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Home My WebLink AboutDecember 2, 2002 RegularCITY OF COLUMBIA HEIGHTS 590 40~h Avenue N.E.. Columbia Heights. MN 55421-3878 (763) 706-3600 TDD (763) 706-3692 Visit Or: Website at: .,.'n'.ci. coh.nbia-heights.mn.us ADMINISTRATION Mayor Gar), L. Peterson Coun¢ilmembers Marlaine Szurek Julienne Wyckoff Bruce Nawrocki Robert A, Williams City Manager The following is the agenda for the regular meeting of the City Council to be held at 7:00 p.m. on Monday, December 2, 2002 in the City Council Chambers, City Hall, 590 40th Avenue N.E., Columbia Heights, Minnesota. The City of Columbia Heights does not discriminate on the basis of disability in the admission or access to, or treatment or employment in, its services, programs, or activities. Upon request, accommodation will be provided to allow individuals with disabilities to participate in all City of Cohmbia Heights' services, programs, and activities. Auxiliary aids for disabled persons are available upon request when the request is made at least 96 hours in advance. Please call the Deputy City Clerk at 763-706-3611, to make arrangements. (TDD/706-3692 for deaf or hearing impaired only) Call to Order - Roll Call Pledge of Allegiance Presentation of 2003 Budget and Tax Levy Information Linda Magee, Assistant to the City Manager and William J. Elrite, Finance Director, will present information. Adjournment Walter R. Fehst, City Manager THE CITY Of COLUMBIA HEIGHTS DOES NOT DISCRIMINATE ON THE BASIS Of DISABILITY IN EMPLOYMENT OR THE PROVISION OF SERVICES EQUAl OPPOrtUniTY EMPLOYER General Fund Parks Police Recreation Fire Engineering Traffic Signs & Signals Finance Civil Defense Street Lighting Weed Control Tree Care & Maintenance Senior Citizens Mayor-Council City Manager Murzyn Hall Youth Athletics Adult Athletics Youth Enrichment Traveling Athletics Assessing Legal Services Elections General Government Bldgs Recognition/Special Events Transfers Contingencies Animal Control Trips & Outings Streets Total General Fund City of Columbia Heights, Minnesota 2003 Budget Personal Services 2002 2003 Budget Budget Difference Percent Increase/Decrease 414,678 471,937 57,259 12% 2,209,176 2,469,424 260,248 11% 184,075 199,210 15,135 8% 748,876 799,447 50,571 6% 252,787 266,893 14,106 5% 46,920 49,328 2,408 5% 537,384 558,221 20,837 4% 17,328 17,994 666 4% 4,424 4,588 164 4% 11,947 12,389 442 4% 45,883 47,542 1,659 3% 65,269 67,516 2,247 3% 108,001 111,102 3,101 3% 350,911 359,803 8,892 2% 156,732 159,104 2,372 1% 13,237 13,237 0 0% 7,761 7,761 0 0% 15,544 15,544 0 0% 7,443 7,443 0 0% 36,073 0 (36,073) 0% 0 0 0 0% 27,624 0 (27,624) 0% 0 0 0 0% 0 0 0 0% 0 0 0 0% 0 0 0 0% 0 0 0 0% 0 0 0 0% 367,361 355,810 (11,551 ) -3% 5,629,434 5,994,293 364,859 Library Library Fund 412,645 428,302 15,657 4% EDA EDA Fund 75,828 72,999 (2,829) -4% Total Tax Supported Funds 6,117,907 6,495,594 377,687 6% Community Development Fund Community Development Protective Inspections 86,253 106,041 19,788 167,161 173,846 6,685 19% 4% Total Community Development Fund 253,414 Summary Data/Budget by Fund/Personal Services 279,887 26,473 9% CITY OF COLUMBIA HEIGHTS TAX LEVIES PAYABLE 2000-2003 General Fund Library EDA Total Levy 2,000 Actual 2,001 2,002 2,003 Adopted Adopted Adopted 2,958,490 4,095,527 4,243,830 547,767 591,588 433,585 119,295 137,015 140,569 2,676,416 500,244 119,296 Amount of Change 148,303 (158,003) 3,554 3,295,956 3,625,552 4,824,130 4,817,984 (6,146) MARKET VALUE (PAYABLE 2002) MARKET VALUE (PAYABLE 2003) 2002 Taxes 2003 Proposed Taxes Amount of Increase/Decrease 51,400 56,500 Sch°(~194 137 (57) MARKET VALUE (PAYABLE 2002) MARKET VALUE/PAYABLE 2003) 2002 Taxes 2003 Proposed Taxes Amount of Increase/Decrease Coun~ I gib/' 128 174 130 160 2 (14) 84,200 92,60O Sch°°~30 I 239 I (91)1 Other17161 I Total 512 444 JMARKET VALUE (PAYABLE 2002) MARKET VALUE (PAYABLE 2003) 2002 Taxes 2003 Proposed Taxes Amount of Increase/Decrease Coun~ City 221 300 241 297 20 (3 113,500 124,900 School I 486 I 348 I 038)1 Other28324 I T°ta1879 I 809 ] (70)1 Coun~ [ Ci~ 334 454 369 455 35 1 Other Total 41 1,315 49 1,221 8 (94)[ MARKET VALUE (PAYABLE 2002) MARKET VALUE (PAYABLE 2003) 2002 Taxes 2003 Proposed Taxes Amountoflncrease/Decrease 140,200 154,200 Coun~ Ci~ 438 595 486 600 48 5 Sch°°~26 I 446 I (180)1 Other Total 69 1,728 80 1,612 11 (116)l JMARKET VALUE (PAYABLE 2002) MARKET VALUE (PAYABLE 2003I 2002 Taxes 2003 Proposed Taxes Amount of Increase/Decrease 169,400 186,300 Coun~ I Ci~ 551 748 613 756 62 8 Sch°°~78 I 554 ] (224)1 Other Total 68 2,145 80 2,003 12 (142)l Budget Charts/Taxes Payable City of Columbia Heights, Minnesota 2003 Budget Insurance Costs Cost of Insurance premium Total Increase from 2000 to 2003 Year 2000 2001 2002 2003 Amount ~ Percent Cost of Family Medical Coverage 401.52 501.13 741.67 862.50 460.98 115% Amount of Increase 99.61 240.54 120,83 Percent of Increase 25% 48% 16% Insurance premium paid by the City Total Increase from 2000 to 2003 Year 2000 2001 2002 2003 Amount ~ Percent Amount paid 455 475 535 535 80 18% Amount of Increase 20 60 0 Percent of Increase 4.40% 12.63% 0.00% Insurance premium paid by the employee Total Increase from 2000 to 2003 Year 2000 2001 2002 2003 Amount ~ Percent Paid by Employee 0 26.13 206.67 327.50 327.50 327.5% Amount of Increase 0 26.13 160.54 120.83 Percent of Increase 690.93% 58.47% INote 1: From 2000 to 2003 the City's contribution to employees fringe benefits for health insurance increased by $80.00 or 18% per month. At the same time the total cost of health insurance went up by $460.98 or 115%. This resulted in a cost increase to the employee of $327.50 per month. Note 2: For 2003 an employee earning $40,000 a year and receiving a 3.5% increase would receive an increse of $116.67 per month. At the same time health insurance costs went up by $120.83. This results in the employee having $4.16 less in income each month for 2003. Using this same example for 2002 the employee's health insurance cost increase was $63.87 more per month than the 3.5% pay increase. For the two years combined the employee's income decreased by $68.04. Smmary Data/Budget by Fund/Insurance TRUTH IN TAXATION HEARING ON THE 2003 PROPOSED BUDGET AND PROPERTY TAXES Table of Contents 2003 Budget Message ...................................................................................................... 