HomeMy WebLinkAboutSP November 21, 1991
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CITY of ANDOVER
Special City Council Meeting - November 21, 1991
7:30 P.M. Call to Order
1. Public Hearing/1992 Tax Levy and Budget
2.
3. Adjournment
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CITY OF ANDOVER
REQUEST FOR COUNCIL ACfION
ITEM
NO.
Public Budget Hearing
DATE November 21, 1991
ORIGINATING DEPARTMENT
Finance
Howard D. Koolick \-K
Finance Director
BY:
AGENDA SECTION
NO.
REQUEST
The Andover City Council has scheduled a public hearing to review
and receive public comment regarding the 1992 budget and tax levy.
Upon concluding discussion and public input, the Andover City
Council is requested to adopt resolutions approving the budget
and certifying the 1992 tax levy. Should City Council choose to
reconvene the hearing to allow changes in the budget or levy, that
date will need to be announced.
BACKGROUND
Attached is a copy of the proposed 1992 summary budget. This is
the information being given to residents who request copies of the
budget. I have also included a copy of the memo dated October
30, 1991 which gave information regarding the 1992 tax levy and
budget.
During the public hearing we will need to discuss both the
proposed tax levy and the 1992 budget. Please note that an
error was made in the proposed levy which overstated the proposed
levy by $38,841. The resolution certifying the final tax levy
includes the corrected amounts.
I will be making a presentation at the meeting which will
summarize the summary budget. I will give you a copy of the
outline of this presentation before the meeting starts.
If you have any questions or would like to see additional
information presented, please feel free to call me at City Hall.
COUNCIL ACTION
MOTION BY
TO
SECOND BY
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CITY OF ANDOVER
COUNTY OF ANOKA
STATE OF MINNESOTA
RES. NO. R -91
A RESOLUTION ESTABLISHING THE 1992 LEVY TO BE CERTIFIED TO THE
COUNTY DEPARTMENT OF PROPERTY TAX ADMINISTRATION BY THE CITY OF
ANDOVER.
THE CITY COUNCIL OF THE CITY OF ANDOVER HEREBY RESOLVES:
The total non-bonded indebtedness levy is hereby set at
$1,428,203 . Of this levy, $1,423,203 is for general
purposes and is levied against all taxable property within the
City of Andover. The remaining $5,000 is levied against the
properties located within the Lower Rum River watershed Management
Organization Taxing District for the City of Andover's share of
costs for this organization.
The total bonded indebtedness levy is hereby set at
to fund the following indebtedness:
$508,446
1987 Certificates of Indebtedness
1989 Certificates of Indebtedness
1990 Certificates of Indebtedness
1991 Fire Station Bonds
$36,807
$27,466
$28,766
$415,407
The levy for the 1990 Certificates of Indebtedness has been
decreased by $37,630 since the City intends to fund this amount of
the debt from local sources.
THE CITY COUNCIL OF THE CITY OF ANDOVER FURTHER RESOLVES that the
scheduled levy of $23,904 for the FHA/G.O. Improvement Bonds
of 1977 is hereby cancelled for 1991.
Adopted by the City Council of the City of Andover on this
day of November , 1991.
21st
CITY OF ANDOVER
Kenneth D. Orttel - Mayor
ATTEST:
victoria Volk - City Clerk
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CITY OF ANDOVER
COUNTY OF ANORA
STATE OF MINNESOTA
RES. NO. R -91
A RESOLUTION ESTABLISHING THE CITY OF ANDOVER 1992 GENERAL FUND,
DEBT SERVICE FUNDS AND PUBLIC IMPROVEMENT REVOLVING FUND BUDGETS.
WHEREAS, the preparation and adoption of operating budgets
is recognized as sound financial practice; and
WHEREAS, the City of Andover receives significant financial
support from its residents through the payment of property taxes:
and
WHEREAS, the City of Andover has the responsibility to
appropriately and efficiently manage the public's funds; and
WHEREAS, the City of Andover complied with the State of
Minnesota truth in taxation requirements including soliciting
public input through a public hearing; and
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WHEREAS, the City Council of the City of Andover adopted
Resolution Number R -91 establishing the 1992 tax levy.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the
City of Andover hereby establishes the 1992 General Fund, Debt
Service Funds and Permanent Improvement Revolving Fund budgets as
follows:
Debt
General Service
Fund Funds
REVENUES:
Taxes $ 1,113,714 $ 898,949
Licenses and Permits 259,298
Intergovernmental 644,326 254,797
Charges for Services 80,200
Fines and Forfeitures 40,000
Special Assessments 1,000 1,667,570
Miscellaneous 82,700 581,650
Bond Proceeds 1,500,000
Transfers from
Other Funds 93,300 37,630
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Permanent
Improvement
Revolving
Fund
$ 119,000
55,000
$ 174,000
,J EXPENDITURES:
General Government $ 608,307
Public safety 850,791
Public Works 436,462
Parks and Recreation 230,428
Recycling 36,811
Economic Development 17,994
Other Financing Uses 133,745
Debt Service $ 3,031,048
Total Expenditures $ 2,314,538 $ 3,031,048
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$ 11,298
10,700
$ 21,998
Adopted by the city Council of the City of Andover on this 21st
day of November , 1991.
CITY OF ANDOVER
ATTEST:
Kenneth D. Orttel, Mayor
victoria volk, City Clerk
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CITY of ANDOVER
1685 CROSSTOWN BOULEVARD N.w. . ANDOVER. MINNESOTA 55304 . (612) 755-5100
MEMORANDUM
Honorable Mayor and city Councilmembers
TO:
COPIES TO:
FROM:
DATE:
Howard D. Koolick, Finance Director
october 30, 1991
REFERENCE: Information on 1992 Tax Levy and Budget
According to the County's Department of property Tax
Administration, the truth in taxation notices will be
mailed to property owners on November 5, 1991. As you are
aware, the notice will show a 64.5% increase in the proposed
tax levy for the city. The notice will also show a weighted
average percentage increase. This amount is the increase
that taxpayers in the City will see if there are no changes
in valuations, no new homesteads and no changes in certified
levies by the city, County or school districts. For
, residents in school district #11 the weighted average
"~ increase will be 7.2% while residents in district #15 will
see a 6.6% increase.
