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TO: <br />FROM: <br />DATE: <br />Mayor and City Council <br />Ron Moorse, City Administrat'r <br />November 26. 1997 <br />r <br />f1 <br />SUBJECT: Proposed 1998 Annual Budget <br />The proposed 1998 Budget accommodates a number of necessa»- xpenditure increases while <br />holding the tax le%7 to the planned increase of less than 3%. A nun. -Texpenditure requirements <br />have occurred simultaneously to cause the need to increase expenditures beyond the normal level. <br />Although the General Fund expenditures are proposed to increase by 5.53%, these expenditures can <br />be accommodated within a tax levy increase of less than 3% because several of the increases are <br />offset by related revenue increases. <br />Expenditures and Tax Lew <br />The city's 1998 General Fund budget expenditures are proposed at $3,638,095. This is an increase <br />of $190,490 or 5.53% over the 1997 budget. The tax lev'y required to fund the General Fund Budget <br />is $1,750,000. rhis is an increase of $69,020 or 4.11% over the 1997 general fund tax levy. <br />The total tax levy required to fund the overall 1998 city budget is $2,225,130. This is an increase <br />of $63,500 or 2.94% over the 1997 levy. <br />Property Tax Class Rate Reductions <br />The 1997 Legislature enacted property class rate reductions for both residential and commercial <br />property, fhe most significant changes in property class rates were the reduction of the residential <br />rate for value over $75,000 from 2% to 1.85%, and the reduction of the commercial class rate for <br />value over $100,000 from 4.6% to 4.0%. <br />Impact of the Budget and Tax Lew on Residential Properties <br />Because the property class rates were reduced, the city's tax capacity rate will be applied to lower <br />tax capacity amounts for individual properties. The result is that the city's share of the property tax <br />bill for homes in Orono will be reduced, assuming no change in valuations. For example, a home <br />valued at $100,000 paid $182.41 in city property taxes in 1997. A home valued at $100,000 would <br />pay $178.12 in city property taxes under the proposed 1998 budget. This is a reduction of 2.4%. <br />Program Highlights <br />The 1998 budget addresses several program needs. Tw o of the most significant are a planning intern <br />and a police sergeant. The need for the planning intern is caused by a verv ’ high level of planning <br />and zoning activity. This activity is producing additional revenue which will be used to fund the <br />position. The police sergeant position is needed to assist the Police Chief with supervisory and <br />administrative duties. <br />1