12-09-2019 Council Packet - Laserfiche WebLink

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Budget Process The budget process began at the beginning of May. At a work session held on May 28th, the Council was provided background information on the budget and an overview of the budget challenges for 2020. Over the summer, a draft budget was prepared and reviewed by the Council at work sessions in June, July and August. In September the preliminary budget and tax levy was publically presented at the meeting of August 26th and adopted at the September 23rd council meeting. Prior to the adoption of the 2020 budget and tax levy, the City is required to hold a public hearing to allow public input on the budget and tax levy. By law, this hearing must occur between November 24th and December 28th. When the preliminary tax levy and budget was approved in September, the public hearing was set for December 9, 2019 at 6:30. The final budget and tax levy was adopted at the conclusion of the public hearing. In addition to the work on the actual budget, staff has been working on updating the Capital Improvement Plan (CIP). The CIP identifies the long-term infrastructure needs and is a valuable tool in the budgeting process. The CIP was also approved as part of the December 9th meeting. In conjunction with the budget process, staff has also reviewed the fee schedule. The 2020 fee schedule, as amended, was adopted on December 9th Tax Lew The total tax levy required to fund the 2020 budget is $6,007,450. This is an increase of $372,000 or 6.6% over the 2019 levy. The increase includes an additional $153,000 for the road maintenance and reconstruction; reflecting the Council's desire to establish a long term funding solution for the City's road infrastructure. The remaining increase of $219,000 is an increase to the General Fund operating levy. Overall, the tax rate is slightly increasing from 16.406% to 16.677%. Orono continues to have one of the lowest tax rates in both Hennepin County (ranking 41 of 45 cities), and the State of Minnesota. The tax levy is used to fund the general operations of the City (General Fund), pay the debt service on the City's outstanding bonds, and fund the Pavement Management Fund. A levy amount of $6,007,450 was approved in the preliminary tax levy. This has not changed in the final tax levy. The breakdown of the 2019 levy is $711,000 for debt service, $617,450 for roads, and the remaining $4,679,000 is used in the General Fund. Tax Capacity Rate and the Impact of the Tax Levy on Property Owners The County Assessor provides an annual calculation of the City's tax capacity based on the annual property revaluation. As of September 6, 2019, the City's taxable market value is $3,170,532,631 with a tax capacity of $36,076,004. When compared to last year, taxable market value has increased by 4.32% and the tax capacity by 4.68%. As a result of the City's increased tax capacity, the tax capacity rate will increase from 16.406% in 2019 to 16.498% in 2020. Using this tax rate and assuming no change in a property's value, the City's share of the property tax bill would be: an increase of $2.16 (0.56% on a home previously valued at $250,000; an increase in tax of $4.60 (0.56%) on a $500,000 home; a $1,000,000 home will see an increase of $10.35 (0.56%); and a $2,000,000 home has an increase of $21.85 (0.56%). The actual tax impact on any particular property will depend on how the property's taxable value changed in relation to the rest of the City. Tables illustrating a 5% increase in value and a 5% decrease in value are included in this budget document. City of Orono - 2020 Budget Page 3