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Prepared By: RJO Reviewed By: RJO Approved By:
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<br />1. Purpose. The purpose of this action item is to approve the 2022 General Fund Budget, Tax Levy,
<br />and the 2022 Special Revenue Fund Budgets.
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<br />2. Background. Prior to the adoption of the 2022 budget and tax levy, the City is required to hold a
<br />public hearing to allow public input on the budget and tax levy. By law, this hearing must occur between
<br />November 25th and December 28th. When the preliminary tax levy and budget was approved in
<br />September, the public hearing was set for December 6, 2021 at 6:00 pm. This public hearing is the final
<br />step prior to adoption of the budget and tax levy.
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<br />The City began the budget process at the beginning of June. At a work session held on June 28th, the
<br />Council was provided background information on the budget and an overview of the budget challenges
<br />for 2022. Over the summer, a draft budget was prepared and reviewed by the Council at work sessions in
<br />July, August, and September. The 2022 Preliminary Budget and Tax Levy was publically presented and
<br />adopted at the council meeting of September 27th.
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<br />In addition to the work on the actual budget, staff has been working on updating the Capital Improvement
<br />Plan (CIP). The CIP identifies the long-term infrastructure needs and is a valuable tool in the budgeting
<br />process. The CIP will also be approve as part of tonight’s meeting.
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<br />In conjunction with the budget process, staff has also been reviewing the fee schedule. The 2022 fee
<br />schedule, as currently amended, will be adopted at tonight’s meeting.
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<br />3. Tax Levy. The total tax levy required to fund the 2022 budget is $6,944,776. This is an increase of
<br />$334,156 or 5% over the 2021 levy. The increase includes an additional $65,000 to the Facilities Fund,
<br />$150,000 for road maintenance and reconstruction; $50,000 for Parks, and $70,956 for the General Fund.
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<br />The tax levy is used to fund the general operations of the City (General Fund), pay the debt service on the
<br />City’s outstanding bonds, and fund the Pavement Management Fund, Building Fund, Facilities Fund and
<br />the Park Fund. In September the approved preliminary levy amount was $7,139,710. This has been
<br />decreased, and the final 2022 levy being adopted tonight is $6,944,776. The breakdown of the 2022 levy
<br />is $577,680 for debt service, $900,000 for roads, $375,000 for facilities, $100,000 for parks and the
<br />remaining $4,992,096 is used in the General Fund.
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<br />4. Tax Capacity Rate and the Impact of the Tax Levy on Property Owners. The County Assessor
<br />provides an annual calculation of the City’s tax capacity based on the annual property revaluation. As of
<br />August 20, 2020, the City’s taxable market value is $3,600,896,699 with a tax capacity of $41,394,949.
<br />When compared to last year, taxable market value has increased by 4.95% and the tax capacity by 5.05%.
<br />As a result of the City’s increased tax capacity, the tax capacity rate will remain at 16.78% in 2022.
<br />Orono will continue to have one of the lowest tax rates in both Hennepin County (ranking 41 of 45 cities),
<br />and the State of Minnesota.
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<br />Using this tax rate and assuming no change in a property’s value, the City’s share of the property tax bill
<br />would be remain the same in 2022 as it was in 2021. The actual tax impact on any particular property
<br />will depend on how the property’s taxable value changed in relation to the rest of the City. Tables
<br />Item No.: 1 Date: December 6, 2021
<br />Item Description: 2022 Budget Hearing
<br />Presenter: Ron Olson
<br />Finance Director
<br />Agenda
<br />Section:
<br />Truth In Taxation
<br />Public Hearing
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