Tax increase likely for Farmington in 2015
With a proposed 6.6 percent net tax levy increase on the books for 2015, Farmington City Council members have officially started their budgeting process.
At a Monday workshop, council members got the first look at the proposed general fund and debt service fund budgets and tax levies for 2015. The early numbers present a budget of $3 million in revenues, and $11.5 in expenditures, according to the draft provided by Farmington finance director Robin Hanson.
The city has little control over some of those expenditures, Hanson said. Necessary increases in human resources and allocations set up for road improvements account for 4.02 percent of the net tax levy alone.
Personnel costs come out of the general fund. In 2014, the city conducted a wage survey which indicated many employees were working below the average pay scale, so a process was implemented to increase those wages. In addition, all four of the city’s collective bargaining units settled contracts this year.
“There are a lot of components when it comes to the wages piece,” Hanson said. “This year the legislature also increased the retirement contribution requirements for employees, and there is always continued pressure on the cost of health care benefits. Those, along with the debt service, make up that 4.02 percent.”
The debt service funds levy covers the city’s scheduled debt principal and interest repayment obligations and provides cash flow for several of the city’s debt issues. Early funding for the 195th Street reconstruction project, planned by Dakota County and scheduled to start in 2015, is also covered under the debt service, Hanson said.
Other budget items
Some of the other expenditures cited in the proposed budget include $66,000 for pump testing, hose replacement, painting of Station 1, and positive pressure and extraction pumps. Another $25,000 is identified in the administration budget for strategic planning, customer surveys and technology costs.
The police department would like to purchase Axon Flex body cameras, and upgrade all of the department’s cell phones. Engineering has requested $20,000 for community development and professional services in building inspections.
The city’s snow removal budget has also been increased by $11,000, Hanson said, to $205,000. That amount reflects the average spent annually over a five year period.
“We had a very mild winter in there and a very expensive winter. The others were more typical. A pretty fair average is about $205,000,” she said. “We can’t control Mother Nature but we can plan for a typical winter.”
The city should find some assistance through a $267,607 allocation of Local Government Aid. However, because LGA is not always a guarantee, those funds are often used for one-time expenditures.
The city has seen an increase in residential construction in recent months, which has led to an increase in building permit revenue. As such, the city has increased its projected permit revenue from $315,000 in 2014 to $380,000 in 2015.
The city of Farmington’s average estimated market value for next year has increased from $179,338 to $197,416; an average of 10.08 percent.
With the 4.02 percent increase from the wage piece and the debt service levy, the estimated increase to the average residential homeowner’s property — with the average $197,416 market value — would increase by $35.69.
To cover the entire proposed 6.6 percent increase, Hanson projects an overall increase of $62.55 on a $197,416-market value property.
With three possible projects to pursue in the near future — a new ladder truck for the fire department, a new aquatic center to replace the outdoor pool, and participation in a project to bring a second sheet of ice to the Schmitz-Maki Ice Arena — council members asked Hanson to develop a plan that would reflect the impact of any or all three of the projects.
“We’re going to work on pulling those numbers together so they can look at their whole list of options as we put this together.
“I fully expect that (6.6 percent tax levy) will be reduced, but we have some additional work to do on these other items that they wanted to get some information on,” Hanson said.
Hanson will provide the requested information to council. In July, they will look at the other budgets within the city’s overall budget. In August, council is expected to go back and start making decisions on what to keep, and what to cut. A preliminary budget and tax levy for 2015 is due to Dakota County in September.