09-14-2015 Council Minutes - Laserfiche WebLink

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MINUTES OF THE ORONO CITY COUNCIL MEETING Monday, September 14, 2015 7:00 o'clock p.m. 4. 2016 PRELIMINARY BUDGET INFORMATION (continued) The General Fund operating levy is exactly the same as last year. The City of Orono's tax rate has remained fairly consistent. Since 2011, the average city in the state of Minnesota has increased their taxes by 8.74 percentage points or slightly over $500,000 over what the City of Orono has done. From 2010 to 2015, Orono's tax increase has been the lowest with the exception of Spring Park. Olson noted some of the cities during that time period, such as Medina and Wayzata, have experienced tax increases of over 20 percent. Olson stated based on the City's tax rate, if a residential property had no increase in value and their property tax rate stayed the same, they would experience no increase in their taxes. If someone owned a $250,000 house in 2014 and there was a three percent increase in the value, it would increase their property taxes by $14 over the course of the year. On a $2 million home that increased by three percent, this tax levy would result in an increase of $130. On the other hand, if a $250,000 home decreased in value by three percent, their property taxes would go down by $14 per year. Olson stated as it relates to the General Fund budget, it is important to note that the property tax levy is not increasing. The City's total revenues are projected to increase 1.7 percent and are expected to come from an increase in building permits. The line for total fines and forfeits is being decreased by 27 percent due to the loss of some federal money from the Metro Drug Task Force. Olson noted there is a big increase dollar -wise for public service charges for the cities that contract with Orono for police protection. The City's expenditures are increasing by 1.7 percent, which is not a very big increase. A couple of big items that are changing are elections, which are going up 66 percent due to 2016 being an election year. Dollar -wise it comes out to approximately $16,000. Olson noted the City will be experiencing a 12 percent increase in charges for assessing by the Hennepin County Assessor's Office. A large portion of the increase in the City's expenditures has to do with the police labor contract and employees' wages increasing by $105,000 or 2.75 percent. Olson noted the total increase is less than the actual wage increase being given to the police officers. In addition, street maintenance is going down by $74,000, which is a result of moving approximately $40,000 from the General Fund into the Pavement Management Fund. Olson noted special projects and contingencies are showing an increase of 152 percent, which represents the amount of money that would be available for raises and benefit increases for the nonunion employees. At the present time none of the departments have a salary increase and that money has been added to the contingency line. In October, when the Council discusses the compensation plan, a decision will be made on how that money will be allocated. When discuss the compensation plan, can decide how that money will be allocated. Olson stated the City is required to certify its preliminary tax levy to Hennepin County by September 30. McMillan noted the City Council will be voting on the preliminary tax levy in two weeks, and after adoption of the preliminary levy, the levy cannot be increased. McMillan stated the levy can still be decreased prior to adoption of the final levy at the December 8 Council meeting but it cannot be increased. Page 2 of 39