In anticipation of questions from Andover residents, the
following information is being provided relating to
Andover's 1992 budget and tax levy.
EXECUTIVE SUMMARY
The notices being sent by the county are mandated by state
law and the form is set by the state. The weighted average
increase shown is a misleading figure since changes in the
tax law will tend to increase taxes on lower and mid-priced
residential property faster than on higher-priced
residential, rental and commercial-industrial property.
Depending on which school district a property is in, 1992
taxes can be between a slight decrease and an increase in
excess of 18%.
The city levies taxes for General Fund operations and debt
service. While the City increased its tax levy 33.13% (from
$1,484,070 to $1,975,490), the majority of the increase is
to pay the principal and interest on the 1991 fire bonds.
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TAX LEVY
The tax levy set by the City consists of two components.
The first, a General Levy, are taxes levied to cover general
operations financed through the City's General Fund. The
other component of the tax levy is the debt levy which are
taxes levied to make debt payments.
Each part of the tax levy is decreased by aids paid by the
state and fiscal disparity distributions to arrive at the
portion of the tax levy actually paid by residents. The
following is a summary of the levy and deductions for both
general and debt for 1991 and 1992:
1991 Tax Levy 1992 Tax Levy
General Debt General Debt
Certified Levy $1,364,215 $119,855 $1,467,044 $508,446
Deduction from Levy:
Homestead and Ag.
Credit Aid 323,611 28,431 298,388 103,415
Equalization Aid 48,336 4,247 38,936 13,494
Fiscal Disp. Dist. 278,954 24,508 181,873 63,034
\ Tax Levy $ 713,314 $ 62,669 $ 947,847 $328,503
'-~ Divided by Local
Tax Base 7,103,414 7,103,414 7,103,423 7,103,423
Tax Rate 10.042% 0.882% 13.344% 4.625%
Several aspects of the above data merit further discussion.
1. Total certified levy increased from $1,484,070 to
$1,975,490. This 33.13% increase is composed of
the following:
Amount
Percentage
of Total
Increase
Increase in General Levy
to compensate for lost
Local Government Aid
Increase in Debt Levy
for Fire Department Bonds
Decrease in Debt Levy
for decrease in annual
payments
Total Increase
$ 102,829
$ 415,407
20.92%
84.54%
$ (26,816)
$ 491,420
(5.46) %
100.00%
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2. Certified general levy increased only 7.5% (from
$1,364,215 to $1,467,044), however, the tax levy
and rate show an increase of 32.9%. The reason for
this difference is that with higher debt levies,
the debt portion of the levy gets more of the
deductions since they are split based on the
percentage of the certified levy for each
component.
3. Local tax base shows no increase due to rate
changes contained in the property tax bill passed
by the state earlier this year. The following is a
summary of the "old" and "new" rate structure:
Class Rates for property
Taxes payable in:
1991
1992
1993
Residential homestead:
First $68,000 of value
$68,000 to $72,000
$72,000 to $110,000
$110,000 to 115,000
Amount over $115,000
1. 0%
2.0%
2.0%
3.0%
3.0%
1. 0%
1. 0%
2.0%
2.0%
2.5%
1. 0%
1. 0%
2.0%
2.0%
2.0%
Rental property:
1 to 3 units
4 or more units
3.0%
3.6%
2.8%
3.5%
2.5%
3.4%
Commercial-Industrial
First $100,000 of value
Amount over $100,000
3.2%
4.95%
3.1%
4.75%
3.0%
4.7%
Vacant Land
2.3%
2.2%
N/A
The effect of decreasing the rates on higher valued
residential, rental and commercial-industrial property is
transferring a greater share of taxes to mid-priced homes
(those homes between $72,000 and $110,000). Any growth in
the City'S tax base from new construction is offset by the
loss from the decrease in rates.
TAX CAPACITIES
The following table shows a comparison of 1991 and 1992 net
tax capacity for a variety of residential properties. This
comparison shows that while the net tax capacity on all
residential property over $68,000 has dropped, the decreases
are much more significant once the property value exceeds
$110,000.
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Property Net Tax capaci ty
Value 1991 1992 Decrease
$ 65,000 $ 650 $ 650 $ -0-
$ 75,000 $ 720 $ 700 $ 20
$ 80,000 $ 920 $ 880 $ 40
$ 90,000 $1,120 $1,080 $ 40
$100,000 $1,320 $1,280 $ 40
$110,000 $1,520 $1,480 $ 40
$120,000 $1,820 $1,705 $ 115
$130,000 $2,120 $1,955 $ 165
$140,000 $2,420 $2,205 $ 215
$150,000 $2,720 $2,455 $ 265
$200,000 $4,220 $3,705 $ 515
PROPOSED CITY TAX LEVY
The City increased actual
$1,484,070 to $1,975,490.
effect of this increase on
properties.
dollars levied by 33.13% from
The following table shows the
a variety of residential
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property
Value
$ 65,000
$ 75,000
$ 80,000
$ 90,000
$100,000
$110,000
$120,000
$130,000
$140,000
$150,000
$200,000
1992 proposed Levy
General Debt
$ 86.74 $ 30.06
93.41 32.37
117.42 40.70
144.12 49.95
170.80 59.20
197.50 68.45
227.52 78.86
260.87 90.42
294.25 101.98
327.60 113.54
494.40 171.35
Increase
General
$ 21.47 $
21.10
25.03
31.65
38.24
44.86
44.76
47.97
51.23
54.45
70.63
Debt
24.33
26.02
32.58
40.07
47.56
55.04
62.81
71.72
80.63
89.54
134.13
Percentage
Increase
64.50%
59.93
57.34
58.62
59.50
60.16
54.09
51. 69
49.88
48.46
44.41
The above data clearly shows that the majority of the increase is a
result of the increase in the debt levy caused by the fire bonds.
The increase in the general levy results from levying for the loss
of local government aid and the decreased aids as explained earlier.
The data also shows that the lower valued properties will bear a
larger burden of the increase.
