6.2. SR 06-17-2019 - Laserfiche WebLink

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The annual budget serves as the foundation for the City of Elk River's financial planning and control. Budget requests are submitted by all departments to the Finance Department each May. The Finance Department compiles these requests into a proposed budget. The Finance Department and city administrator review the information and present a draft budget to the Council in July for consideration. Following Council discussion and public input, the final tax levy and budget are approved in December. The City's Financial Management Policies allow department heads to make administrative budget amendments (excluding personal service and capital outlay) throughout the year as long as the total department budget does not change and the amendment is approved by the city administrator and finance director. The Council approves additional budget amendments in December of each year. Budget to actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund this comparison is presented on page 26 as part of the basic financial statements for the governmental funds. For other governmental funds with appropriated annual budgets this comparison is presented in the governmental fund subsection of this report. Local economy The local economy has continued to grow by the increase in building permits with a construction value of $66,048,488 being issued in 2018. $48,387,226 accounts for new construction and $17,661,262 of additions and remodels make up the balance. The number of new housing permits increased from 113 in 2017 to 153 in 2018, the largest number of housing starts since 2009. Single family homes accounted for 152 of the new housing permits along with a multi -family 40 -unit apartment building. The average value new home is about $245,000 compared to $230,000 in 2017. Many of Elk River's largest employers reported stable or steady growth of employment levels between 2017 and 2018. This is largely due to the upward trend in manufacturing activity in the region. There has been continued interest in both affordable and market rate multi -family housing projects. The commercial/industrial sector has experienced notable growth, expansion and reinvestment as well. In 2018, there were several facility expansions and completion of two senior housing projects. The outlook in this region looks promising with commercial industrial activity and the recent increase in single-family residential development projects. Long-term financial planning As part of a yearly budget process, the City Council reviews the updated Financial Management Plan. The Financial Management Plan provides a long-range forecast that brings together future expenditures, revenues, and development of the City. The Council has been diligent in maintaining a level tax rate. This plan provides the information needed to develop in a manner that will sustain or expand City services while keeping the property taxes stable. Department heads take part in this process to estimate staff additions, service levels, and capital needs for the next ten years. In addition, the City Council continually reviews cash flow analysis and long-term planning as part of the comprehensive Capital Improvement Plan (CIP) process. The CIP is a 5 -year planning tool that forecasts the City's capital needs based on the City's long-range plans, goals, and policies. Relevant Financial Policies The City Council has adopted a comprehensive set of Financial Management Policies that provide the basic framework for the overall fiscal management of the City. The Financial Management Policies include: revenues, property taxes, investments, purchasing, financial reporting, reserves, fund balance, capital investment, and debt policies. The City's policy on fund balance states that the City will maintain an unassigned fund balance of not less than 40-45% of budgeted general fund operating expenditures. The percentage of unassigned fund balance at December 31, 2018 is 45%. Since property tax payments are received by the City in two installments in July and December, the City needs adequate cash reserves for cash flow in order to avoid short-term borrowing to finance operations. Major Initiatives Through the state's Corridors of Commerce program, Highway 169, which runs north -south through Elk River, was selected for $157 million state transportation funding. The project will convert Highway 169 to a freeway by removing five stop lights through Elk River. The signalized intersections along this stretch of highway are over capacity, resulting in significant delays and congestion, leading to traffic safety concerns. Project construction is expected to start in 2023. City officials will be heavily involved with the preliminary design beginning in 2019 and