Dakota County Administrator

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Dakota CountyAdministrators2009
RecommendedBudget11/4/08
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2009 Dakota County Budget

• Preserve the high quality of services that Dakota
  County provides to residents
• Limit tax burdens as much as possible in a very
  difficult economy
• Plan now so that the County will be
  well-positioned to meet future challenges

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Dakota County MissionEfficient, Effective,
Responsive Government Delivering Value
Source MICA
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Dakota County Delivering Value

• Strong accomplishments across the organization
• Positive Balanced Scorecard results external
  recognition for achievements
• 64 of residents feel they receive good value for
  the taxes they pay (2008 Residential Survey)
• 73 favorable impression when citizens contact us
  (2008 Residential Survey)
• 82 agreement that County services are important
  to neighborhood quality of life. (2008
  Residential Survey)

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Economic turmoil and uncertainty

• Subprime fallout on financial markets is having
  widespread impacts on the real economy in the
  US and internationally
• Growing consensus that US and world economies are
  now in recession and will continue to be in 2009
• MN Finance October Economic Update foresees most
  severe US recession in 25 years
• Dakota County unemployment rate tops 5

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MN state budget was already challenged before the
recession hit

• As of May, the official state budget deficit
  for 2010-11 was 946 million--ignoring inflation
• With inflation, more realistic measure of state
  budget problem exceeded 2 billion
• Next (November) State forecast on December
  4factoring in recessionwill likely show a much
  bigger problem
• States cash reserves are now much lower than
  they were heading into the 2002-3 budget crisis

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Most recent state economic update acknowledges
2008-09 recession
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Economic environment affects residents and
taxpayers
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Economic environment affects residents and
taxpayers

• Total residential tax base declining 1.3 for
  2009 taxes
• Shifts property tax burdens toward business
• Rising demand for economic and health assistance
  services from the County

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Economic risks to the County budget

• Inflationary pressure on commodities from energy
  to steel to road salt
• Local revenues related to real estate and
  construction activityrecorders fees, gravel
  taxesare softening
• Community Service caseloads grow during
  recessions
• State budget shortfall in FY 10/11 increases the
  likelihood of aid cuts and cost shifts onto local
  governments

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Budget Development Guidelines

• Plan for the future
• Strategic and programmatic planning
• Reserve for planned capital projects (CIP
  set-aside)
• Leave no tails create a budget outlook
  through 2011
• Identify resources and strategies to manage
  future risks
• Set resource constraint first
• Manage our finances well
• Aaa bond rating
• Enhance collaboration and cost-sharing
• Maintain or lower the Price of Government

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Budget Principles

• Preserve the high quality of services that Dakota
  County provides to residents
• Limit tax burdens as much as possible in a very
  difficult economy
• Plan now so that the County will be
  well-positioned to meet future challenges

13
2009 Budget Summary

• Preserve current service and investment levelsno
  cuts for 2009
• Very limited staff growth to respond to caseload
  pressures5.4 new tax supported FTEs (smallest
  increase since 2004)
• Lowest total FTE growth since 2004
• Provide funding to staff and operate new Robert
  Trail library
• Support 44 million in local transportation
  improvements
• Limit the impact on property taxpayers
• Increase levy by 3.9 (retain lowest metro county
  levy growth)
• New state transportation aids (gas tax) for local
  road construction and maintenance saves over
  700K in property taxes
• Median-value home will see no net growth in
  county tax bill
• Maintain capacity and flexibility to meet looming
  fiscal challenges
• Plan prudently for future budget challenges
  through 2011
• Continue to hold 2.5 of positions vacant or fill
  limited-term in 2009 to preserve future budget
  optionsspecific recommendation in December after
  State budget forecast
• New positions recommended in budget will be
  limited-term
• Use 1.5M of fund balance to maintain services to
  children pending resolution of federal TCM budget
  cuts
• Delay some large county building projects to
  reduce CIP operating set-aside

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The 2009 Recommended Budget and Levy (in
Millions of Dollars)
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Understanding Your Proposed 2009 County Taxes

• Proposed Tax Notice and insert will be mailed to
  residents beginning November 10.
• Website includes
• Explanation of Proposed Tax Notice with
  definitions
• Property tax refunds and senior citizen deferrals
• Metro tax comparisons
• County budget
• Website available today (November 4)
• www.dakotacounty.us (search Levy)