ESTIMATED TAXES
As was mentioned earlier, the notice will give a weighted average
increase. In order to give you a more concrete idea of what the
proposed tax increases combined with the changes in rates will do
for a specific property, the following able shows estimated 1992
taxes and the increase or decrease from 1991.
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) property Located in School District ill
within Coon Creek outside Coon Creek
Property watershed Dist. watershed Dist. School District U5
Value 1992 Increase 1992 Increase 1992 Increase
$ 65,000 $ 705 $ 85 $ 703 $ 84 $ 718 $ 115
$ 70,000 759 72 757 72 774 106
$ 80,000 954 76 951 75 972 119
$ 90,000 1,171 103 1,167 101 1,193 154
$100,000 1,388 129 1,383 127 1,414 190
$110,000 1,605 155 1,600 154 1,635 249
$120,000 1,849 113 1,843 111 1,884 196
$130,000 2,120 97 2,113 96 2,160 194
$140,000 2,292 83 2,383 80 2,437 193
$150,000 2,663 68 2,653 65 2,713 191
$200,000 4,018 - 8 4,005 - 11 4,094 181
As the data above shows, depending on the value of the
property, the increase can range from a decrease in taxes to
an increase in excess of 18%. While the weighted average
increase shown is around seven percent, the actual increase
on the property will be more if the property is valued
under $115,000. Conversely, those properties valued over
$115,000 will see increases lower than the weighted average,
except in School District *15 where the increase is high
enough to offset the a larger portion of the rate decrease.
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1992 BUDGET
The 1992 General Fund budget shows an increase of $110,336.
On the revenue side, the increase results from the following:
Increase in tax levy
Less Estimated increase in aids
reducing tax levy
Inclusion of Comm. Development
Block Grant
Increase Local Revenue Sources:
Building Department Revenues
Establishment of Investment
Adminstration Fee for all
other city Funds
Increase in various fees
Decrease in Local Revenue Sources:
Court Fines
Transfer from the Admin. Trust
Miscellaneous increases/decreases
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102,829
-38,841
47,723
32,813
24,600
4,575
19,000
Fund 26,700
-17,663
110,336
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accomplished by increasing local revenue sources and the tax
levy to offset decreases in some local revenue sources.
The General Fund expenditure budget also shows an increase of
$110,336. The increase is composed primarily of the
following:
Additional costs required to
operate and maintain new fire
stations
Additional costs required to
operate larger fire department
Community Development Block Grant
budget included in General Fund
Estimated cost of election in 1992
Increase in police costs charged by
Anoka County
Increase in assessing costs charged
by Anoka County
Operation of 4 new traffic signals
Elimination of seal coating and
cracksealing programs
19,510
32,153
47,423
13,586
15,150
6,789
5,100
-31,200
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In addition to the increases as shown ahove, the City is
required to meet several state and federal mandates including
the new social security withholding, implementation and
maintenance of comparable worth relationships and the
required development of Kelsey Park to name a few.
The City, by increasing local revenues, has been able to
adopt a balanced and realistic budget without major
sacrifices in programs or services.
prior to the November 21, 1991 public hearing on the budget
and tax levy, you will receive a more detailed budget and
explanation of the budget process and document.
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CITY OF ANDOVER
PROPOSED 1992 SUMMARY BUDGET
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CITY of ANDOVER
1685 CROSSTOWN BOULEVARD NW. . ANDOVER, MINNESOTA 55304 . (612) 755-5100
BUDGET TRANSMITTAL LETTER
November 12, 1991
Honorable Mayor and city Council
and Residents of the City of Andover:
Submitted herewith is the proposed 1992 budget for the City of
Andover. The budget represents the blueprint of where the
City intends to go financially and programatically during
1992.
This document, the Summary Budget, is intended to summarize,
for the Mayor, City Council, residents and other interested
persons, how the City of Andover has allocated its resources
for 1992, and the principles and forces which guided that
allocation.
The Summary Budget is divided into the these sections:
* Executive Summary
* Introduction to the City of Andover
* 1992 Goals and Objectives
* Operating Budgets
* Tax Levy
* Prospects for the Future
* Appendix
The Introduction section provides general background
information about the City, its structure and services. The
Operating Budgets section includes information about the
revenues, expenditures and important variables affecting the
1992 proposed budget. The Tax Levy section provides
information relating to the proposed tax levy for 1992. The
final section provides attempts to anticipate those things
which will occur in the future having an affect on the City.
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The City
individual
department.
also prepares a more detailed budget showing
revenue items and expenditure items within each
Copies of this budget are available upon request.
Questions or comments from readers are welcomed and should be
directed to the Finance Director.
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TABLE OF CONTENTS
EXECUTIVE SUMMARY
page
1
INTRODUCTION TO THE CITY OF ANDOVER
Background
Budget preparation
Services Provided
4
4
5
6
GOALS AND OBJECTIVES
OPERATING BUDGETS
Revenues
Expenditures
General Fund
Revenues
Expenditures
Debt Service Funds
Revenues
Expenditures
Permanent Improvement Revolving Fund
Water and Sewer Enterprise Funds
8
9
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10
12
14
15
16
17
17
17
TAX LEVY
PROSPECTS FOR THE FUTURE
Building Trends
Relationship with State of Minnesota
Debt
20
20
20
APPENDIX
General Fund Revenue by Source 22
General Fund Expenditures by Department 23
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EXECUTIVE SUMMARY
The Executive Summary provides an overview of this Summary
Budget document. More detailed information can be found in
the information that follows as well as the more detailed
budget which is available upon request.
The City of Andover operates under guidelines established in
Minnesota State Law. These guidelines govern all operations
of the City including the organization structure, the budget
process and tax levy authority to name a few. Under these
guidelines, the City provides the usual services associated
with a City and finances these services through a variety of
means.
