The CITY of EDINA Budget September1, 2015 Council Meeting

The CITY of EDINA Agenda Definitions Process and Timeline Budget Challenges HRA Levy Tax Comparisons 2

The CITY of EDINA Definitions General Fund: The main operating fund of the City’s government functions. Includes about $37M of revenues and expenditures. Governmental Funds: In addition to the general fund, the City has a debt service fund, construction fund, HRA fund, and several special revenue funds. Annual expenditures are about $60-$70M. Enterprise Funds: Used to account for “business-type” activities. Total annual expenses equal about $40M Consolidated Budget: Approximately $100M in total revenues and expenditures/expenses and includes all City and HRA funds, governmental and enterprise. 3

The CITY of EDINA Definitions 4 Edina Consolidated Budget $100M Governmental Funds $60-$70M General Fund $37M Debt Service Fund $7M Construction Fund $15M Special Revenue Funds, including HRA Enterprise Funds $40M Utility Fund $16M Liquor Fund $12M Park Enterprises $11M

The CITY of EDINA Definitions Estimated Market Value: One way to measure “tax base”. The City Assessor estimates values for each property in Edina. The total EMV of all properties in Edina is around $10B. Tax Capacity: A second way to measure “tax base”. Tax capacity is a uniquely Minnesotan way of calculating property taxes. Tax capacity uses EMV and property classifications so that different types of property are taxed differently. 5

The CITY of EDINA Definitions Total City Property Tax Levy or Levies: Often described as one, but the City actually has several different levies organized by purpose. General Fund Property Tax Levy: The dollar amount that the City needs from property taxes to pay for General Fund expenditures. About $25M of the $37M General Fund budget (68%). Debt Levies: Edina has several debt levies that go towards principal and interest payments on some of the City’s debt. The City also has debt that is paid by revenue other than property taxes, like our utility fund debt and special assessment debt. Other Levies: Arts & culture, equipment, and HRA are examples. 6

The CITY of EDINA Agenda Definitions Process and Timeline Budget Challenges HRA Levy Tax Comparisons 7

The CITY of EDINA Work Plan Drives Budget 8 Work Plan Themes Council Work Plan Goals Staff Budget Staff

The CITY of EDINA Biennial Budget Process 9 Even Year: CIP Focus First year of biennial budget Update operating budget for odd year Review CIP in detail Odd Year: Operating Budget Focus Second year of biennial budget Plan for next biennial budget

The CITY of EDINA Budget Timeline April 21City Manager presents proposed work plan to Council May 15Department Heads send budget requests to Finance July 8ELT reviews budget draft July 21City Manager presents budget draft to Council Sept. 1City Council adopts preliminary 2016 property tax levy and budget Sept. 16City Council adopts new water/sewer connection charges and utility rates based on the rate study discussed on July 7 Dec. 1Public Hearing & option to adopt 2016 final property tax levy and budget. Dec. 15Deadline to adopt final 2016 property tax levy and budget 10

The CITY of EDINA Agenda Definitions Process and Timeline Budget Challenges HRA Levy Tax Comparisons 11

The CITY of EDINA Budget Challenges Minimum wage increase affects many positions in Edina. 11.5% rate cap for health insurance premiums. FT employee count increased by 1 since last budget cycle, but 4.2 increase in the General Fund is offset by a 3.2 decrease elsewhere. Edinborough & Centennial Lakes reserve balances are projected to decrease. Liquor profits are lower than past years budgeted transfer was $1,800,100 but actual was $1,035, budgeted transfer is $1,850,100 but actual will be less than $1M - Draft 2016 budgeted transfer is about $1.15M less than 2015 budget 12

The CITY of EDINA Budget Challenges 13

The CITY of EDINA Budget Challenges 2014 General Fund unassigned fund balance was $708,294. This is lower than in the past, which affects our CIP funding. Services and expectations are increasing for all departments Preliminary budget would result in about a 7.07% property tax levy increase (City portion) – new staff requests not included (5 total FT staff requests) – GIS not included – Weber Woods and many work plan items also not included – Street sweeping expenses are being moved to Storm Utility fund Council and staff have identified many possibilities, but priorities may need to be adjusted. 14