1-1 2003 Revenue by Source ................................................................................................... 1-13 2003 All Budgetary Funds Expenditures By Functional Area .......................................... 1-14 2003 All Budgetary Funds Expenditures By Classification .............................................. 1-15 2003 Sources of General Fund, Library Fund, and EDA Revenue ................................... 1-16 2003 General and Library Fund Expenditures by Classification ...................................... 1-17 Major Expenditure Increases ............................................................................................ 1-18 Class Rate Percentages By Real Property Type ................................................................ 1-19 Changes in State Aid ......................................................................................................... 1-20 Proposed Property Taxes .................................................................................................. 1-21 Changes in Tax Levy 2001-2003 ...................................................................................... 1-22 Where Your Property Taxes Go ........................................................................................ 1-23 What will $30 a Month Buy? ............................................................................................ 1-24 CITY OF COLUMBIA HEIGHTS 2003 BUDGET MESSAGE This budget message accompanies the 2003 budget document prepared for the Truth in Taxation meetings which is distributed to the City Council and available to the public. The purpose of this document is to touch on the highlights of the 2003 budget overall as well as each functional area of the City. Budget Format Several years ago the budget format was revised in an attempt to provide more useful information to the City Council and the public in a summarized, user-friendly format. Under the new format the budget was broken down into ten functional areas and is prepared with a summary for each of these functional areas along with a detailed budget workbook for the City Council to utilize during their budget review. The summary budget book is then again summarized in a public document that is used for the City's public budget adoption meeting and for any required Truth in Taxation hearings. The budget message follows the format of the overall budget and provides a narrative section summarizing each of the functional areas along with overall summary information on the budget document, total budget, property taxes, and other revenue sources. Budget Overview Budget Highlights To fully understand the 2003 budget highlights we must first reflect on the significant happenings in the 2002 budget. As is reflected in the budget, the City Manager's overall proposed budget for tax-supported funds was down for 2002 from 2001. For 2001 the total General Fund, Library Fund and EDA budgets equaled $8,674,001. For 2002 the City Manager's proposed budget was $8,660,490. The principal reason for the reduction in the budget was the new state legislation that reduced state aid to the city by $800,566. It was the state legislature's recommendation that this aid reduction be passed on to residents in the form of a property tax levy. With these changes and reductions in state aid together with inflation and the additional financial needs of the City, it was necessary to take a hard look at all departmental budgets and make some significant reductions. These budget reductions included the elimination of four positions from the City payroll (one policeman and one community service officer from the Police Department, and one assessment clerk and one secretary from the City Manager's office). Cutbacks were also made to capital equipment purchases. After a vital attempt to hold the line on the 2002 budget, it was difficult to make further cuts in the 2003 budget. However, staff put forth every effort to keep expenses to a minimum with the only significant increases being for personal cost of living and pay scale increases. These efforts resulted in a City Manager proposed budget that utilizes $384,733 in fund balance but also reflects a reduction of $6,146 in the property tax levy. Page 1-! Increase/Decrease 2001 Budget 2002 Budget from 2001 Police 2,417,842 2,499,952 82,110 Streets 642,019 681,712 39,693 Elections 6,823 40,548 33,725 Administration & General 189,556 206,434 16,878 General Government Building 130,000 142,216 12,216 City Manager 391,945 403,841 11,896 Parks 644,403 654,215 9,812 Senior Citizens 72,121 76,238 4,117 Street Lighting 124,989 128,088 3,099 Civil Defense 32,352 33,836 1,484 Trips & Outings 37,530 36,603 1,073 Weed Control 14,953 