Proposed operating budgets for 1992 are as follows:
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Revenues:
Taxes
Licenses and Permits
Intergovernmental
Charges for Services
Fines and Forfeitures
special Assessments
Miscellaneous
Bond Proceeds
Transfers from
Other Funds
Total Revenue
Expenditures:
General Government
Public Safety
Public Works
Parks and Recreation
Recycling
Other Financing Uses
Debt Service
Total Expenditures
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General
Fund
$ 1,113,714
259,298
644,326
80,200
40,000
1,000
82,700
93,300
$ 2,314,538
$ 608,307
850,791
436,462
230,428
36,811
151,739
$ 2,314,538
Debt
Service
Funds
$ 898,949
254,797
1,667,570
581,650
1,500,000
37,630
$ 4,940,596
$ 3,031,048
$ 3,031,048
Permanent
Improvement
Revolving
Fund
$ 119,000
55,000
$ 174,000
$ 11,298
10,700
$ 21,998
.~ General Fund Budget
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The General Fund proposed budget reflects an increase of
$110,336. The additional revenues required to maintain a
balanced budget include an increase in the tax levy ($63,988),
the inclusion of a budget for Community Development Block
Grant Funds ($47,723), increases in some local revenue sources
of totaling $61,988 which is offset by decreases in other
local sources of $63,363.
Additional expenditures in the General Fund include:
Increased costs for new
volunteer firefighters
and new station operations
Inclusion of a budget for Community
Development Block Grant Funds
Increased costs in the police
contract with Anoka County
Estimated election costs
Increased costs in the assessor's
contract with Anoka County
Increased number of traffic signals
$51,663
47,723
15,150
13,586
6,789
5,100
The above are partially offset by eliminating the seal coating
program and reducing the crack sealing program.
Debt Service Funds
The Debt Service Fund budget reflects a large decrease in
activity compared to prior years resulting from large
prepayments of special assessments and smaller bond maturities
than previous years. Expenditures are primarily the payment
of bond principal and interest and are subject to little
fluctuation. Revenues in this fund are primarily special
assessment payments which can vary greatly from year to year.
Permanent Improvement Revolving Fund
This fund accumulates resources for the construction of
various i~provements and acquisition of equipment. The
revenues 1n this fund result from assessments remaining on
four bond issues which were paid-off in 1990 and interest
earnings. The expenditures for 1992 include the acquisition
of minor election equipment and the replacement of minor and
fire department equipment.
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,,) Tax Levy
The city, after correction for a minor error and before
calculating state credits which reduce the share of the
property tax to be paid by property owners, proposes to
increase taxes $452,579. The vast majority of this increase
($415,407) relates to the Fire Bonds which were approved by
voters in 1990. The increase is so large since 1992 is the
first year taxes have been levied for these bonds.
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INTRODUCTION TO THE CITY OF ANDOVER
Background
The City of Andover was incorporated as a city on November 12,
1974. Previously known as Grow Township, the City is located
in Central Anoka County approximately 25 miles north of the
Twin Cities of Minneapolis and st. Paul.
The City operates under "Optional Plan A" form of government
as defined in the state of Minnesota statutes. The City
Council, composed of an elected mayor and four elected
councilmembers, exercise legislative authority and determine
all matters of policy. The City Council which will be serving
during 1992 is as follows:
Kenneth D. Orttel, Mayor
Donald Jacobson, Councilmember
John (Jack) McKelvey, Councilmember
Marjorie Perry, Councilmember
Todd Smith, Councilmember
The City
a City
to carry
Council, all serving in a part-time capacity, appoint
Administrator, various department heads and employees
out the day-to-day operations of the City.
Budget Preparation
The City maintains 37 accounting funds, each of which operates
as a separate accounting entity with its own assets,
liabilities, revenues and expenditures. Annual budgets are
adopted for the following funds:
* General Fund
* Debt Service Funds
* Permanent Improvement Revolving Fund
* Enterprise Funds
Annual budgets are not adopted for Capital Project Funds since
each project within a fund has its own, multi-year budget.
The City budgets on a calendar year basis in accordance with a
variety of state laws. These laws, known as truth in taxation
laws, require the City to meet deadlines as follows:
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* Prior to September 1st - The city must adopt a proposed
tax levy and budget.
* Between November 15th and December 20th - The City must
hold a public hearing on the proposed tax levy and
budget and adopt a final tax levy and budget. The
final tax levy cannot exceed the preliminary tax
levy.
* Prior to December 28th - The City must Certify to the
County the amount of the final tax levy.
Failure to meet these deadlines results in the City being held
to the amount of taxes levied in the prior year.
In order to meet the deadlines listed above, the budget
process begins in late spring as department heads begin
planning for the upcoming year. In late June or early July,
the City Council is presented a preliminary budget, which is
refined and amended until its adoption prior to September 1st.
Budgets for
year. Since
sewer user
completed in
laws.
the enterprise funds are completed later in the
these funds are financed totally by water and
fees and receive no tax revenue, they can be
late fall without affecting the truth in taxation
Services Provided
,,) The City of Andover is the provider of the normal services
associated with a city. These services can be broken down
into the following areas:
*
General government consisting
property assessment, building
elections.
of administration,
administration, and
* Public safety consisting of police and fire protection,
civil defense maintenance, animal control and
protective inspections.
* Public works consisting of street maintenance, snow and
ice removal, street sign maintenance, storm sewer
maintenance and weed control.
* Park and Recreation consisting of park maintenance and
development.
* Other services including recycling administration.
* Water and sewer service to a portion of the City.
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While the City provides these services, it is common for the
City to contract with Anoka County or a third party if such an
arrangement is cost effective while still providing the
desired level of service. Areas such as property assessment
and police protection are contracted for such a reason.
GOALS AND OBJECTIVES
During the budget process, the City Council, upon review of
the budget, adopted the following goals and objectives for
1992:
Goal #1 - Maintain the financial health of the- Ci ty of
Andove r .
Objectives
1. Maintain General Fund fund balance, as well as all
other fund balances, as required by the Fund Balance
Policy adopted by City Council on February 19, 1991.
2 .
Promote the use of tax
assessment debt financing
residential development.
increment and special
to encourage commercial and
3.
Determine a funding source for the
cover future costs of employee
retirements and begin funding these
severance fund to
resignations and
costs in 1993.
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Goal #2 - Provide efficient and high quality maintenance of
public infrastructure.
Objectives
1. Provide patching, repair and grading of roadways to
prevent deterioration and extend the street's life as
a part of normal maintenance.
