2020 City of Shakopee Budget

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To: Mayor and Council Members From: Nate Burkett, Assistant City Administrator Cc: Bill Reynolds, City Administrator Date: November 19, 2019 Re: Draft Budget Workshop – November 19, 2019 __________________________________________________________________________________ Background Each year the city must prepare a budget and property tax levy for the following year. Staff has been analyzing revenues, expenditure information and initiatives to prepare a draft budget and levy for your consideration. The City of Shakopee takes a responsible, long-term perspective with financial planning and management. Decisions are made with the future in mind to ensure the city’s ongoing ability to provide quality services at a reasonable price. Over the last three years, the city’s estimated market value has increased $1.2 billion to more than $6 billion. New construction accounts for $244 million or 20 percent of this increase. New construction allows the tax levy to be spread across a larger tax base, which reduces tax burden of existing taxpayers. Staff has proposed budgets with minimal or no impact to residents for the past three years. That being said, the city is experiencing budget pressures, most notably from increasing infrastructure construction and maintenance costs, as well as general personnel costs, neither of which are unique to Shakopee. Fortunately, these pressures are mitigated by our previous work to financially position our budgets and by right-sizing our operations. This year’s budget focuses on maintaining operational service levels which includes an infusion of tax dollars dedicated to maintaining street infrastructure. The levy also includes an investment in regional park development as a result of the Parks, Trails and Recreation Master Plan and the 2040 Comprehensive Plan. The 2020 budget also continues focusing on fiscal transparency, long-term financial stability and ensuring our budget accurately reflects how we spend tax dollars. This past year residential values increased on average 6.7 percent according to data from Scott County with 57 percent of the homes seeing an increase between 5 and 15 percent. As outlined in this memo, staff recommends increasing the city’s preliminary levy 5.98 percent. For the average-valued home increasing by 6.7 percent to $272,600, this equates to a 4.6 percent or $39 annual increase. Absent any change in value, homeowners can expect a tax decrease of about $25 or about 2.9 percent. This