15,959 1,006 Increase/Decrease 2002 Budget 2003 Budget from 2002 Police 2,499,952 2,786,587 286,635 Parks 654,215 751,437 97,222 Transfers 400,000 480,000 80,000 Fire 843,223 916,572 73,349 Library 609,402 676,456 67,054 Civil Defense 33,836 84,973 51,137 Finance 606,272 643,973 37,701 Administration & General 206,434 224,417 17,983 Recognition/Special Events 52,100 71,368 19,268 General Government Building 142,216 158,546 16,330 Murzyn Hall 235,172 249,022 13,850 Streets 681,712 695,369 13,657 As mentioned above, the state legislature significantly reduced state aid to the City in 2002. The following chart reflects what the City received in state aid for the years 2001 through 2003. As you can see, there was an $800,566 reduction in 2002. In 2003 aid increased by $62,579, which is still $737,987 less than the City received in 2001. 2001 Budget 2002 Budget 2003 Budget HACA 1,004,368 0 0 LGA 2,385,618 2,589,420 2,651,999 Total 3,389,986 2,589,420 2,651,999 Change from Prior Year 60,835 (800,566) 62,579 Page 1-2 As was recommended by the state legislature, the 2002 aid reduction was passed on to residents in the form of a property tax levy increase. It should be noted that although the city and county had property tax levy increases as a result of state legislation, there was a significant offset to this in the fact that the state drastically increased aid to school districts and the levy reduction by school districts was greater than the levy increase from the city and county. The net result, as projected by the state, was that homes saw a total property tax levy reduction. The following chart shows the breakdown of the City's levy for the years 2000 through 2002 and the proposed levy for 2003. As the chart reflects, the City's levy increase for the year 2000 was very minimal. To finance expenses in this year the City relied heavily on reserves that were accumulated in the City's General Fund balance. The levy for 2002 was increased to cover expenses and actually resulted in a General Fund Balance increase of $274,601. For 2003 the levy has decreased resulting in the use of $384,733 in General Fund reserves. PROPERTY TAXES, 2000 - 2003 Proposed Property Taxes 2000 2001 2002 2003 Adopted Adopted Adopted Proposed Library 500,244 547,767 591,588 433,585 EDA 119,296 119,295 137,015 140,569 General Fund 2,676,416 2,958,490 4,095,527 4,243,830 Total Levy 3,295,956 3,625,552 4,824,130 4,817,984 Levy Increase from Prior Year57,331 329,596 1,198,578 (6,146) The next major factor in the property tax formula is the state legislature's restructuring of class rate percentages for real property taxes payable in 1997 through 2003. The class rate changes made during this period of time will affect property taxes in all future years. A major change was a significant shift in the tax capacity value from commercial industrial and residential non- homestead to residential homestead property. As you can see from the following table, for residential homestead property there is no change in the class rate for the first $72,000 of value. There was a slight decrease in class rate for higher priced homes. However, there was a significant decrease in class rate for commercial industrial property and residential non- homesteaded property. The net result of this is that although there was a small reduction on residential property, there was a far greater reduction on non-residential property that, in effect, shifts a significant amount of the property tax payment to residential homestead property from other properties. Page 1-3 CLASS RATE PERCENTAGES BY REAL PROPERTY TYPE TAXES PAYABLE 1998, 1999, 2000, 2001, 2002 and 2003 Real Property Payable Payable Payable Payable Payable Payable Description 1997 1998 1999 2000 and 2001 2002 2003 Class Class Class Class Rate Class Class Rate Rate Rate Rate Rate Residential homestead First $72,000 1.00% Over $72,000 2.00% First $75,000 1.00% 1.00% Over $75,000 1.85% 1.70% First $76,000 1.00% 1.00% $76,000 - $500,000 1.65% 1.00% 1.00% Over $500,000 1.25% 1.25% Commercial-Industrial and public utility First $100,000 Over $100,000 First $150,000 2.70% 2.45% 2.40% 1.50% 1.50% Over $150,000 4.00% 3.50% 3.40% 2.00% 2.00% Residential non-homestead, 1 unit First $72,000 2.30% Over $72,000 2.30% First $75,000 1.90% 1.25% Over $75,000 2.10% 1.70% First $76,000 1.20% 1.00% $76,000 - $500,000 1.65% 1.00% 1.00% Over $500,000 1.25% 1.25% Residential non-homestead, 2-3 units and undeveloped land 2.30% 2.10% 1.70% 1.65% 1.50% 1.25% Residential non-homestead 4 or more units 3.40% 2.90% 2.50% 2.40% 1.80% 1.50% Low Income 1.00% 0.90% 1.00% Economic Environment As indicated in the Moody's Municipal Credit Report for the City of Columbia Heights, our finances remain satisfactory with reasonable General Fund reserves. As a result, the City has maintained an A1 bond rating. Our revenue structure is somewhat vulnerable to economic pressure since approximately 30% of our General Fund revenue base comes from state aid and 50% of our General Fund revenue base is from local property taxes. As these aids and the City's property tax revenue are received in the last six months of the year, the City has been maintaining a cash flow fund balance equal to 40% of the General Fund operating budget. Subsequently, although it may appear that we have a significant fund balance reserve, it is actually dedicated to cash flow purposes. The City's primary source for increased revenue is through property tax levies. Over the past several years, the City Council has maintained a very conservative profile in