2. Provide sealcoating, which is mostly cosmetic in
nature, to those roads where residents request this
service and are willing to be assessed for the cost.
3.
Remove snow and clear ice, with the use
and equipment only, to ensure the
properly maintained and driveable.
of Ci ty staff
roadways are
4 .
Acquire additional equipment considered necessary
the Public Works Superintendent to maintain
repair infrastructure on a regular basis.
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Goal *3 - Provide for the health and safety of the citizens
of the City of Andover
Objectives
1. Provide 32 hours of police coverage through the Anoka
County Sheriff's Office.
2. Provide fire protection and rescue service through the
Andover volunteer fire department and rescue squad
and encourage residents to become volunteers by
providing training, a stipend and contributions to a
pension plan.
3. Fund costs incurred for Andover
participate in the DARE program.
students to
4. Ensure residents and businesses a safe place to live
or work by providing building inspections and plan
review for all construction in the City of Andover.
Goal * 5 -
provide and maintain a
recreational areas for the
residents.
variety of
enjoyment
parks and
of Andover
Objectives
1. Develop Kelsey-Round Lake Park as a regional
outlined in the plan prepared by the City,
the use of federal grants and local funds.
park, as
through
2. Develop and improve neighborhood parks as recommended
by the Park and Recreation Commission.
3. Maintain parks and recreation areas to provide safe
and enjoyable areas for residents.
4. Replace worn out equipment, as considered necessary by
the Public Works Superintendent, required to maintain
City parks.
Goal *6 - Operate the City in accordance with all applicable
state and federal legislation.
Objectives
1. Implement and maintain comparable worth relationships
amongst employees.
7
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2. Conduct improvement projects in accordance with state
statute section 429.
3. Provide resources necessary to comply with a variety
of reporting, publication and operational laws.
Goal #7 - Provide the residents of Andover with high quality
service.
Objectives
1. Hire, develop and retain competent and professional
staff.
2. Use tax dollars to support only those operations that
do not unduly benefit private property or specific
groups. Services or expenditures incurred that do
not benefit the entire City, should be funded through
user fees.
3.
Provide
the use
official
information of interest to residents through
of the newsletter, cable television, the
newspaper and other means available.
These goals and objectives will provide the basis
decisionmaking during upcoming year.
for
OPERATING BUDGETS
Revenues
The City's major revenue sources include special assessments,
interest earnings, license and permit fees, tax levies and a
variety of state aids. The allowable use and amount of each
type of revenue is prescribed and limited as follows:
*
Special assessments are used solely for the payment of
debt for which the assessments are pledged.
, Assessments are levied against property benefitted by
an improvement such as street construction, water and
sewer installation and storm drainage construction.
Prior to levying an assessment, the affected property
owners are notified of the potential assessment to
allow them to comment on the improvement.
*
Tax levies
service
levied.
are used for both operations and debt
based on the purpose for which the taxes were
Minnesota state Statutes limit the amount of
8
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taxes that can be levied for operations. They also
limit the amount that can be levied for debt service
without an voter approval prior to issuing debt.
* State aids are also used for both operations and debt
service dependent on the type of aid and the
allowable uses under state law. The city receives
several aids which are used to reduce the property
taxes levied, local government aid and state highway
aid which is dedicated to pay debt used to improve
major roadways within the City.
* License and permit fees are used for operations and are
charged to the individuals applying for such items.
* Interest earnings are allocated to each fund based on
its cash position during the year. The City pools
cash balances from all funds and invests them to the
extent available in various investments authorized by
state statute. Interest is allocated periodically
based on each funds participation in the pool.
\ The City receives revenue from other minor sources such as
\_~ fines, charges for services and refunds and reimbursements as
well as other sources.
Expenditures
The City expends resources to provide the services mentioned
earlier as well as to pay outstanding debt and to construct
various improvements. Expenditures are made for payment for
personal services, supplies, contracted services, repairs and
maintenance, capital acquisitions and construction and the
payment of principal and interest on debt.
GENERAL FUND
The General Fund is used to account for those revenues and
expenditures associated with the regular day to day operations
of the city as well as those activities that cannot be
accounted for in another fund. It is the most complex fund as
well as the fund with the most activity.
'-)
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The General Fund receives the majority of its revenue from
property tax levies, state aids and licenses and permits. The
following is a summary of revenues within the General Fund:
1991
Actual 1992
through Proposed
1990 Budget Sept. 30th Budget
Taxes $ 911,255 $1,072,643 $ 578,928 $1,113,714
Licenses/Permits 212,793 223,710 175,261 259,298
Intergovernmental 616,722 592,199 394,333 644,326
Charges for
Services 75,962 72,350 47,409 80,200
Fines 46,650 59,000 24,926 40,000
Interest Earnings 28,147 30,000 9,344 54,600
Other 41,913 34,300 12,336 29,100
Transfers from
Other Funds 188,318 120,000 -0- 93,300
'\ Total $2,121,760 $2,204,202 $1,242,537 $2,314,538
,_.J
As the above shows, the 1992 proposed budget represents a
$110,336 increase over the amended 1991 budget. This increase
results from an increase in the tax levy as well as an
increase in local revenue sources. The Appendix includes a
more detailed listing of revenues by sources.
The following summarizes the major components of the increase:
Increase in Tax Levy
$63,988
This increase represents the reduction in local
government aid from the 1991 for which the City
can levy taxes. Under the 1991 tax bill, this
is the only increase allowed in the levy for
operations. Prior to the 1991 state legislative
session, state law allowed for a three percent
inflation increase plus an increase based on
growth. Both these factors were removed for 1992.
Inclusion of Community Development Block Grant
$47,723
'. )
The City receives federal funds through this
program. Previous budgets have not included
10
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equal amounts for revenues expenditures. Since
the expenditure budget reflects an increase of
$47,723 for CDBG expenditures, there is no net
effect on the budget.
Increase in Building Related Fees
The City has increased a variety of building
related fees. These fees are charged when
buildings are built, remodeled or improved.
The increases make the City's fee schedule
comparable to neighboring cities.
