COLA adjustment on wages Comp and Class implementation What’s Not In the Budget Funding for Trails City Council Finance Committee has recommended developing a funding plan IX-03 Fee Revenue Changes Utility rates In accordance with a 2020 rate study, Water rates will increase 3.5%, Sewer 1%, and Stormwater 4% Fire EMS Fees Ambulance fees It has been 5 years since ambulance Fees were last adjusted; this increase will provide more support of EMS services Safety Inspections State of MN requires inspections for schools, hotels, churches and daycare providers By contracting with the state, the City can receive payment at a state-determined rate Fire Extinguisher Training This new fee will help recoup expenses for staff time, supplies and training props Parks Fees Pool fees have been increased to fund higher seasonal staff pay rates Arena fees will increase to help pay for increasing costs, including seasonal staff rates Community Development and Building Fees Consolidating fees to reduce redundancy and simplify administration Some fees have been increased to recoup more of the City’s expenses, which increase annually Water Meters Increase in cost of equipment necessitates an increase in fee charged for meters IX-03 American Rescue Plant Act (ARPA) –funded Capital Police Radar Signs Portable Safety Cameras Accounting software Fire Truck Air Purification Filters Cyber Security Penetration Testing Servers for Technology Infrastructure IX-03 Preliminary Tax Impact 2022 tax rate estimate 58.606% increase of 1.25% from 2021 Levy of $16,294,085 an increase of 6.41% 1% levy equates to approximately $162,940 IX-03 Historical Taxes –City Levy 11,980,920 11,610,920 12,060,920 12,510,920 12,960,920 13,503,307 14,233,201 14,788,179 15,312,300 16,294,085 68.547 66.246 62.581 63.577 62.518 60.864 59.612 57.391 57.351 58.606 50 52 54 56 58 60 62 64 66 68 70 0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 Preliminary 2022 Tax Capacity Levy Tax Rate IX-03 Dakota County Proposed Tax Changes 2022 Residential Homestead Properties Average Total Tax, Percentage Change IX-03 Dakota County Proposed Tax Changes 2022 Commercial Properties Average Total Tax, Percentage Change *excluding TIF Districts IX-03 HEDRA LEVY LIMITED TO .0185% OF TAXABLE MARKET VALUE 2022 AMOUNT IS $413,820 Total HEDRA budget proposed is $815,792 ◦Fund balance will be used in 2022 for the balance not covered by the levy IX-03 Significant Capital Projects Water Tower Painting Will be funded by a bond issue, which would be paid from Water utility revenue City Hall Dome Scope of work is still being determined, with a wide range of cost estimates Storage Building Public Works needs a new building to store equipment after a development project forced the department out of its previous storage location. Project will be paid through a combination of a bond issue and existing fund balance IX-03 Next Steps 6 December Truth and taxation public hearing 6 or 20 December Adopt budget and levies, utility rates, and fee schedule IX-03