increasing taxes by minimal percentages. To maintain the quality of services provided to the residents of Columbia Page 1-4 Heights, it may be necessary to develop a policy of a slightly higher property tax increase. However, due to state imposed levy limits for the years 1998 through 2000, the City was restricted from implementing minimal property tax increases. These levy limits were removed for the year 2001 but are back in place for the years 2002 and 2003. As a result of this legislative restriction, the City was forced to look at severe budget cuts and a reduction of services in the 2002 budget preparation process. For 2003 the City has looked at using approximately $384,733 in Fund Balance reserves to avoid further cuts to services and to also afford residents a small reduction ($6,146) in the property tax levy. At the present time it is anticipated that the property tax legislation passed in the 2001 legislative session will only worsen the future property tax burden on cities. As part of the City's property tax revenue, the City does receive an area wide fiscal disparities tax distribution from commercial property in other communities. The basis of this area-wide fiscal disparities tax distribution is to collect property taxes on commercial property throughout the metropolitan area and then redistribute this area-wide property tax to communities such as Columbia Heights that have a limited commercial property tax base. Under the fiscal disparities area wide tax system, the City of Columbia Heights benefits significantly. It is projected that the City will receive approximately $1,000,000 in property taxes from the tax on commercial property in other communities. As part of the recent legislation, the City may see a reduction in this area wide tax revenue in future years. This would result in the residents of Columbia Heights picking up an even larger portion of the property taxes. Page 1-5 Significant Highlights on Expenditures by Functional Area Administration The Administration function includes Mayor, City Council, City Manager, Assessing, and the Legal budgets. The total proposed 2003 budget for this functional area is $921,292. This is down $25,421 from the adopted 2002 budget of $946,713. The most significant areas of change in the budget are in personnel services and liability insurance coverage. The Mayor/Council budget increased by $3,101 due to wage and benefit adjustments for 2003. In addition to this, insurance and bonding costs increased by $6,267. These increases were offset by a $4,000 decrease in contingencies. This combined with other smaller adjustments to the budget resulted in a net increase of $3,772 to the Mayor/Council budget. The City Manager budget also saw an increase of $9,000 for wage and fringe adjustments. This increase also included $5,410 for an ADMINISTRATION EXPENDITURE SUMMARY · Contingencies & Transfers intern position to offset the loss of the part-time clerk typist position that was moved to Community Development. The Assessing Department budget decreased by $40,620 from 2002 to 2003. This is primarily due to the retirement of the Accounting Clerk II in Assessing and the City contracting with Anoka County to replace some of these services and spreading the remaining duties of the special assessment clerk to the Finance and Engineering departments. The Legal Department budget increased by $2,562 based on the current contract and past expenditure history. The net result of all this was a total functional area decrease of $25,421. Community Development This functional area covers all services previously provided by the Housing & Redevelopment Authority in addition to expanded services. The specific departments covered by this functional area are Building Inspections, Administration, Community Development Block Grant, Parkview Villa, Economic Development Authority, Housing Redevelopment Authority, multi-use redevelopment, and some miscellaneous housing programs. This functional area of the City was created in 1996 with the establishment of the EDA and the transfer of the previous HRA staff to the EDA as a City department. In recent years this budget has seen several changes and modifications with the increases and decreases to the Community Development Block Grant programs. In mid-2002 a new director was hired for the Community COMMUNITY DEVELOPMENT EXPENDITURE SUMMARY Personal Services O Supplies · Other Services and Charges ICapital Outlay ~Contingencies & Transfers Development Department. Under his guidance, the primary objectives for 2002 and 2003 are the redevelopment of the City's industrial area and the development of a specific budget and funding sources to cover this redevelopment project. Page 1-d Finance Department This functional area covers Elections, Finance, Information Systems, and Utility Billing Administration for the water, sanitary sewer, storm sewer, and refuse departments. The total budget for 2003 is $643,973, which is up $37,701 from the 2002 budget of $606,272. The most significant change in this budget is in the area of personnel. Due to cost of living and progression through the pay scale, personnel costs are up $20,837. The other significant cost item in this department is capital outlay at $10,000. This capital outlay covers two items, the first item being a new mailing machine. The current mailing machine is over 10 years old and has broken down repeatedly. During the year 2002 the Finance Department underwent considerable restructuring in preparation for the new financial reporting and accounting