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2(f02 Preliminary' Hiuiiict Update <br />September 4. 200! <br />Paj^e 2 _____ <br />Tax Reform and Tax Levy <br />l^c lax reform package adopted by ihe 2001 legislature included ihc climinalton of state I lACA aid <br />from cities as one source of revenue to be used by the state to pay for other elements of the tax <br />reft)rm package; the most substantial of which is the slate funding of education. Although the tax <br />reform substantially reduces pn>pcrty taxes through the state’s increascxl funding of education, the <br />reform package also assumexi the property lax reduction would be s^miewhat offset by increased <br />municipal levies to offset the loss of IIACA aid. Although taxpayer groups ore tr> ing to make an <br />issue of cities levying for the lost IIACA aid. it is clear the legislature fully expected cities to <br />increase their levies to ofl’set the loss in IIACA aid. In fact, the levy limit** placed on cities by the <br />legislature enable cities to levy for the lost I h\CA aid. <br />If the city’s II AC’A aid had not been reduced, the city’s tax levy w*ould have increased by SI 23.355 <br />or 5.05%. Ihe additional levy to oIVset the loss of S300.630 of IIACA aid results in a total levy <br />increase of $432.*)K5 or 17.72%. <br />Certification of Tax Le% y <br />The city must certily a levy to the county by September 14. 4 his levy amount may he reduced but <br />may usil K* increased, fhe final budget and levy are adoptexi in late November or early December <br />of each > ear. litis certified lew will be used for the "truth in taxation” pioperty tax notices providexi <br />by the County to all property owners. <br />fhe Council w ill be asked to approve the potposed levy at its regular meeting of September 10. <br />Truth in Taxation Hearing <br />liach year the various levels of local government, i.e. city, county and .school districts, are required <br />to hold trulli in taxation hearings, w hich arc ati opportunity for property o w ners to obtain information <br />regarding the proposed budgets and tax levies. Ilie truth in taxation hearings nonitally occur in late <br />November or early December afier the property owners have received property tax statements <br />indicating the proposed levy increases, llie final budget and tax lew are then adopted subsequent <br />to the truth in taxation hearing. <br />Because the tax reform package resultcxi in so many changes to the property tax system, the holding <br />of a truth in taxation hearing in 2001 has been left to the discretion of each individual jurisdiction. <br />On one hand, a truth in taxation hearing could be a ginnl opportunity for the city to explain the <br />properly tax reform package and how it alTects the city’s finances, particularly the tax levy, and to <br />explain the proposed budget. On the other hand, in past years, tlie city has not had any public <br />participation in its truth in taxation hearings. Ilowxrvcr. the city has included articles regarding the <br />proposed budget and lax levy in its city new sletter. StalT is in the process of preparing on article for <br />the upcoming fall newsletter w hich will explain the major elements of the lax reform package as well <br />as provide information regarding the propo.scd budget and lax levy.