12-09-2019 Council Packet - Laserfiche WebLink

Home Browse Search

AGENDA ITEM Item No.: Item Description: 2020 Budget Hearing Date: December 9, 2019 Presenter: Ron Olson Agenda Truth In Taxation Finance Director Section: Public Hearing 1. Purpose. The purpose of this action item is to approve the 2020 General Fund Budget, Tax Levy, and the 2020 Special Revenue Fund Budgets. 2. Background. 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 24`x' and December 28'. When the preliminary tax levy and budget was approved in September, the public hearing was set for December 9, 2019 at 6:30. This public hearing is the final step prior to adoption of the budget and tax levy. The budget process was begun by staff at the beginning of May. At a work session held on May 28t' 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 26' and adopted at the September 23rd council meeting. 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 will also be approve as part of tonight's meeting. In conjunction with the budget process, staff has also been reviewing the fee schedule. The 2020 fee schedule, as currently amended, will be adopted at tonight's meeting. Tax Levy 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 16.498%. 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 as the preliminary tax levy. This has not been 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 Prepared By:.MRU Reviewed By: JJV Approved By: �bV