08-27-1990 Council Packet - Laserfiche WebLink

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recession. This inay well be aggravated by the anticipated reduction in national defense spending and the spin-out effects to aerospace and defense oriented industries. The national unemployment rate was at 5.2% in June. In Minnesota there have been, during the past year, significant layoffs in the computer and areospace indus:ries. This has raised what has traditionally been a very low unemployment rate in the metro area to as high as 4.5% but for May was at 3.9%. A slowdown in other industries in Minnesota has boosted Minnesota's unemployment rate which is often below the national rate to above the national rate earlier this year at 5.4% but is presently at 4.3%. On the 1990 Legislative scene, the actions to again put a bandaid on the property tax system resulted in the City of Orono receiving no monies from the State either in the form of Local Government Aids (LGA) or in Homestead and Agricultural Credit Aid (HACA). This theoretically has come about with no net increase in taxes to local property owners as these have proportionately been shifted to the school districts. The "good news" from the Legislative session is because the City of Orono no longer receives the LGA or HACA money there is no penalty should the City exceed its levy limits. In addition, the City could undertake Tax Increment Financing which was severly restricted throughout Minnesota by the 1990 Legislative session as the prime control was a reduction in the City's LGA. While levy limits continue to be an issue for Orono, which because of Legislative action for the 1983 budget year lost over $200,000 in available levy when it attempted to be a good steward of its resources, it will continue to look for ways to insure that it maintains its healthy financial credit rating, which during 1989 was raised to a Aal. A possible option would be for the City to explore methods to reduce its longterm debt which may possibly be done outside the levy limit. On the local level the slow down in construction has been noted with only 14 new housing permits issued through the first of July as opposed to a total of 24 in 1989. General commodities are anticipated to increase at the rate of inflation. REVENUES - The preliminary estimate of property tax growth for th<» 'eneral Fund will be approximately 3.7% based on the rules estarHished by the 1990 Legislature. In an effort to insure a strong financial posture the City, should it choose, may be able to increase above that for payment of bonds and interest in the range of $100- $200,000 to be able to be in a position to pay off outstanding bonds early and then use the assessments to reimburse the earlier tax levy. This would equate to 5-10% city tax increase or about 1-2% total property tax increase. Orono continues to have the lowest city tax capacity rate for any city over 1,000 in Hennepin County.