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MEMORANDUM <br />To: Mayor Walsh and Orono City Council <br />From: Maggie Jin, Finance Director <br />Subject: 2025 General Fund Budget and Tax Levy <br />Date: July 22, 2024 <br />Attachments: 2025 General Fund Budget and Tax Levy <br />Work is continuing on the 2025 budget and tax levy. Individual departments requests have been <br />received and department heads have discussed their requests with the City Administrator and <br />Finance Director. The Budget Committee then met to discuss further changes to meet the needs <br />and goals of the City, with the focus on keeping the tax rate steady. <br />Tax levy required to fund the General Fund, Capital Funds, and Debt Service Funds has been <br />calculated and is sufficient to fund all of the needs with a minor increase to the tax rate. The goal <br />of the City is to maintain a stable tax rate, which is achieved by the tax rate (16.48%) being <br />lower than the last five-year average tax rate (16.606%). Staff will continue to meet with the <br />Budget Committee and work with each department heads to further refine the budget prior to the <br />adoption of the preliminary budget in September. The draft budget and tax levy information is <br />being provided as an update of the budget process to the rest of the council for further <br />suggestions and recommendations. <br />There are a couple of variables that could still impact the budget and the tax base: <br />•Health Insurance – The budget has been created with an assumption that the city <br />contribution for employee health insurance will increase by 10%. The City will not <br />receive the actual amount of any rate increase until the end of September or early <br />October. <br />•Property Values – The final property values will not be received from the Hennepin <br />County Assessor until December. The tax rate calculations are based on the most recent <br />numbers available and generally do not change significantly in either direction between <br />now and the final. <br />With the first initial meeting of the Budget Committee, the committee have met to refine the <br />budget and tax levy to meet the goals of both funding needs and keeping the tax rate stable, with <br />the recommendations as follows: <br />•Enterprise fund payment to the Facilities Fund to assist in covering future facilities <br />expenditures. <br />•Change of the City’s general fund reserve policy from 45% to 35%. <br />•Cell tower antenna lease revenue move from Facilities Fund to Fire Capital Fund. <br />Page 1 3