FY 2020 Budget

To: Mayor and Council Members From: Brian W. Weuve, Deputy City Manager/Finance Director cc: Amanda Mack, City Manager Date: March 15, 2019 Re: Fiscal Year 2019/2020 Budget

Background Each year the City is required by state statute to prepare and adopt a budget, and shall certify taxes as needed to fund the operations of the city. Staff has analyzed revenues, expenditures and council priorities to prepare the budget and tax levy for your consideration. The final budget contained within this document represents the decisions made by the Council throughout the budget process. The budget document format this year is the same as last year. Summary information is presented for each of the fund type (i.e. General Fund, Restricted Cash, Special Revenue, Debt Service, Capital Projects, Permanent funds, and Proprietary funds). Detailed budgetary information is then presented by Budgetary Function (i.e., Public Safety, Public Works, etc.) and within each function by operating department (i.e. Police, Fire, Street Maintenance, Snow Removal, etc.). On each detailed departmental page, the allocation of the budget by fund type is highlighted. This type of budgetary presentation was chosen to demonstrate to all involved what the total monetary commitment is required to operate each department in an easy to access location. This format allows the reader to understand the full cost of each of the city’s operations at a single glance and in a centralized location. Previous budget documents had departmental information spread throughout the document. For the sixth consecutive year, staff has proposed a budget with NO INCREASE to the property tax levy. This produces no impact to residents or business in the city, absent changes in the state’s rollback formula and changes to property valuation – for which the city has no control. The budget maintains our current levy rate of $11.99999 per $1,000 of property valuation. The city continues to monitor the state’s financial condition as it is imperative to the continuing receipt of property tax “backfill” dollars. Several major changes to the state’s property tax system were made during the 2013 legislative session. For each assessment year beginning in 2013, residential and agricultural property value growth is capped at 3 percent, or whichever is lowest between the two classes (the coupling provision remains). The rollback percentage for these two classes of property changes annually based upon the growth limitation as mentioned above. This has been the case since 1978 when residential and agricultural property were first subject to an assessment limitation order or “rollback” that limits the annual growth of property values. Prior to the 2013 overhaul of the property tax system, property value growth was limited to 4 percent per year for agricultural, commercial, industrial and

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