Another Budget

For the eleventh year, transmitted herewith is my City Manager’s Proposed Budget. The 2011 budget has been prepared in accordance with state budget laws, city policies and practices.
For example, last year the average home in the City of Lake Mills had a fair market value of approximately $175,600, and the homeowner would pay $3,445.44 in property taxes. The City’s portion of that tax bill was $1,247.63 minus the credit equals $1,184.47 Spread over 12 months, the projected cost to the owner of a $175,600 home was $98.70 per month in 2010 for municipal services. The 2011 budget is projected to increase the property tax levy on a $175,000 home to $1,310.02 minus the credit equals $1,247 or $103.91 per month. There are households in Lake Mills that pay about the same amount for cable TV, phone and internet service as they pay to the City for providing, police, fire, ambulance, financial, legislative, legal services, parks, cemetery, streets, animal control, library, records management, bookkeeping, and a host of other services. Last year, a home with a gross value of $150,098 would have an equalized value of $175,000. The same home this year will have an approximate value of $169,986. If you take $169,986 times the equalized tax rate of .00749 – you get a tax bill of $1,273.20 minus the credits results in a tax bill of $1,211.
The City’s General Fund Budget is proposed to be $4,619,900, up from $4,533,100. This is a 1.92% increase. The General Fund Debt Service was 1,059,100 and is increasing to $1,144,400. This is an 8.1% increase.
The City’s equalized assessed value for 2010 without TID is $459,000,000 and 2009 was $472,688,700 without TID. That is a 3% decrease over 2009. The equalized assessed value for 2008 with TID was $487,638,100 and the City’s equalized assessed value for 2009 was $490,186,900 and 2010 is $475,600,000. The state levy cap this year is 3% or net new construction, whichever is greater. Net new construction for this year is 1.34%. The Levy Limit Law allows for the carrying forward of unused levy from previous years. The city has $299,189 of used levy from available for 2010.
The proposed General Fund budget subject to the cap is at 1.92% - a decrease from last year’s 1.99%. The state determines an equalization ratio for balancing assessed values to market value and across jurisdictions statewide. Last year our ratio was 85.77% and this year I estimate it to be 88.3%. The State needs to do this so that school districts and other multi-jurisdictional agencies can fairly tax across jurisdictional lines and debt ratios can be determined.
The City Manager’s proposed equalized tax rate is $7.49 per thousand dollars of assessed value and is a 5.35% increase in the rate from the previous year. The gross rate is $8.49 and is a 2.34% increase in the rate from the previous year. This is an increase in total levy of $81,100 from the previous year. The City’s rate increase will raise the amount the City collects annually on a $175,000 home by $68.03.
The State Expenditure Restraint Program is based on the information being generated in this document. The State Expenditure Restraint formula is based on inflation and has generally been allowing the City about a 4.0% increase in these categories to qualify for an additional $110,000 in State aid. The State is allowing the City 3% increase this year and the city appears to be well under the line (1.92%) to qualify for expenditure restraint funds.
The Utility Budgets are run like businesses with cash flows and balances. I have not included balances or reserves in the budgets to try to plan around maintenance and capital requirements. The Utility Funds either have positive cash flows or have more than adequate balances to cover any shortfall in current year revenues and no contingency funds.
The City Manager initiates the budget process. The City Manager sets the expenditures of the budget and establishes the revenue estimates to finance the budget. The City Council may increase, decrease, or delete individual items in the proposed budget except for Debt Service expenditures. The City Manager must propose, and the City Council must adopt, a balanced budget.