Establishment of Investment Administration Fee
for all City Funds
The City invests all idle cash to the extent
available. The General Fund pays all costs
associated with investing. This fee, which
amounts to two percent of each funds interest
earnings, is designed to compensate the General
Fund for costs incurred relating to investment
acti vi ty.
Increase in Various Fees
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Fees for items such as special assessment
searches, copies of longer ordinances, and
liquor licenses have been increased to better
reflect the costs to perform the required
services.
Decrease in Estimated Court Fines
The estimate for fines charged by the County
Court has been decreased from the 1991 estimate
to reflect a more conservative estimate based
on actual 1991 fines through July.
Decrease in Transfer from the Administrative Trust
Fund
The City maintains an Administrative Trust
Fund which is funded through assessments for
administrative costs on new construction
projects. The Trust fund annually transfers
monies to the General Fund based on assessment
payments. The estimated amount has decreased
due to a two-year phase-in of a change in the
method of accounting for this fund which
ended in 1991.
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$32,813
$24,600
$4,575
($19,000)
($26,700)
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Expenditures
The General Fund expends monies for public safety, public
works, administration, park maintenance and development and
other areas associated with the daily operation of the city.
The following is a summary of the expenditures within the
General Fund:
General Government
Public Safety
Public Works
Parks & Recreation
Recycling
Other
contingency
Total
1991
1990
$ 593,778
754,907
336,214
261,456
39,567
143,878
-0-
$2,129,800
Budget
Actual
through
Sept. 30th
$ 419,914
453,894
256,587
158,356
21,179
73,156
-0
$1,383,086
1992
proposed
Budget
$ 609,307
850,791
436,462
229,428
36,811
95,667
56,072
$2,314,538
The 1992 proposed budget represents a $110,336 increase over
the amended 1991 budget. The major components of this
increase are described below.
$ 582,814
811,658
456,043
219,897
37,129
53,117
43,544
$2,204,202
Increase in Fire Station Operations
$19,510
During 1991, the City maintained one fire station
while building two new stations. The 1992 budget
reflects the additional costs for items such as
utilities, insurance and general operating costs
for two additional stations.
Increase is Number of Firefighters
$32,153
During the mid-1980's through 1990, the fire
department was authorized to operate with up to
35 volunteer firefighters. Based on report
prepared for the City establishing the City'S
fire fighting needs, the City Council authorized
the fire department to operate with up to 50
members. The 1992 budget is the first year that
the department will operate with a full 50 members.
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Inclusion of Community Development Block Grant
The City receives federal funds through this
program. Previous budgets have not included
equal amounts of revenues or expenditures.
Since the revenue budget reflects an increase
of $47,723 for CDBG revenue, there is no net
effect on the budget.
Estimated Costs of 1992 Election
Since the City is required to hold elections
in even numbered years only, the 1991 budget
included no costs for elections. Minor costs
were incurred to elect a new county commissioner,
however, Anoka County has reimbursed the City
for these costs. The estimate for 1992 is higher
than past years, since the City will be required
to hold a presidential primary in April along
with the regular primary and general elections
in the fall.
Increase in Police Contract
The City contracts with Anoka County for 32
hours of police coverage per day. The County
increased the contract for such service by 3.84%
for 1992.
Increase in Assessor's Contract
The City contracts with Anoka County for
assessing services. The annual cost is based
on the number of each type of property times
a specified rates. The increase results from
both an increase in rates and numbers of
properties.
Increase in Number of Traffic Signals
During late 1990 and 1991, the City Council
approved several joint powers agreements for
the installation and operation of traffic
signals at major intersections. These
agreements call for the City to pay the
operating costs of the signals.
13
$47,723
$13,586
$15,150
$6,789
$5,100
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Elimination of Sealcoating and Reduction of
Cracksealing
The city has done little or no sealcoating
for the last several years since it is
primarily cosmetic in nature and does not
prolong the life of the road. Cracksealing
is being reduced to the point that only the
worst areas will be cracksealed.
($31,200)
A summary of expenditures by department can be found in the
Appendix.
DEBT SERVICE FUNDS
Debt Service Funds are used to account for the resources
accumulated to make annual principal and interest payments on
debt issued by the City. The City currently maintains 21 debt
service funds, however, budgets are only prepared for 19 of
these funds. The two unbudgeted funds do not have debt
directly tied to them at this time, therefore, no expenditures
are anticipated.
The City, as of December 31, 1991 has the following types and
, amounts of bonded debt outstanding:
~-)
S ecial Assessment Bonds are issued to finance
varlOUS lmprovements an will be repaid primarily
from special assessments levied against the properties
benefitting from the improvements.
Amount outstanding as of December 31, 1991 - $18,315,000
General Obligation Bonds are issued to finance
improvements benefitting the City as a whole and
will be repaid from taxes levied against all real
property within the City. Currently, the only
issue of this type are the Fire Station Bonds issued
in 1991.
Amount outstanding as of December 31, 1991 - $2,500,000
State Aid Bonds are issued to finance the construc-
tion, improvement or repair of State-aid streets
within the City. These bonds will be repaid from
aids received from the state designated for payment
of this debt.
Amount outstanding as of December 31, 1991 - $510,000.
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Tax Increment Bonds are issued for redevelopment
projects and are financed by the additional tax
revenue resulting from the increased taxable value
of the redeveloped properties.
Amount outstanding as of December 31, 1991 - $1,015,000.
Certificates of Indebtedness are issued to finance
the purchase of equipment. This type of debt will
be repaid from taxes levied against all real property
within the City and transfers from other funds.
Amount outstanding as of December 31, 1991 - $302,000.
The City also is liable for non-bonded debt relating to
assessments levied against City owned property and two leases
used to purchase equipment. These items, which are paid out
of the General Fund, total less than $300,000 as of December
31, 1991.
