The Coon Rapids City Council wants to cut general fund expenditures proposed in the 2014 budget.
In the staff proposed budget, the general fund expenditures were set at $27,773.985 for next year, which included $650,000 in transfers out to the retirement insurance and compensated absences funds.
That figure is 3.9 percent higher than the 2013 amended budget of $26,718,613.
At its budget work session Aug. 21, the council directed staff to reduce the general fund spending increase to something less than 3 percent.
According to Finance Director Sharon Legg, a drop of 1 percent from a 3.9 to 2.9 percent increase would translate into a $277,000 reduction in spending.
But that does not mean the proposed 2014 tax levy will be reduced by the amount that expenditures are cut, if at all, Legg said.
However, the proposed levy has only a small increase, $35,716, over the 2013 levy from $18,302,200 to $18,33,916.
That’s largely because for the first time since 2004, Coon Rapids is receiving state Local Government Aid, a total of $934,354.
The impact of the proposed tax levy on six benchmark single-family homes and three commercial/industrial properties in Coon Rapids that the city has for decades tracked for tax purposes is that all but one will see a decrease in the city’s tax share.
The one exception is a single-family home on which the taxable market value went up 3.7 percent from 2013 to 2014 for tax purposes.
Staff will present its recommendation on general fund spending cuts to the council at its Tuesday, Sept. 3 meeting.
At that time the council will adopt a preliminary tax levy and budget for 2014.
Final action on the tax levy and budget will be taken by the council in December.
Under state law, the final tax levy cannot be higher than the preliminary levy that the council will approve next month, but it can be unchanged or lower.
In the proposed general fund budget presented to the council, public safety has a 3.3 percent increase ($13,177,339 to $13,613,358), community services a 6.6 percent increase ($445,391 to $474,586), community development a 3.2 percent increase ($1,800,957 to $1,858,265), maintenance services a .9 percent increase ($6,805,571 to $6,866,217) and general government a 1.5 percent decrease ($3,871,322 to $3,811,559).
There is also $500,000 set aside for contingencies, plus $650,000 transfers.
When all city funds are factored in – special revenue, debt service, capital projects, enterprise and internal service as well as the general fund – then the proposed spending jumps from $49,373,954 to $53,914,160.
According to City Manager Steve Gatlin, the most significant increase outside the general fund is $1,994,064 (from $3,017,146 to $5,011,210) in the capital projects fund, of which $615,831 has been earmarked for city hall improvements, such as boiler/rooftop units, remodeling of restrooms and security improvements, as well as $585,000 for a fire truck in the equipment certificate fund, an increase of $389,924 and $313,927 for various park and sidewalk improvements.
The Local Government Aid has helped to boost anticipated general fund revenues by 4.6 percent or $1,235,541 from 2013 to 2014, although it has been offset to some extent by a $592,106 drop in investment income because of continued low interest rates which impacted all funds, Gatlin wrote in the budget document.
At this time, general fund revenues are $885,031 over expenditures, but with transfers in and out, there will be an increase of $280,531 in fund balance.
That would produce an estimated fund balance unassigned and designate for working capital as of Dec. 31, 2014 at $12,864,653, which is 45 percent of the 2015 expenditures and transfers out, according to Gatlin.
The city’s external auditor recommends a fund balance of more than 40 percent of the following year’s projected expenditures for cash flow purposes early in the year because the first property tax and Local Government Aid payments are not received by the city until June of each year.
Peter Bodley is at [email protected]