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MINUTES OF THE
<br />ORONO CITY COUNCIL MEETING
<br />Monday, December 7, 2020
<br />6:00 o’clock p.m.
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<br />Page 2 of 15
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<br />TRUTH IN TAXATION PUBLIC HEARING – Continued
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<br />the City’s tax capacity rate to get the net City tax on the property. Onscreen, she showed an actual
<br />example of a home in Orono of which the value is $1,026,000 for 2021; using the 2021 value assigned to
<br />this property, 1% of the $500,000 of the estimated market value and then 1.25% of the remaining
<br />$526,000 of the home value is $11,575. She said they multiply that number by the City’s tax capacity
<br />rate of 16.765% and that comes out to $1,940.54, which is the City’s portion of the property tax. She
<br />showed a property tax statement onscreen and noted the City’s portion, the County’s portion, and the
<br />School’s portion, as well as other taxing districts. She stated this reflects the conservative nature that the
<br />Orono City Council has, which is to try and keep the property taxes as low as possible while still being
<br />able to fund and improve needed infrastructures and services. She showed a graphic comparing Orono’s
<br />tax capacity rate compared to neighboring and connecting cities, of which Orono was the lowest. In
<br />Hennepin County, the average tax capacity rate for cities is 38.4%. Metro-wide there is an average of
<br />79% residential and 18% commercial; in Orono the majority is 98% residential with only 2% making up
<br />commercial. Ms. Ung moved on to the budget information and showed the tax levy they are asking the
<br />Council to approve tonight. The majority of the $6.6 million will go towards the General Fund of
<br />$4,921,140. There are two new levies to share, the building fund and parks levy; the building fund levy
<br />of $310,000 will go towards development and improvement of buildings, and the parks levy of $50,000
<br />will go towards parks improvements and expenses. The pavement management levy is designated
<br />towards the improvement of road infrastructures. The last two levies are for outstanding bonds that they
<br />sold in the past and are now trying to pay those off. This year one bond was paid off, and they expect to
<br />see the other two drop off by 2029. Ms. Ung showed another way to look at the tax levy; as previously
<br />stated, the tax capacity is $39,431,077 and the City’s total levy is $6,610,620 and that brings them to a
<br />total tax capacity rate of 16.765% for 2021 which is .25% above last year’s rate of 16.512%. For the
<br />average homeowner, if one has a home that has a $250,000 market value and market value did not change
<br />for 2021, their City’s tax portion would be increased by $5.95. On a $2,000,000 dollar home with no
<br />change in value, their City’s tax portion would be increased by $60.09. Some homes have increases and
<br />decreases in values so looking at a 5% increase in the value of a home, a home with a value in 2020 of
<br />$250,000 now increases $28.79 for 2021; a home with a decrease in value of 5% (a $250,000 home is
<br />now valued at $237,500) the City tax portion would decrease by $16.89. Ms. Ung moved on to the
<br />budget and provided summary information. She noted the detailed budget would be made available on
<br />the website later in the week. Revenue is increasing 1.3% overall, the biggest decrease is in the
<br />intergovernmental due to the way they handle the grant money for accounting purposes. Because Orono
<br />is not the grant distributor, they will also see this decrease in the expenditure side. Taxes make up over
<br />half of the revenue, and public safety charges make up about 1/4 of the revenue budget, due to police
<br />contract with neighboring cities (Mound, Spring Park, Minnetonka Beach). This helps Orono keep
<br />property taxes down to 53%; typically, they would see the other cities’ budgets depend on the property
<br />taxes about 65-76%. She showed a graph that breaks down the revenues. She gave a year-to-date update
<br />on permit revenues, and said overall through November they are at 85.7% of the budget for 2020;
<br />building permit is about 80%; planned check site exam is at 76.4%; mechanical permit is at 163%;
<br />plumbing is at 89%. Expenditures are increasing by 1.28%, so the percentage increase on the Mayor and
<br />Council is 25.5%; this is due to the meeting minute price increase and noted that is a small amount
<br />compared to the overall budget. There is also a 54% decrease in election due to 2020 having been
<br />budgeted for the presidential election (they will see another spike in the budget line item in 2024 for this
<br />reason). She noted another way to look at the budget by use: the personal service line item has increased
<br />for Staff increases and costs of living; this is offset by eliminating the building official position. They
<br />will see an increase in professional service for the outsourcing of those duties which is the 10.5% increase
<br />in professional service. As for the decrease of other expenses, it is to offset the way they account for
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