Revenues
The debt service funds receive revenues from the sources
listed above and interest earnings. The following is a
summary of revenues within the debt service funds:
\
,,-~ 1991
Actual 1992
through Proposed
1990 Budget Sept. 30th Budget
Taxes $ 80,687 $ 94,855 $ 34,391 $ 390,449
Tax Increments 449,064 227,000 280,408 508,500
Special Assess. 3,166,992 1,783,651 1,739,718 1,667,570
Intergovernmental 326,058 224,400 147,341 254,797
Interest Earnings 891,528 496,536 367,557 581,650
Other 28,877 -0- 75,524 -0-
Bond Proceeds 4,031,476 3,125,000 3,405,047 1,500,000
Transfers from
Other Funds 751,706 37,630 1,994,951 37,630
Total $9,726,388 $5,989,072 $8,044,937 $4,940,596
While the 1990 actual amounts
exceed budgeted amounts, it
variety of factors, predicting
in some lines significantly
should be noted that due to a
revenue amounts for these funds
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is difficult. Since conservative estimates are used, it is
not uncommon or considered troublesome that the budget
estimates have differed from actual amounts.
Transfers from other funds in 1990 consists of remaining
monies in the 1988 Construction Fund and amounts from the
Water and Sewer Trunk Funds. These amounts were transferred
to the 1988 Debt Service Fund to help retire a portion of the
$5,800,000 1988 Special Assessment Bonds which matured in
1991.
Expenditures
Debt service funds expend monies for the payment of principal,
interest and related fees on the types of debt mentioned
above. In addition, upon levying of special assessments, the
portion of the assessment relating to administrative costs are
transferred to other funds in accordance with City policy.
The following is a summary of the expenditures within the debt
service funds:
1991
Actual 1992
through proposed
1990 Budget Sept. 30th Budget
'\
,~) Bond Principal $9,399,400 $7,151,000 $7,039,000 $1,556,000
Bond Interest 1,896,680 1,578,235 1,394,433 1,462,958
other 141,359 -0- 62,176 -0-
Fiscal Fees 93,769 15,000 7,638 12,090
Arbitrage Rebate -0- -0- 94,000 -0-
Transfer to
Other Funds 35,134 175,000 75,919 -0-
Total $11,566,342 $8,919,235 $8,673,166 $3,031,048
Since bond principal and interest payments are fixed, there
should be, and is, very little variation from budget. The
amounts shown as other represent a variety of fees and costs,
including costs of issuing new debt, defending special
assessments against appeals. These costs, by their nature,
can not be foreseen and budgeted.
The large principal payments in 1990 and 1991 relate to two
bond issues, each of which was in excess of $5,000,000, which
matured each year. There are no such maturities scheduled for
1992, therefore, the large decrease in the budgeted amount.
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PERMANENT IMPROVEMENT REVOLVING FUND
The Permanent Improvement Revolving Fund was established by
the City Council in 1990 and is being budgeted for the first
time in 1992. The fund is used to accumulate monies from
bonds once they mature which will then be spent on either
improvements or equipment acquisition. The monies in the fund
are the result primarily of interest earnings in excess of
bond rates which were earned on prepaid assessments and
assessments remaining on four bond issues which were totally
paid-off before their maturity
In order to safeguard this fund from political forces, the
City Council requires a 4/5ths majority to expend any monies
from this fund.
The 1992 budget is as follows:
Revenue:
Special Assessments
Interest Earnings
Total
$119,000
55,000
$174,000
Expenditures:
Equipment Acquisition
$ 21,998
~ ) The equipment being acquired through this fund is voting
equipment and the replacement of minor fire equipment.
WATER AND SEWER ENTERPRISE FUNDS
As of the date of this letter, the City Council has not yet
adopted preliminary or final budget for these funds which are
wholly funded by user fees.
TAX LEVY
Minnesota State law governs the amounts and purposes
the City can levy taxes. The tax levy set by
consists of two components. The first, a general
taxes levied to finance general operations which are
for in the City's General Fund. The amount that can
under this levy is limited by state law.
for which
the City
levy, are
accounted
be levied
The second component of the tax levy is the
These taxes are levied to pay the principal
bonded debt issued by the City. Under
debt service levy.
and interest on
state law, debt
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exceeding a certain value must be approved by citizens through
an election. Debt under this level, which is primarily
equipment certificates of indebtedness, can be issued without
voter approval.
As mentioned earlier, the increases in taxes from year to year
are limited by state law and voter approval. The following is
a summary of the increases in the City's levy from 1991 to
1992:
~_J
1991 Certified Levy
Increase from lost
Local Government
Aid
Increase from first
year of Fire Bond
levy
Decrease in other
debt levies
1992 Proposed Levy
Correction of Error
Corrected 1992
Proposed Tax Levy
General
Levy
$ 1,364,215
Debt
Service
Levy
$ 119,855
Total
$ 1,484,070
102,829
102,829
415,407
415,407
$ 1,467,044
(38,841)
(26,816)
$ 508,446
(26,816)
$ 1,975,490
(38,841)
$ 1,428,203
$ 508,446
$ 1,936,649
Each portion of the levy is decreased by state aids and fiscal
disparity distributions to arrive at the portion of the tax
. levy actually paid by property owners. After these
reductions, the total levy to be paid by property owners, is
$1,237,509. This amount represents a 64.5% increase over
the 1991 amount.
It should be stressed that the City's levy will account for
approximately 16% of a properties total tax bill. Anoka
County, School District U1 or US, and other minor
governments account for the remaining 84% of the taxes to be
paid by property owners.
while the City of Andover is experiencing a larger than normal
increase in 1992, its tax rate is still comparable to other
neighboring cities. The following table shows the average tax
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rates for 1991 and 1992 for cities neighboring Andover as well
as those with similar populations and tax bases.
City of Andover
Neighboring Cities:
Coon Rapids
Ramsey
Anoka
Oak Grove
Ham Lake
1991 Average
Tax Rate
10.925%
1992 proposed
Tax Rate
17.969%
15.589%
13.413%
18.388%
28.865%
11.025%
16.188%
15.144%
20.079%
28.292%
12.165%
Similar Cities:
Robbinsdale
Champlin
Hastings
16.472%
18.442%
27.779%
21.757%
20.512%
Not available
As was mentioned earlier, the City receives approximately 16%
of each tax dollar paid. To give a better idea of total
taxes, including County and school district levies, the
estimated taxes and increase for residential homestead
property for 1992 are shown below. It must be noted that
since the tax rates are only estimates and subject to changes
from property valuation changes and decreases in actual
levies, final property tax amounts may differ from this table.