The CITY of EDINA Budget Summary 15

The CITY of EDINA Work Plan Themes Focused Redevelopment - PW site decision with community space + financing by 3/1/16 - Hwy 100 lid study completed by 12/31/17 - Fred Richards plan + financing by 12/31/16 Future Planning - Comprehensive plan draft complete by 12/31/17 Intergovernmental Relations 16

The CITY of EDINA Work Plan Themes Transportation & Infrastructure - Complete Grandview transportation study & plan by 12/31/17 - Complete construction of street or woonerf - Start construction on WTP #5 in Study S’dale sanitary capacity & implement plan by Convert debt retirement in 2017 into CIP funding - Consider increasing franchise fees for streets by 12/31/16 Enterprise Stability - Complete business plans for each enterprise 17

The CITY of EDINA Levy Drivers 18

The CITY of EDINA Agenda Definitions Process and Timeline Budget Challenges HRA Levy Tax Comparisons 19

The CITY of EDINA HRA Levy for 2017 State law allows an HRA to levy up to % the previous year’s taxable market value of all property in the City. This limit would produce tax revenue of about $1.8M in Edina. An HRA raises its own levy separate from the City, and the HRA levy is not subject to levy limits (other than above) Levies collected by an HRA must be used only for purposes listed in the HRA Act. A $95,000 HRA levy in Edina would be $4/year for a median single family home ($457,300) Sources: LMC Handbook for Cities, Edina Finance Dept., & Edina Assessing Division 20

The CITY of EDINA Agenda Definitions Process and Timeline Budget Challenges HRA Levy Tax Comparisons 21

The CITY of EDINA Estimated Market Value (EMV) 22 Source: City Assessor’s Office and Hennepin County

The CITY of EDINA Annual Property Taxes 23 Source: LMC Property Tax Calculator 7/20/15 & City Assessor’s Office

The CITY of EDINA Annual Property Taxes 24 Source: LMC Property Tax Calculator 7/20/15, Bureau of Labor Statistics 8/13/15 & City Assessor’s Office

The CITY of EDINA Property Tax Distribution 2015 Taxes on a Homestead property valued at $457,300 in the Edina school district. 25

The CITY of EDINA 2016 Estimated Levy Impacts In 2015 the median home pays about $100 per month in property taxes to fund all of the City provided services. Tax capacity is increasing in Edina by about 6% for taxes payable in The median value single family home is now $457,300. If the budget includes an 7.07% property tax increase, the effect on the $457,300 single family home would be about: - about 6% increase in City property taxes. - about $71 increase per year, or about $6 per month. - this home would pay about $106 per month in 2016 City property taxes. 26

The CITY of EDINA Governmental Revenue Per Capita 27 The total revenue approach: 2013 governmental revenue per capita 1Plymouth $ Minnetonka $ Eden Prairie $ Richfield $ Edina $ 1, Hopkins $ 1, Maple Grove $ 1, St. Louis Park $ 1, Bloomington $ 1, Golden Valley $ 1, Minneapolis $ 2, Source: MN State Auditor website 7/7/15

The CITY of EDINA Property Tax Revenue Per Capita The tax per capita approach: 2013 Property tax revenue per capita 1Plymouth $ Maple Grove $ Richfield $ Eden Prairie $ Bloomington $ St. Louis Park $ Edina $ Hopkins $ Minnetonka $ Minneapolis $ Golden Valley $ Source: MN State Auditor website 7/7/

The CITY of EDINA City Property Taxes The property buyer approach: 2014 estimated city taxes on $400,000 house 1Edina* $ 1,14112Burnsville* $ 1,861 2Plymouth* $ 1,20213St. Louis Park $ 1,937 3Eden Prairie* $ 1,42414Bloomington* $ 1,941 4Shoreview* $ 1,49515Apple Valley* $ 1,995 5Minnetonka* $ 1,55916Maplewood* $ 2,008 6Eagan* $ 1,59317Savage* $ 2,269 7Woodbury* $ 1,62218Golden Valley $ 2,466 8Lakeville* $ 1,65019Hopkins $ 2,496 9Shakopee* $ 1,67320Richfield $ 2,571 10Maple Grove* $ 1,68521Minneapolis $ 2,976 11Inver Grove Heights* $ 1,859 Source: LMC Property Tax calculator 7/7/15 *City is a member of the MLC 29