standards set by the Governmental Accounting Standards FINANCE EXPENDITURE SUMMARY Actual 2000 Actual 2001 AdoptedProposed 2002 2003 · Personal Services a Supplies IOther Services and Charges ·Capital Outlay · Contingencies & Transfers Board. This restructuring has been very successful and made the department much more efficient. With the City holding even year elections, the need for an odd year election budget has been eliminated. For 2003 this results in a savings to the City of approximately $34,000 in cost and a considerable savings in staff time. The IS Department budget remains status quo with the IS Department's primary functions being to maintain the City's network of computers, software, and computer training along with the maintenance of the City's Web site and Internet connections. During 2002 the City purchased the CityView program that is centralized, database software. The primary goal of this program is to create a central property database that will link the assessing software, building inspections, and Fire Department programs. The first phases of this program will be brought on-line in 2003. With this and the elimination of the special assessment billing clerk position, it is anticipated that the IS staff will spend a significant amount of time in 2003 enhancing and fully implementing the CityView software. Fire This functional area is comprised of the Fire and Civil Defense departments. The Fire Department budget has increased by $73,349 for 2003. The primary increase is in the area of personnel for cost of living and pay scale increases under the pay plan. The other large cost factor in personnel is the projected increase for overtime. The overtime budget for 2002 was $28,200. This has been increased to $43,000 in 2003, which falls more in line with the actual overtime cost of $55,800 in 2001. Overtime is a fluctuating cost for the Fire Department due to the fact that it cannot be controlled, it is determined by the number of fire and other emergency callbacks of staff. Another uncontrolled factor in this department is insurance costs, which have literally doubled since 2001 with the current FIRE EXPENDITURE SUMMARY Actual Actual Adopted Proposed 2000 2001 2002 2003 I Personal Services D Supplies · Other Services & Charges aCapital Outlay · Contingencies & Transfers budget of $21,600 for liability and property coverage. The last item is a slight increase for computer equipment and an additional software license for the CityView program. In 2003 a major objective is to convert the current Firehouse software to CityView software to track fire calls and other related Fire Department information. The other function under the functional area of Fire is the Civil Defense Department. For 2003 the most significant item is the replacement of the City Hall generator. The cost of this is estimated at approximately $50,000. The current Page 1-? generator in City Hall is an early 1960's vintage that is no longer functional or safe to operate. This generator maintains primary services to the Fire and Police departments, as well as other areas of City Hall in the case of a disaster or emergency and could prove to be an essential item in continued emergency public safety operations. Due to budget restraints in prior years the generator replacement has repeatedly been removed from the Civil Defense budget. It is the goal to accomplish the generator replacement in 2003. General Govemment This functional area as a grouping was created new for the 1998 budget process. It is a collection of all the departmental areas that are not specifically assigned to one division head. This functional area includes the following departments: General Government Buildings, Recognition/Special Events, Contingencies and Transfers, Cable Television, Refuse and Hazardous Waste funds. For 2003 one of the items to note is under the Recognition/Special Events budget. This budget funds the City float and royalty events. For approximately 30 years the City's float has used a secondhand, homemade trailer. Also, there have been frequent problems with having a tow vehicle available to pull the float. For the 2003 budget, $18,000 has been included to purchase a new, heavy-duty, lightweight trailer for the float and/or acquire a used vehicle to be dedicated primarily to towing the float. The next area to GENERAL GOVERNMENT EXPENDITURE SUMMARY Actual 2000 Actual 2001 Adopted Proposed 2002 2003 · Personal Services El Supplies · Other Services & Charges ·Capital Outlay · Contingencies & Transfers note is in this functional area is the Cable Television fund. The major goal for 2003 is to purchase new equipment to replace existing equipment as needed to enhance in-house and public presentation and communications over the City's cable channel. The final item is related to General Government Buildings. The budget for this department in 2002 included $30,000 to improve and enhance security at City Hall. Due to a number of reasons, it does not appear that this objective will be accomplished in 2002. Subsequently, this is an item that will be revisited in 2003, as overall security for City Hall employees, residents and visitors is a major concern to be dealt with as a high priority. Library The City's library is located at 820 40th Avenue. The library's main goal is to provide free access to informational and recreational materials for patrons in a pleasant environment conducive to the acquisition of knowledge. A variety of library- related programs (e.g. storytimes, reading clubs, filmtimes, homebound delivery, etc.) are