Property Located in:
Anoka-Hennepin st. Francis
School District #11 School District #15
Estlmated Estimated
Property 1992 Prop. Estimated 1992 Prop. Estimated
Value Taxes Increase Taxes Increase
$ 65,000 $ 705 $ 85 $ 718 $ 115
$ 70,000 759 72 774 106
$ 80,000 954 76 972 119
$ 90,000 1,171 103 1,193 154
$100,000 1,388 129 1,414 190
$110,000 1,605 155 1,635 249
$120,000 1,849 113 1,884 196
$130,000 2,120 97 2,160 194
$140,000 2,292 83 2,437 193
$150,000 2,663 68 2,713 191
$200,000 4,018 8 4,094 181
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PROSPECTS FOR THE FUTURE
Building Trends
The City of Andover has been characterized by rapid growth in
residential housing over the last several years. Despite a
slow down in this trend, it is anticipated that the increase
in new housing will continue and will be comparable to 1991.
This increase in residents and streets will continue to put a
strain on the operations of the city's General Fund.
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Relationship with the State of Minnesota
Recent history shows that the city is subject to the political
decisions made at the State level. During both 1990 and 1991,
the State Legislature and Governor have reduced aid to cities
in mid-year without giving the city the opportunity to recoup
this lost revenue. For 1992, aid was also reduced, however
the City was allowed to increase taxes in this amount.
The state has also attempted to keep property tax increases
for 1992 below ten percent, by eliminating the growth and
inflation factors that existed in the levy limits. The effect
of this action was to in essence require a growing City like
Andover to serve more people with no additional dollars.
So what can be expected for 1992 and beyond? It is difficult
to predict since the State has made decisions based on the
their financial problems as well as political agendas. Under
current law, levy limits on cities are scheduled to be
repealed for taxes payable in 1993. However, it is very
possible that not only will levy limits be reinstated, but
they may include little or no growth as was done for 1992. In
addition, further mid-year and future year aid changes are
possible.
Debt
The City anticipates issuing new debt in 1992, however not to
the extent of previous years. The City has a number of
improvement projects which need to be funded. It is
anticipated that in early 1992, the City will sell $1,500,000
of special assessment bonds. These bonds will be fully paid
by special assessments levied against the benefitted
properties. In addition, the City Council is contemplating
selling equipment certificates in an amount that will result
in no tax increase from the 1990 level. A final decision is
expected on these certificates in late 1991 or early 1992.
,
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,J GENERAL FUND REVENUES BY SOURCE
1991
Actual 1992
through Proposed
1990 Budget Sept. 30th Budget
Taxes:
Current $ 884,995 $1,026,643 $ 539,497 $1,074,214
Delinquent 26,260 46,000 39,431 39,500
Licenses & Permits
Business 16,054 18,200 9,167 20,325
Non-Business:
Building related 192,528 199,910 160,952 232,723
Other 4,211 5,600 5,142 6,250
Intergovernmental:
Community Develop.
Block Grant 66,919 -0- 58,987 47,723
Local Gov't Aid 102,657 45,455 19,513 38,841
Tax Credits 335,007 337,572 185,994 353,989
Other 112,139 209,172 129,838 203,773
Charges for Services:
Street Lighting 54,521 51,500 27,070 56,900
Other 21,441 20,850 20,339 23,300
Court Fines 46,650 59,000 24,926 40,000
~) Miscellaneous:
Interest Earnings 28,147 30,000 9,344 54,600
Refunds/Reimb. 38,480 30,000 8,222 25,000
Other 3,433 4,300 4,114 4,100
Transfers from
Other Funds 188,318 120,000 -0- 93,300
Total $2,121,760 $2,204,202 $1,242,537 $2,314,538
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"J GENERAL FUND EXPENDITURES BY DEPARTMENT
1991
Actual 1992
through Proposed
1990 Budget Sept. 30th Budget
Ci ty Counci 1 $ 27,614 $ 34,108 $ 27,803 $ 34,802
Newsletter 5,976 6,831 1,667 4,771
Mayor 4,232 4,200 3,423 4,521
Elections 10,117 2,829 13,586
Administration 102,887 105,171 78,630 104,359
Financial Admin. 100,574 102,891 74,077 93,278
Auditing 12,185 10,000 10,255 10,000
Assessing 28,707 31,500 33,621 38,289
Attorney 60,184 60,300 30,927 50,800
Planning & Zoning 55,399 50,702 36,907 52,649
Data Processing 18,556 19,095 17,536 21,248
Ci ty Hall Bldg. 32,714 35,833 29,275 44,663
Fire Stations 11,343 14,190 7,492 33,700
Public Works Bldg. 40,307 23,600 18,912 22,932
Senior Citizen's
Center 6,976 9,635 4,889 8,456
Equipment Bldg. 5,039 3,593 833 3,077
Engineering 70,968 71,165 40,838 68,176
"J Police Protect. 394,768 404,078 201,642 411,737
Fire Protect. 197,880 231,597 128,076 263,750
Rescue Service 29,110 37,057 23,251 35,972
Protective Inspect. 122,622 127,530 92,577 126,797
Civil Defense 536 2,300 911 2,300
Animal Control 9,991 9,096 7,437 10,235
Street & Highways 144,566 213,788 119,668 182,588
Snow & Ice Removal 78,415 122,352 64,891 121,918
Storm Sewers 19,680 22,821 8,161 23,257
Street Lighting 13,445 15,000 9,280 14,450
Street Signs 28,417 31,606 18,376 31,637
Traffic Signals 5,134 3,000 4,753 10,680
Street Lights-Billed 37,069 38,000 27,086 42,264
Park & Recreation 261,456 219,897 158,356 229,428
Trees & Weed Control 9,488 9,476 4,372 9,668
Recycling 39,567 37,129 21,179 36,811
Economic Development 14,289 16,544 12,403 17,994
Unallocated 31,552 23,773 29,007 24,950
Contingency 43,544 56,072
other Financing Uses 98,037 12,800 31,746 52,723
Total $2,129,800 $2,204,202 $1,383,086 $2,314,538
:~)
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