12-03-2007 Council Packet Truth in Taxation

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Pronosed 2008 Bud�et The proposed 2008 budget reflects additional funding for street improvements and public safety. The budget includes funding to enable a multi-year street improvement program to move forward at an accelerated pace, as well as funding for an expanded Police Department garage. The budget also reflects Orono's share of the cost of a new full-time Fire Chief position to lead the Long Lake Fire Department, which serves the majority of the City. Tax Capacitv Rate and Propertv Tax Impact on Property Owners Based on the proposed budget and tax levy, and the increase in the City's tax capacity (tax base), the City's tax capacity rate will be reduced. Applying the proposed tax levy to the estimated tax capacity results in a tax rate of 13.52% which is a reduction from the 2007 level of 14.27 %. Using this tax rate, the City's share of the property tax bill on a home valued at $500,000, assuming the home has increased in value by 8% over the past year, will increase by $16.63, or 2.3%. For a home valued at $1,000,000, again assuming an 8% value increase, the City's share of the property tax bill will increase by $50.94, or 3.2 %. Tax Levy The total tax levy required to fund the proposed 2008 budget is $4,391,160. This is an increase of$307,930, or 7.5 % over the 2007 levy. The former $200,000 tax levy for street rehabilitation has been eliminated in favor of a new levy to fund the debt service on the planned street improvement bonds. The new levy for the street improvement bonds is $275,370. General Fund Bud�et Expenditures The proposed 2008 General Fund expenditures are $6,034,650. This is an increase of$451,410 or 8.09% over the 2007 budget. The main expenditure items affecting the budget increase are salary and benefits adjustments, the City's share of the cost related to the new Long Lake Fire Chief position, and additional engineering fees related to development, which are reimbursed by the developer. The budget also includes costs related to the update of the City's Community Management Plan, which is required every 10 years. Significant elections expenditures related to the 2008 presidential election are also included in the budget. General Fund Bud�et Revenues The General Fund revenue items are relatively stable for 2008. Construction-related revenues, such as building permit fees, plan review fees, and conditional use permit and variance fees were reduced in 2007, and are budgeted at the same level in 2008. The lower revenue amounts reflect the slowing of residential construction activity. Fundin� for Street Improvements The City has developed a multi-year street improvement plan that is designed to manage the condition of the City's streets in the most cost-effective manner over the long term. The 2008 budget reflects a substantial increase in the levy for debt service related to the street improvements bonds. This levy for these bonds will increase again in 2009, but will remain relatively stable in future years.