09-14-1998 Council Packet - Laserfiche WebLink

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Request for Council Action continued Page 2 September 10, 1998 Proposed 1999 Budget and Tax Levy - Resolutions Eropgrn Class Tax Rate Reductions. Tax Capacity Rate, and Imnact nn Property The 1998 Legislature approved additional property class tax rate reductions for both residential and commercial/industrial properties. For residential properties, the tax rate on all value over $75 000 was reduced from 1.85% to 1.70%, a reduction of 8%. For commercial/industrial properties, the tax rate on the first $ 150,000 of value was reduced from 2.7% to 2.45%, a reduction of 9.26%. The tax rate on all commercial/industrial property value over $150,000 was reduced from 4 0% to 3 5% a reduction of 12.5%. ‘ ’ Due to the property tax class rate reductions, the City ’s tax capacity has been reduced for 1999 taxes even though the City has had substantial new development and growth in property values. The combination of the reduction in tax capacity and the increase in tax levy will cause the City's tax capacity rate to increase from 14.716% to 15.784%. This is an increase of 7.26%. T^e general affect of the property class tax rate reductions on property owners is to shift taxes from high valued residential properties and commercial/industrial properties to low valued residential properties. For example, a home valued at $100,000 would have a $7.03 or 3.9% increase in City taxes assuming no increase in value, and a $20.45 or 11.5% increase in taxes assuming a 5% increase in value. A home valued at $300,000 would have a $0.81 or 0.1% reduction in City taxes assuming no increase in value, and a $39.44 or 5.5% increase in taxes, assuming a 5% increase in value. A $500,000 commercial/industrial property would have a $142.64 or 5.4% reduction in City taxes assuming no increase in value, and a $4.53 or 0.2% reduction in City taxes assuming a 5% increase in value. Lew Limit The State Legislature placed levy limits on City's for 1998 and 1999. The levy limit is tied to the implicit price deflator and household growth. The City's levy limit for 1999, which includes all levies except those for debt service, is $1,919,140. The proposed levy is at the levy limit. General Fund Budget Expenditures General Fund expenditures are highlighted as part of the proposed budget information because they have the greatest impact on the tax levy. The proposed 1999 General Fund budget expenditures are $3,850,340. This is an increase of $212,245 or 5.8% over the 1998 budget. The tax levy required to fund the general fund budget is $1,818,690. This is an increase of $68,690 or 3.9% over the 19*>8 General Fund tax levy. The proposed General Fund budget includes the expenditures related to updating the City's Comprehensive Community Management Plan and updating the City's Zoning Code, as well as the additional expenditures related to increased costs for contracted services such as fire service and assessing service. These e.xpenditures all require additional tax levy. The General Fund budget also includes a number of substantial expenditures related to providing increased serv ice capacity, such as hiring a full-time Assistant Zoning Administrator and hiring a