offered for patrons of all ages from preschool through senior citizen. As a city-supported library, Columbia Heights participates in the MELSA regional system through a contract with the Anoka County library system, State-wide Borrowers Compact, and METRONET. This enables Columbia Heights patrons to gain access to special services and scholarly materials available to other participating libraries. For 2003, the department proposed library budget is up from $609,402 to $676,456, an increase of $67,054. Some of the main highlights in the budget are $1,500 Page 1-8 LIBRARY EXPENDITURE SUMMARY Actual 2000 Actual 2001 Adopted Proposed 2002 2003 El Personal Services El Supplies · Other Services & Charges ·Capital Outlay · Contingencies & Transfers to replace one staff PC, creating a new line item for DVD's to accommodate the new technology, and general cost of living increases for items such as telephone, utilities, and insurance. Capital outlay items include the replacement of the public use copier, the departmental copier, the carpet tile in the main floor entry, the ballast in the East Room, the re-sensitizing unit for the security system in the Children's Department, and additional lighting in the Adult Reading Room. Liquor The liquor function is comprised of three liquor stores, Top Valu I, Top Valu II, and Heights Liquor, along with a capital equipment replacement fund for each of the three stores. Top Valu I is located at 4340 Central Avenue. This store opened in November of 1984 and was the City's first endeavor into a large volume discount liquor operation. Since it's opening it has been very successful. The City's second endeavor along this line was Top Valu II at 2241 37th Avenue. This store follows the same concept as Top Valu I and opened in April of 1994. As this store is located in a lower traffic area, its growth has been slower but very steady. Each year it shows a progressive increase in sales and profitability. Heights Liquor is the third store and is located at 5225 University Avenue. This store was opened in 1964 and has remained a very small, traditional municipal liquor operation. It does not operate on a high volume discount basis. Markups LIQUOR EXPENDITURE SUMMARY Actual 2000 Actual 2001 Adopted Proposed 2002 2003 · Personal Services m Supplies · Other Services & Charges · Capital Outlay · Contingencies & Transfers are higher at this store, along with profitability, which is due primarily to taking advantage of high volume purchasing discounts based on the volume purchased at Top Valu and the lower overhead expenses of a city-owned operation. For several years, an important discussion item regarding the liquor operation has been building a new, larger, state of the art, liquor store on University Avenue. The current store is very small and has seen significant deterioration over the years. Its size is inadequate to handle the high volume of customers and traffic. Building a new store on University Avenue could be extremely profitable to the City as we, once again, could compete with the new liquor store in Fridley and other more modern operations. Along this line, another major concern is the store we are renting on Central Avenue. Here the City spends approximately $150,000 each year on rent and CAM expenses. These unnecessary expenses could be eliminated if the City owned its liquor store on Central Avenue, which would make the operation more profitable. Currently the profits generated from the liquor operation are equivalent to a 16% property tax reduction. With newer, more cost-effective, City-owned stores on University and Central Avenues, the profitability could be increased with the net income being utilized to further offset property tax levies. Subsequently, acquiring a building on Central Avenue and constructing a building on University Avenue are major priorities for 2003. Page 1-9 Police This functional area is comprised of the Police Department, Animal Control, DARE, and Capital Equipment Replacement budgets. The most significant item in this area is personnel costs. Over the past several years departmental staffing was increased from 22 sworn officers to 26 with the addition of three officers by federal grants, and one additional officer over and above the grant requirements. In 1999 all grant funding and the requirement to maintain this staffing level ended. The City Council has annually reviewed the costs of maintaining this higher staffing level and in the 2002 budget decided to cut back by one officer to a staffing level of 25 sworn officers. This staffing level was again reviewed for the 2003 budget and the decision was made to maintain the staff level at 25 sworn officers. The proposed Police Department budget for 2003 is $2,927,023, which is up $286,996 from 2002. The major increase is in the personnel category, which is up $260,248 and is for cost of living increases and POLICE EXPENDITURE SUMMARY Actual 2000 Actual 2001 Adopted Proposed 2002 2003 · Personal Services m Supplies aaOther Services and Charges ·Capital Outlay · Contingencies & Transfers employees in the department progressing through the pay scale. Another significant item is the capital equipment budget. The proposed 2003 capital equipment budget is $109,500. This includes two full-size and one town-size vehicle for $84,500. Also included in the capital equipment budget is the final payment for the Visions Records Management system in the amount of $25,000. Pubfic Works This functional area is comprised of several departments crossing several funds. One of the