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County Administrators 2009 Recommended Budget
Agenda

• Budget Workshop Background and Directives
• Administrators Recommendation
• External Comparisons
• Levy Impact of Recommended Budget
• Summary

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Budget WorkshopBackground and Directives
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2009 Budget Process

• Outlook and priorities reviewed in budget
  workshop (June 17)
• Proposed levy options review (August 26)
• Proposed levy adoption (September 9)
• set at 3.9
• County Board budget hearings (November 4-7)
• Truth-In-Taxation hearing (December 4)
• 2009 budget adoption (December 16)

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Major Issues/Directives from Board Workshops

• Set a levy target of 128.4 million (3.9 growth)
• Below state levy limit and less than other
  counties
• Budget for planned increase of 2.15 million in
  state County Program Aid to offset tax levy
• Use remaining Levy Reduction Fund balance in 2009
• Reserve Cash Flow levy for 2010-11 against
  potential risks and review other potential
  resources
• Recognize frozen positions as future source of
  budget flexibility

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2008 SP/C estimated at 3.7 assuming CPI of 2.5
and population growth of 1.2
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Administrators Recommendation
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The 2009 Recommended Budget and Levy (in
Millions of Dollars)
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Operating Budget - Current Level - Recommended
Requests
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Current Level Background

• Definition - the cost of maintaining the same
  quantity of service
• From all sources, 6.6 million is required to
  maintain current services into 2009
• 2009 current level levy increase is set at 5.4
  (4.8 million)
• 1.8 million financed or reallocated from other
  sources
• Inflation of 2 for both non-staff and direct
  client services/supplies costs

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2009 Major Current Level Increase Factors

• 4.9M Salary (5.0-6.0 merit matrix)
• 0.7M FICA/PERA
• 1.2M 5.2 health insurance estimate
• (3 yr avg year 2)
• 0.7M CIP general adjustment
• 0.6M Energy costs
• 0.3M Mileage and Training

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Various impacts of energy costs

• Fuel Gas 25, Diesel 35
• Electricity 8
• Natural Gas 10
• Salt 27
• Mileage reimbursement 15
• Asphalt/road construction materials 9
• (Change in budgeted spending actual year to year
  increase from 2008-2009 may be higher.)

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2009 Major Current Level Decrease Factors

• 1.15M DCC Subsidy Planned reduction
• 1.3M Future CIP set-aside (Robert Trail)

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Recommended Requests
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Meeting the 2009 Challenge

• Where is the new money coming from?
• Levy
• County Program Aid
• New transportation resources
• Where does the new money go?
• Current level
• Very limited new spending on above-base activities

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Meeting the 2009 Challenge
Levy Reduction Fund 126K
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Very limited new spending

• 5.4 new levy funded positions, all limited term
• Continue to budget for future operating costs of
  capital projects
• Catch-up for Parks operating costs of previous
  capital spending

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Requested Level Changes by Department
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Capital Equipment (CEP)

• Large capital equipment items (20,000 or more)
• Total 2009 recommended amount of 3.82 million
• 1.6M Automation/major systems
• 1.9M Fleet Management
• 0.3M Other

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Capital Equipment Projects by Department
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Capital Improvement Program (CIP)( millions)
County Total Levy
increase Transportation 9.3 43.6
1.0 Parks 0.9 2.9
4.0 Buildings 7.7 18.8
4.0 Total 18.0 65.3 2.2
Does not include FNAP and Debt Service
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2009 Major Capital Improvement Projects -
Transportation

• County State Aid Highway 56 Construct 4-lane
  from 66th St to Corcoran Path Construct 4-lane
  from Chestnut St to 66th St
• County State Aid Highway 70 Construct
  interchange at I-35
• Cedar Bus Rapid Transit Design and Right of Way
  Acquisition

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Major Building Projects Have Been Delayed

• Judicial Center Addition delayed 1 year
• Design planned for late 2009, completed 2012
• Western Service Center Expansion delayed 2 years
• Design planned for 2010, completed 2013
• Law Enforcement Center Addition delayed 2 years
• Design planned for 2011, completed 2014
• Public Safety Support Center modified, reduced
  in scope, delayed 4 years
• Design planned for 2012, completed 2015

