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The City began the budget process at the beginning of June with the <br />various city departments completing their budget request forms. <br />Departments then met with the City Administrator and the Finance <br />Director to review their budget requests. Upon completion of the <br />reviews, the draft preliminary General Fund budget was discussed by <br />the Budget Committee on July on 29th. The same process was <br />followed with the Enterprise Budgets which were discussed by the <br />Budget Committee on August 26th. The Preliminary General Fund <br />Budget and Tax Levy will be adopted by the Council on September <br />26th. The draft budget is being presented tonight to the whole <br />council for their review prior to adoption at the next council meeting. <br /> <br />Tax Levy. The tax levy is used to fund the general operations of the <br />City (General Fund), pay the debt service on the City’s outstanding <br />bonds, and to fund the Pavement Management (PMP), Building, <br />Facilities, Community Investment and Park Funds. <br /> <br />The total tax levy required to fund the 2023 draft budget is <br />$8,387,000. This is an increase of $1,442,224 or 20.8% over the <br />2022 levy. The increase includes an additional $100,000 to the PMP <br />Fund. The levy has been increased from $0.00 in 2015 to the level <br />required to fully fund the City’s Pavement Management Plan. The <br />additional $50,000 for Parks continues the Council’s commitment to <br />adequately fund park infrastructure and better maintain current <br />facilities. The additional $426,320 for Debt Service is need to service <br />the City’s current outstanding debt. The $219,000 to the Community <br />Investment Fund is new and will be used to fund projects that are of <br />general benefit to the Community. <br /> <br />The additional $648,904 for the General Fund represents the largest <br />increase in the levy. With inflation still in the 8% range the costs of <br />supplies, services, and materials are increasing. Inflation is also <br />creating upward pressure on wages for employees. As a result, the <br />levy needed to fund these increasing expenditure’s is also increasing. <br />Because the City has diverse revenue streams, the increase in the tax <br />levy will be less than the increase in expenditures. <br />Tax Capacity Rate and the Impact of the Tax Levy on Property <br />Owners. The County Assessor provides an annual calculation of the <br />City’s tax capacity based on the annual property revaluation. As of <br />July 1, 2022, the City’s taxable market value is $4,335,886,800 with <br />a tax capacity of $50,000.00. When compared to last year, taxable <br />market value has increased by 20.9% and the tax capacity by 21.1%. <br />As a result of the City’s increased tax capacity, the tax capacity rate <br />will remain at 16.78% in 2022. Orono will continue to have one of <br />the lowest tax rates in both Hennepin County, and the State of <br />Minnesota. <br /> <br />Using this tax rate and assuming no change in a property’s value, the <br />City’s share of the property tax bill would be remain the same in <br />2023 as it was in 2022. The actual tax impact on any particular <br />property will depend on how the property’s taxable value changed in <br />relation to the rest of the City. Tables illustrating a 5% increase in <br />value and a 5% decrease in value are included with this budget <br />document. <br /> <br />General Fund Budget. <br /> <br />General Fund Expenditures. The 2023 expenditure budget is <br />$10,923,500 which is an increase of $969,904 (9.7%) over the 2022 <br />budget. The largest increase is in Personal Services (Wages and <br />Benefits) in the amount of $580,655. Professional services is <br />increasing by $100,000 (6.6%) as the result of an increase of $88,000 <br />in the fire budget and $40,000 in Assessing. Other expenses, which <br />includes utilities and any budget lines not included in other <br />categories, is increasing by $100,580 (20.5%). This is the result of <br />increases in gas/electric costs, brush site disposal, and other <br />inflationary cost increases. Transfers to other funds is increasing by <br />$100,000 (25.0%) with the increase designated for fire equipment in <br />the Improvement Equipment Outlay Fund. <br /> <br />By Department, the significant increases are: The Police budget is <br />increasing by $480,700 (9.3%) as the result of wage and benefits, <br />i <br />City of Orono <br />Preliminary Budget