significant advantages of the functional area budget format adopted in 1998 is that it shows the entire Public Works function in one area. Areas covered are engineering, streets, weed control, parks, tree programs, water utility, sanitary sewer utility, storm sewer utility, garage, and capital equipment replacement funds for the Public Works operation. For 2003 the total Public Works budget is $6,884,305, which is up $823,258 from 2002. Here the most significant budget item is personnel costs. The 2003 Public Works personnel budget is $2,001,610, which is up $110,661 from 2002 and is due to cost of living pay increases and employees progressing through the pay scale. One notable highlight of the 2003 Public Works budget is that previously there were three departments dedicated to tree PUBLIC WORKS EXPENDITURE SUMMARY · Contingencies & Transfers · Capital Outlay · Other Services and Charges mSupplies · Personal Services trimming, Dutch Elm sanitation and Dutch Elm replacement. For the 2003 budget all of these departments have been combined into one new Tree Care and Maintenance Department. This will allow the Public Works Department more flexibility in utilizing dollars dedicated to tree maintenance throughout the city. In the Street Department major items are the capital equipment replacement of the Ford 350 4x4 1-ton dump truck at $50,000 and the replacement of the trailer for the small roller at $4,500. In Parks the budget includes the replacement of the Dodge 250 3/4 -ton pickup at a cost of $38,000. In the Water and Sewer funds a major concern is utility rates. The City has put forth every effort over the years to maintain Iow rates. This has been done even Page 1-]0 though our costs to the City of Minneapolis for the purchase of water have increased 6-7% every year. Going into 2003, a consulting firm will be hired to perform a professional, long-term rate study for the City. This study is designed to establish a long-range plan for rate increases to cover operating costs and capital equipment replacement. One of the significant long-term cost effects to water will be the new filtration system that Minneapolis is installing. This will provide the City of Columbia Heights with a purer, better source of water but will greatly increase the cost for the water we purchase from them. In the General Garage fund there is minimal change from 2002. The major goal here is to continue funding the Capital Outlay fund for future building improvements to the Municipal Service Center building. In summary, several other areas of the Public Works budget saw changes that are presented in more detail in the Public Works budget document. Recreation Recreation is comprised of several departments including administration, youth athletics, youth enrichment, adult athletics, traveling teams, trips and outings, senior citizens, CHASE, and Murzyn Hall management. Over the years the recreation program has seen steady growth in their budget. One of the most notable areas is the Senior Citizen program. Over the years this program has continued to grow in popularity and success. While several senior programs in other communities are stagnant, through the excellent management of our Senior Coordinator, Karen Moeller, the program in Columbia Heights has grown consistently and is well received by all seniors. Other items of notable mention in the Recreation budget are that the administrative component has increased by $17,983 primarily due to cost of living increases and progression of personnel through the pay plan. The Youth Athletics, Adult Athletics, Youth Enrichment and RECREATION EXPENDITURE SUMMARY · Contingencies & Transfers · Capital Outlay · Other Services and Charges DSupplies m Personal Services Traveling Athletics are relatively the same for 2003 as 2002. The Trips and Outings program is a subcomponent of the Senior Citizen Department. This program includes one day and extended trips for seniors. These are advertised through quarterly trip flyers mailed to participants. This continues to be one of the most popular offerings and is a self-sustaining program as the fees charged cover the operating costs. Murzyn Hall maintenance is another significant item in the recreation program. Murzyn Hall is utilized approximately 2,500 hours for classes and activities, 1,500 hours for weddings, and 1,000 hours for meetings. Approximately 15% of the users are charged a fee while the remaining 85% are fee-waived organizations. JPM operates seven days a week and runs nearly full capacity throughout the year. The cost of operating and maintaining Murzyn Hall is $249,000 for 2003. Through its operation and fees charged, it will generate revenue of $71,500 leaving expense of $177,500 to be covered by property taxes and local government aid. With increasingly tighter budgets and reductions in state aid, fees for Murzyn Hall usage should be increased to more adequately cover the operating expenses. Conclusion The above narrative should provide an overview of the most salient changes and assumptions included in the budget. As much as possible, this is a hold-the-line budget. The property tax format in the state saw significant changes in 2002 and prior years with state legislation shifting local government aid from cities to schools. This resulted in a significant increase in the City Page 1-11 portion of the property tax bill. However, it also resulted in a significant decrease in the school property tax levy, which overall for 2002 resulted in reduced property taxes. On a preliminary basis, we anticipate this