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AGENDA ITEM
<br />Tax Cauacity Rate and the Imbact of the Tax Lew on Property Owners
<br />The County Assessor provides an annual calculation of the City's tax capacity based on the annual
<br />property revaluation. As of October 31, 2018, the City's taxable market value is $3,004,167,366 with a
<br />tax capacity of $34,109,993. When compared to last year, taxable market value has increased by 4.32%
<br />and the tax capacity by 4.68%. As a result of the City's increased tax capacity, the tax capacity rate will
<br />decrease from 16.555% in 2018 to 16.378% in 2019. Using this tax rate and assuming no change in a
<br />property's value, the City's share of the property tax bill would be: a decrease of $4.16 (-1.07% on a
<br />home previously valued at $250,000; a decrease in tax of $8.85 (-1.07%) on a $500,000 home; a
<br />$1,000,000 home will see a decrease of $19.91 (-1.07%); and a $2,000,000 home has a decrease of $42.04
<br />(-1.07%). The actual tax impact on any particular property will depend on how the property's taxable
<br />value changed in relation to the rest of the City. Tables illustrating a 5% increase in value and a 5%
<br />decrease in value are included in this budget document.
<br />General Fund Budget
<br />General Fund Expenditures
<br />The 2019 expenditure budget is $8,577,280 which is an increase of $383,879 (4.68%) over the 2018
<br />budget. This increase is the result of a $95,000 increase in Personal Services, a $217,619 increase in
<br />Professional Services, and a $100,000 increase in Contingency. The increase in Personal Services is due
<br />to step increases and a COLA increase of 2.5% for union and non-union employees. The increase would
<br />have been larger but the wages for the IT Technician have been moved to the IT Internal Service Fund.
<br />The increase for Professional Services is due to some actual increases for Legal ($17,000), Engineering
<br />($5,000) and Pass-through charges ($30,000). The majority of the Professional Services increase is due to
<br />a shift in coding as a result of the creation of the IT Fund. IT related expenditures that were previously
<br />coded to wages (IT Tech), Other Expenses, and supplies and maintenance are now coded to a new line
<br />item (IT Services) in the Professional Services category. The increase to Contingencies is due to
<br />reestablishing the line item that had been removed from the 2018 budget.
<br />General Fund Revenues
<br />For revenues the General Fund budget also totals $8,577,280 and is increasing by $383,880. The largest
<br />increase in revenues is the Administrative Charges for Service line $165,170. This revenue is from
<br />charges to other funds, mainly Water, Sewer, Storm Sewer for costs incurred by the General Fund in
<br />support of the other funds. Other increases are Property Taxes ($34,950), Building Permits ($29,000),
<br />Police State Aid ($20,000), Police Service Contracts ($62,000), and Interest on Investments ($41,000).
<br />There are other smaller increases for a total revenue increase of $383,880.
<br />Special Revenue Funds
<br />The special revenue funds that budgets are adopted for are the Park Fund, The Drug Forfeiture Fund, and
<br />the TIF Fund. Special revenue funds by definition have a primary source of revenue that is dedicated for
<br />a specific purpose. In the Park Fund the primary revenue source is park dedication fees collected from
<br />developers. By state law, these funds must be used for parkland acquisition and development. The Drug
<br />Forfeiture Fund receives its primary funding from the Police Department's drug and alcohol enforcement
<br />activities. The funds must be used for drug and alcohol related activities. The TIF Fund is used to
<br />account for revenues related to the Orono Woods Senior Housing Development.
<br />Prepared By: J*JU Reviewed By: 51V Approved By: J1V
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