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2009 Major Capital Improvement Projects -
Buildings

• Fleet Vehicle Storage Building Including Parks
  Sheriff
• 6,080,000 
• Judicial Center Addition Start of Design
• 17,260,000
• Burnhaven Library Renovation Needs Assessment
  Design
• 1,525,000 
• Robert Trail Library Occupancy Close-out
• 8,350,000
•  Greater Emphasis on Maintenance Projects
• 3,160,000 

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Managing Budget Risks

• 2009
• Cautious estimate of new gas tax revenue
• Assume lower Recorders fees than traditional
  estimating methodology
• Limited term employees
• 2010 beyond
• Review cash flow set-aside and other county-wide
  resources

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External Comparisons
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Per capita levy has fallen below comparable
counties and stayed there
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Lowest tax per capita in the Metro
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(No Transcript)
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2009 Proposed Levy Comparisons

• MICA survey of proposed maximum levies
• Dakota 3.9 Anoka 5.99
• Ramsey 4.5 Scott 5.31
• Washington 5.94 Carver 8.9
• Hennepin 7.0

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Dakota County tax rate will remain lowest in
Metro in 2009
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Dakota County projected to retain lowest Metro
tax on comparable-valued homes in 2009
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Levy Impact of Recommended BudgetImpact of 2009
Levy on Property Owners
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Pay 2009 Tax Capacity Changes

• Total pay 2009 gross tax capacity 506.9M
  (1.0 from 2008)
• Residential property
• Median market value drops 2.6 from 246,900 to
  240,500
• Total residential tax capacity drops 1.3
• Value exclusions for disabled vets are higher
  than earlier estimate
• Commercial/Industrial 8 increase in tax
  capacity
• Agricultural 0.7 increase in tax capacity
• Apartments lt1 decrease in tax capacity
• Additions to tax capacity from new construction
  are 26 lower than 2008

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County levy grew far slower than market values
during the real estate boom
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Dakota Countys Price of Government has remained
level
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Pay 2009- Tax Rate Calculation

• (Millions) Change from
  08
• Proposed Net Levy 128.381 3.9
• Net Tax Capacity 437.319 0.1
• Tax Capacity Rate 25.808 2.5
• (Estimated)

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The county levy falls mainly on residential
properties
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Estimated 2009 County Tax Levy Impact on a
Median-valued Home

• Year Taxable market value NTC tax rate County
  tax
• 2008 246,900 25.184 621.79
• 2009 240,500 25.808 620.68
• Change -2.6 2.5 - 1.11
• - 0.2

Rate calculation does not include the
referendum levy and is calculated before any
applicable credits.
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Value trends mean 7 in 10 homes will pay no added
County tax next year, while most businesses will
pay more
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(No Transcript)
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Summary
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2009 Budget Recap

• Preserve current service and investment levelsno
  cuts for 2009
• Very limited staff growth to respond to caseload
  pressures5.4 new tax supported FTEs (smallest
  increase since 2004)
• Lowest total FTE growth since 2004
• Provide funding to staff and operate new Robert
  Trail library
• Support 44 million in local transportation
  improvements
• Limit the impact on property taxpayers
• Increase levy by 3.9 (retain lowest metro county
  levy growth)
• New state transportation aids (gas tax) for local
  road construction and maintenance saves over
  700K in property taxes
• Median-value home will see no net growth in
  county tax bill
• Maintain capacity and flexibility to meet looming
  fiscal challenges
• Plan prudently for future budget challenges
  through 2011
• Continue to hold 2.5 of positions vacant or fill
  limited-term in 2009 to preserve future budget
  optionsspecific recommendation in December after
  State budget forecast
• New positions recommended in budget will be
  limited-term
• Use 1.5M of fund balance to maintain services to
  children pending resolution of federal TCM budget
  cuts
• Delay some large county building projects to
  reduce CIP operating set-aside

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2009 Budget ProcessOpportunities for Public
Involvement

• Budget Hearings (Nov. 4 Nov. 7)
• Truth-in-Taxation (Dec. 4)
• Budget Adoption (Dec. 16)

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• Budget hearings will begin after the County
  Board, Regional Rail and A/F/P meetings