Planning the City’s 2024 Budget Underway
Important Dates for Community Involvement Announced
The development of the City of Owatonna’s budget is influenced by multiple internal and external controls. State law requires municipal budgets to be balanced as cities are not allowed to deficit spend. The City of Owatonna’s 2024 budget process is underway as needs are being assessed and projects are being prioritized.
City staff utilize a rigorous process for developing the coming year budget that provides opportunities to evaluate revenue and expenditure forecasts so adjustments can be made as the budget plan evolves. It also includes multiple opportunities to share information publicly and invite input from the community.
Although some information is not yet available, the annual budget process began in June with department directors preparing initial Operating and Capital Improvement Plan (CIP) budget requests, refining them with the City Administrator and Finance Director and determining whether they align with the City’s priorities. The following four Key Focus Areas developed by the City Council and staff help prioritize work and allocate resources: Economic Vitality, Infrastructure, Quality of Life and Efficient, Effective Government.
A high-level overview of the proposed 2024 budget was presented to the City Council at its August 15 Study Session. It includes projected revenues and expenditures as well as the proposed 2024 property tax levy. The proposed options include the following:
- Utilizing the increase to local government aid and a small portion of a levy increase, the City is making a large investment in its unaddressed capital needs. These projects will include necessary mechanical and electrical improvements at Merrill Hall, Law Enforcement Center improvements, a generator replacement, tuckpointing, new pavement in some parks and renovations at the Brooktree Clubhouse among other projects.
- An eight percent increase in the Operating Budget would include wages for an Assistant City Administrator, Police Officer, Equipment Maintenance Technician and increasing the part-time Information Technology Specialist to full-time to cover video production for City Council meetings. This also includes funding to conduct a community survey.
Combined, these budget additions would result in a nine percent overall levy increase. Information from the Steele County Assessor’s Office regarding tax capacity will be available in September and will provide insight on how to balance the potential levy increase options to minimize any increase on taxpayers.
In the coming weeks, City staff will meet with the City Council and Mayor to refine 2024 Operating and CIP budget requests. At the September 19 City Council meeting, Finance Director Rhonda Moen will present the proposed 2024 CIP and Operating Budget request for approval. Moen will also provide a budget summary showing a comparison to this year’s budget. While adjustments can continue after this point to lower the levy, it cannot be increased past this point. The City Council must adopt a preliminary levy for the following year and the Finance Director must certify the proposed levy through Steele County prior to September 30.
Additional data points that influence the City’s annual budget include tax capacity fluctuations, Local Government Aid allocations, union contracts that determine employee wages, property valuations determined by the County and the cost of employee benefits. This information is finalized annually by November and helps shape the budget. “We need to not only consider the current year budget, but also must include the City’s long-term financial planning in our budget process and decisions,” Moen said. Such long-term planning sets aside funding for capital assets. There are two City Council Study Sessions tentatively scheduled for additional budget discussions on October 3 and November 7.
City staff maintain a 10-year facility needs assessment that guides forecasting for expenditures and levy increases required to maintain capital investments. A comprehensive analysis of City-owned buildings was completed earlier this year and is helping determine the improvements that are needed and how these buildings may be used differently in the future to continue serving the community’s needs. For ongoing updates regarding the capital improvements being considered, visit Imagine Owatonna: Long Range Asset Preservation Plan | Owatonna, MN.
As the end of the year approaches, so will the City’s budgeting process. The City Council will hold the annual Truth in Taxation Hearing December 5 at 6 p.m. The goal of this meeting is to present a summary of the proposed 2024 budget to the community. Public input is encouraged at the hearing and throughout the entire budget process. The City Council is expected to take action to adopt next year’s final budget and levy December 19. For additional information about City budgets, visit Finance | Owatonna, MN.