scenario to continue for 2003, at least at a City property tax level. With the reduction in the City property tax levy for 2003 from 2002 the average home in Columbia Heights should see a reduction in city property taxes. However, the City still receives 32% of our General Fund budget from state aids. With the significant state deficit, it can be anticipated that the state will cut back on aid to the city and that in future years we will look to cities to make up this aid cutback through increased property taxes. The City, for several years, has been at a hold-the-line budgeting concept, and each year has looked at City staffing and wherever feasible reduced staff and services. Because of this ongoing process of holding back on expenses, it is virtually impossible to make further reductions. Subsequently, the only alternative may be to pass the state aid cuts on to residents in the form of property taxes to cover basic services and inflation. The budget process is a major undertaking by City staff and the City Council that requires a great deal of work performed by all involved to bring the process to a successful conclusion. I extend my appreciation in this endeavor to all department directors and their staff, and a special thanks to Barb Kelzenberg and Sue Schmidtbauer for their time in compiling the budget and their extensive efforts to ensure the accuracy of the entire document. This is a very trying and exhausting endeavor, and their extensive efforts are greatly appreciated. Page 1-12 2003 REVENUE BY SOURC ALL FUNDS Allocations $80,000 Net Sales - Liquor $1,694,714 Transfers In & Non Rev Receipts $3,103,161 Sales & Related Charges $4,191,669 Miscellaneous $1,380,395 Charges for Services $454,400 Taxes $4,817,984 Debt Service Funds and HRA $1,099,083 Licenses & Permits $305,320 Inter- governmental $3,391,564 Fines & Forfeits $105,000 Page 1-13 2003 ALL BUDGETARY FUNDS EXPENDITURES BY FUNCTIONAL AREA Administration $921,292 Recreation $680,519 Public Works $6,884,3O5 Police $2,927,O23 Liquor $1,169,547 Debt Service $2,412,822 Community Development $1,2O6,8OO Finance ~1,204,437 GFire $1,187,958 eneral Government $2,464,408 _Library $676,456 Page 1-14 2003 All Budgetary Funds Expenditures by Classification Capital Outlay $8,658,813 Contingencies & Transfers $3,OO4,892 Personal Services $8,484,218 Other Services Charges $3,988,650 Supplies $9,680,495 Page 1-15 Sources of General Fund, Library Fund and EDA Revenue 2O03 BUDGET Other $619,820 Transfers $485,888 Charge for Services $454,400 Inter- governmental $2,927,982 Taxes $4,817,984 Page 1-16 2003 GENERAL FUND AND LIBRARY FUND EXPENDITURES Expenditures by Classification Capital Outlay 1.9% Other Services & Charges 19.4% ! I I I I Supplies 5.8% Contingencies & Transfers 6.0% Personal Services 67.0% Page 1-17 Major Expenditure Increases 2002 2003 Increase/Decrease Budget Budget from 2002 Police 2,499,952 2,786,587 286,635 Parks 654,215 751,437 97,222 Transfers 400,000 480,000 80,000 Fire 843,223 916,572 73,349 Library 609,402 676,456 67,054 Civil Defense 33,836 84,973 51,137 Finance 606,272 643,973 37,701 Administration & 206,434 224,417 17,983 General Recognition/Special 52,100 71,368 19,268 Events General Government 142,216 158,546 16,330 Building Murzyn Hall 235,172 249,022 13,850 Streets 681,712 695,369 13,657 Page 1-18 CLASS RATE PERCENTAGES BY REAL PROPERTY TYPE TAXES PAYABLE 1997, 1998, 1999, 2000, 2001, 2002 and 2003 Real Property Payable Payable Payable Payable Payable Payable Description 1997 1998 1999 2000 and 2001 2002 2003 Class Class Class Class Rate Class Class Rate Rate Rate Rate Rate Residential homestead First $72,000 1.00% Over $72,000 2.00% First $75,000 1.00% 1.00% Over $75,000 1.85% 1.70% First $76,000 1.00% 1.00% $76,000 - $500,000 1.65% 1.00% 1.00% Over $500,000 1.25% 1.25% Commercial-Industrial and Public Utility First $100,000 Over $100,000 First $150,000 2.70% 2.45% 2.40% 1.50% 1.50% Over $150,000 4.00% 3.50% 3.40% 2.00% 2.00% Residential non-homestead, 1 unit First $72,000 2.30% Over $72,000 2.30% First $75,000 1.90% 1.25% Over $75,000 2.10% 1.70% First $76,000 1.20% 1.00% $76,000 - $500,000 1.65% 1.00% 1.00% Over $500,000 1.25% 1.25% Residential non-homestead, 2-3 units and undeveloped land 2.30% 2.10% 1.70% 1.65% 1.50% 1.25% Residential non-homestead 4 or more units 3.40% 2.90% 2.50% 2.40% 1.80% 1.50% Low Income 1.00% 0.90% 1.00% Page 1-19 '~0 o .c: Changes in Tax Levy 2001 - 2003 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 o ~--- ~---- ~ 2001 2002 2003 General Fund 2,958,4904,095,5274,243,830 Library Fund __ 547,767 591,588 433,585 EDA Fund 119,295 137,015 140,569 Page 1-22 WHERE YOUR PROPERTY TAXES GO Payable 2002 County 27% Miscellaneous 5% City 38% School 3O% WHERE YOUR PROPERTY TAXES GO Payable 2003 County 32% Miscellaneous City 7% 42% School 19% Page 1-23 WHAT WILL $30 A MONTH BUY? (Based on 2003 Property Tax) $30 a Month Buys Quality and Quantity in the City of Columbia Heights Telephone Dinner for 4 Garbage Pick-Up Columbia Heights City Services Basic Cable TV Parks Streets Police Fire Library The average home in Columbia Heights pays $30 per month in city real estate taxes. The average Columbia Heights' resident will spend $30 every month on various services and pleasures, i.e., pizza and pop for four at a local restaurant, basic cable TV for the family, monthly phone services, etc. The best value for your money in Columbia Heights is still all of the city services that $30 of your monthly property tax will buy! (Based on a $94,300 home in Columbia Heights.) CITYSERV Page 1-24