12-07-2020 Council Packet - Laserfiche WebLink

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AGENDA ITEM Prepared By: MLU Reviewed By: MLU Approved By: DJR 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 August 20, 2020, the City’s taxable market value is $3,432,437,494 with a tax capacity of $$39,438,081. When compared to last year, taxable market value has increased by 7.86% and the tax capacity by 8.37%. As a result of the City’s increased tax capacity, the tax capacity rate will increase from 16.512% in 2020 to 16.765% in 2021. 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 $28.79 (7.41%) on a home previously valued at $250,000; an increase in tax of $65.04 (7.88%) on a $500,000 home; a $1,000,000 home will see an increase of $133.24 (7.17%); and a $2,000,000 home has an increase of $269.65 (6.88%). 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. General Fund Budget General Fund Expenditures The 2021 expenditure budget is $9,260,500 which is an increase of $ 117,300 (1.3%) over the 2020 budget. The significant increase is the following: Building Inspection Service (Professional Services) is increasing $155,700 (10.53%). This is due to having the building official position in house transition to outsourcing the duties. Therefore, there is only a slight increase in Wages and Benefits (Personal Services) of $55,300 (0.96%) while the Cost of Living increases 3%. The significant decrease is as follows: Distribution to Other Government (Other Expenses) is $116,200 (23.29%). The change was to the accounting for the Toward Zero Deaths Grant. The City was not designated as the authorized representative in 2021. After accounting for these more significant increases and decreases, the remaining General Fund increases the total of $22,500 or 0.25%. General Fund Revenues For revenues, the General Fund budget also totals $9,260,500 and is increasing by $117,300 (1.3%). The largest increase in revenues is the property tax line at $247,140. Coop Police Services are increasing by $25,060 and are the amounts charged to the City of Spring Park, Minnetonka Beach and Mound for providing them police services. The significant decrease include $130,000 in the State Grant line item which was also discussed in the expenditure section. All other revenue changes total $24,900 and represent an increase of 0.27% of the revenue budget. Special Revenue Funds The special revenue funds that budgets are adopted for are the Park Fund, The Drug Forfeiture Fund, and the TIF Fund. Special revenue funds by definition have a primary source of revenue that is dedicated for a specific purpose. In the Park Fund the primary revenue source is park dedication fees collected from developers. By state law, these funds must be used for parkland acquisition and development. The Drug Forfeiture Fund receives its primary funding from the Police Department’s drug and alcohol enforcement activities. The funds must be used for drug and alcohol related activities. The TIF Fund is used to account for revenues related to the Orono Woods Senior Housing Development.