09-23-2024 CC Agenda Packet - Laserfiche WebLink

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City of Orono 2025 Preliminary Budget The Budget Process The city began the budget process at the end of May with the various city departments completing their budget request forms. Departments then met with the City Administrator and the Finance Director to review their budget requests. Upon completion of the reviews, the draft preliminary General Fund budget was discussed by the Budget Committee and the full council was updated during work sessions in July and September. The Preliminary General Fund Budget and Tax Levy will be adopted by the City Council at the September 23rd, 2024 City Council meeting. Prior to the final adoption of the 2025 budget and tax levy, the City is required to hold a public hearing to allow public input on the budget and tax levy. By law, this hearing must occur between November 24th and December 28th. The public hearing is set for November 25, 2024 at 6:00 pm at Orono Council Chambers. The final budget and tax levy will be adopted at the December 9th City Council meeting. In addition to the work on the actual budget, staff has been working on updating the Capital Improvement Plan (CIP). The CIP identifies the long-term infrastructure needs and is a valuable tool in the budgeting process. The CIP will be approved as part of the December 9th meeting. In conjunction with the budget process, staff will also review the fee schedule. The 2024 fee schedule will be adopted at the December 9th meeting. Tax Levy The tax levy is used to fund the general operations of the City (General Fund), pay the debt service on the City’s outstanding bonds, and to fund the Pavement Management (PMP), Building, Facilities, Fire Capital and Park Funds. The total tax levy required to fund the 2025 draft budget is $9,631,000. This is an increase of $215,900 or 2.29% over the 2024 levy of $9,415,100. The increase of $358,900 in the General Fund represents the largest increase in the levy. The increase is primarily for the need to cover a budgeted 3% increase in union employee wages, a proposed increase for non- union employee wages, and an increase in employee insurance contributions. Other levy increases include $25,000 increase for the Fire Facilities Fund. The 2014A bond levy was reduced one-time in 2024 and will return to the original amount of $242,000, an increase of $182,000. The Parks levy is stable to continue the Council’s commitment to adequately fund park infrastructure and better maintain current facilities. Similarly with Pavement Management, the levy remains stable to adequately fund street projects. The levy for Facilities Fund is being reduced by $150,000, with additional amounts to the fund coming from the Enterprise funds for future facility needs. The levy for Community Investment Fund is zeroed as the fund has adequate funding for future needs until further. Tax Capacity Rate and the Impact of the Tax Levy on Property Owners The County Assessor provides an annual calculation of the City’s tax capacity based on the annual property revaluation. As of August, the City’s taxable market value is $5,014,564,174 with an adjusted net tax capacity of $58,907,542. When compared to last year, taxable market value has increased by 2.1% and the adjusted net tax capacity by 2.3%. For 2025, it is anticipated that the tax rate can remain the same as 2024 at 16.35%; one of the lowest rates in both Hennepin County, and the State of Minnesota. Using this tax rate and assuming no change in a property’s value, the City’s share of the property tax bill would remain the same compared to 2024. The actual tax impact on any Page 2 of 63 94