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MINUTES OF THE
<br /> ORONO CITY COUNCIL MEETING
<br /> Monday, September 23,2019
<br /> 7:00 o'clock p.m.
<br /> Property taxes are increasing by$299,000,which is larger than it has been in recent years. However,
<br /> $80,000 of that increase is due to another budgeting shift. Orono had been budgeting for road
<br /> maintenance out of the Pavement Management Plan. Starting in 2020,road maintenance will be taken out
<br /> of the General Fund. Previous city councils were not funding it out of the General Fund and had been
<br /> using bond revenue for maintenance because they did not want to raise taxes to fund road maintenance.
<br /> The current City Council has done a good job of looking at long-term maintenance needs and providing
<br /> funding for them.
<br /> Property taxes consist of 51 percent of the budget. Over the years Orono has found other ways to fund
<br /> the General Fund. One of those funding sources is public safety service charges,which consists of 28
<br /> percent of the budget. General government service charges is at seven percent and permits are at 6
<br /> percent. Surrounding cities are much higher in their dependence on property taxes to fund their General
<br /> Fund,but Orono's police contract revenue allows the City to be less dependent on property taxes.
<br /> The expenditure budget is increasing by 6.6 percent,which is consistent with the revenue budget. One of
<br /> the biggest increases for 2020 is elections. Next year there will be three elections-the presidential
<br /> primary,the general primary,and federal elections,which amounts to an$62,000 increase. Police
<br /> services are increasing significantly by$354,000,with at least half of that going towards wages and
<br /> benefits. Another big increase for the police department is insurance costs,which amount to around
<br /> $40,000. Over time the City's insurance carrier has realized that police departments in general are behind
<br /> a lot of big claims, and as a result,the City's premiums have increased dramatically. Street maintenance
<br /> has an increase of$95,000,mainly as a result of an accounting shift. The City Council removed$80,000
<br /> out of the Pavement Maintenance Plan and put it into the street maintenance budget.
<br /> Olson stated those are the three main departments that are increasing significantly. Special Projects and
<br /> Contingencies is decreasing by$70,000 since the City will not be hiring another employee as was
<br /> originally anticipated. The City's expenditure budget overall consists of 53 percent for the police
<br /> department,five percent for fire protection,eight percent for building and zoning,and seven percent for
<br /> street maintenance. Personnel costs is the most significant budget line item.
<br /> The total of all proposed levies is$6,007,450. The General Fund operating budget is$4,679,000;the
<br /> Pavement Management levy is$617,450, which is an increase of$73,000; and bond payments is
<br /> $711,000 per year. That number will drop significantly by a quarter of a million dollars in 2023.
<br /> Orono has traditionally been very conservative on the amount that they tax. A person's property tax bill
<br /> consists of Hennepin County at 40 percent,the City at 15 percent,the school at 37 percent,and other is
<br /> nine percent.
<br /> As it relates to the City's tax capacity, in 2019 the City's tax rate was 16.406 percent. Under the 2020
<br /> levy,that would increase to 16.677 percent,which is a little over a quarter percentage increase in the rate,
<br /> which yields $372,000 in revenue. If someone has a$250,000 home that did not change in value,their
<br /> taxes would increase by$6.38 on annual basis. On a$2 million home,that would amount to an increase
<br /> of$64.00. Because some homes will increase in value, a five percent value was calculated to each of the
<br /> examples. In that scenario,the$250,000 home would see a$29 increase and the$2 million home would
<br /> see a$272.00 increase. Over the years the City's tax rate has decreased from 17.9 percent in 2014 to 16.6
<br /> percent in 2020.
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