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AGENDA ITEM <br />Prepared By: RJO Reviewed By: Approved By: <br />1.Purpose. Prior to the adoption of the 2024 budget and tax levy, the City is required to hold a public <br />hearing to allow public input. By law, this hearing must occur between November 25th and December <br />28th. When the preliminary tax levy and budget was approved in September, the public hearing was set <br />for November 27, 2023 at 6:00 pm. This public hearing is the final step prior to adoption of the budget <br />and tax levy on December 11, 2023. <br />2.Background. Staff has been working on the 2024 General Fund budget since May. As part of the <br />budget process, there have been monthly meetings with the Budget Committee and updates to the whole <br />council at work sessions. The preliminary budget and tax levy was approved by the Council on <br />September 11th. <br />3.Tax Levy. The property tax levy has seven components. The first is the operating levy which is <br />adopted to fund the General Fund Operating Budget and is increasing by $904,100 (16.3%). Next is the <br />Facilities Levy is remaining steady at the 2023 amount. The Fire Capital levy in the amount of $375,000, <br />is dedicated to fire capital need. The Pavement Management Levy is remaining at the 2023 level. The <br />levy for parks is being increased by $50,000 (33.3%). The Community Investment levy is being reduced <br />by $19,000 (8.7%) and is dedicated for projects of citywide value. The final levy component is the Debt <br />Service levy which will be reduced by $182,000 by using previously accumulated debt service funds. The <br />breakdown of the tax Levy is as follows. <br />General Fund - Operating $6,545,100 <br />Facilities $375,000 <br />Fire Capital Fund $275,000 <br />Pavement Management $1,000,000 <br />Parks $200,000 <br />Community Investment 200,000 <br />Debt Service $820,000 <br />Total $9,415,100 <br />When compared to the 2023 tax levy, the levy is increasing by $1,028,100 or 12.3%. <br />4.Tax Capacity Rate and the Impact of the Tax Levy on Property Owners. Hennepin County has <br />calculated the City’s new tax capacity rate. Adoption of the proposed levy will result in a decrease in the <br />City’s tax rate from 16.820% to 16.567%. This continues to have one of the lowest tax rates in Hennepin <br />County (ranking 40 of 45 cities). Using the new tax rate and assuming no change in a property’s value, the <br />City’s share of the property tax bill will be: a decrease of $-28.52 (-7.21%) on a home previously valued <br />at $250,000; a decrease in tax of $54.07 (-6.43%) on a $500,000 home; a $1,000,000 home will see a <br />decrease of $-132.01 (-6.98%); and a $2,000,000 home will decrease $267.17 (-6.69%). The actual tax <br />impact on any particular property will depend on how the property’s taxable value changed in relation to <br />the rest of the City. Tables illustrating a 5% increase in value and a 5% decrease in value are included in <br />this budget document. <br />5.General Fund Budget. Tonight’s public hearing is focused on the Tax Levy and the General Fund <br />budget. There are other budgets that have formally adopted budgets as well as some funds that have <br />Item No.: 12 Date: November 27, 2023 <br />Item Description: 2024 Budget Hearing <br />Presenter: Ronald Olson <br />Finance Director <br />Agenda <br />Section: <br />Truth In Taxation <br />Public Hearing <br />Orono City Council | Monday, November 27, 2023 | Page 38 of 79