12-14-2015 Councill Packet - Laserfiche WebLink

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infrastructure. Even with the increase Orono’s tax rate will decrease slightly in 2016. Orono continues to have one of the lowest tax rates in both Hennepin County and the State of Minnesota. 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 Fund. The breakdown of the 2016 levy is $754,980 for debt service, $183,000 for roads, and the remaining $4,016,500 is used in the General Fund. The General Fund levy did not increase. 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 11/6/2015, the City’s taxable market value is $2,531,406,258 with a tax capacity of $28,350,885. When compared to last year, taxable market value has increased by 4.1% and the tax capacity by 4.2%. As a result of the City’s increased tax capacity, the tax capacity rate will decrease from 17.39% in 2015 to 17.33% in 2016. Using this tax rate and assuming no change in a property’s value, the City’s share of the property tax bill would be: a decrease of $1.44 (-0.35% on a home previously valued at $250,000; a decrease in tax of $3.05 (-0.35%) on a $500,000 home; a $1,000,000 home will see a decrease of $6.86 (- 0.35%); and a $2,000,000 home has a decrease of $14.49 (0.35%). The actual tax impact on any particular property will depend on how the property’s taxable value changed in relation to the rest of the City. Tables illustrating a 3% increase in value and a 3% decrease in value are included in attachment 5. General Fund Budget General Fund Expenditures The 2016 expenditure budget is $7,708,570 which is an increase of $128,700 (1.70%) over the 2015 budget. The increase of $105,175 (2.65%) in the Police Department is primarily the result of a 2.75% wage that was negotiated with the police unions. Other notable increases are $15,730 (655.42%) due to the 2016 election, a $20,000 (12.5%) increase in Assessing charges to Hennepin County, and $25,820 (36.92%) in Special Services. The expenditures in Special Services are charged back the party that requests the service. The increase in this department is offset by an increase in revenues. During 2015 the City completed a compensation study. The 2016 budgeted non-union wages are based on the results of that study and include a 2.75% COLA. A number of departmental budgets are decreasing. The budget for Mayor and Council is being reduced by $8,460 (-9.23%) as a result of a reduction in the Lake Minnetonka Conservation District levy. Engineering is being reduced $5,000 (-20.0%) to bring in in line with historical costs. Street maintenance is being reduced by $60,610 (-10.93%) with these expenditures moved to the Pavement Management Fund. General Fund Revenues The primary revenue source for the General Fund, accounting for 52.1% of the revenue budget, is the property tax levy. The 2016 General Fund tax levy is $4,016,500 which is the same amount as the 2015 General Fund levy. Total General Fund revenues are budgeted to increase by $128,700 (1.7%) in 2016. Increases are: Permit revenues increase $55,250 (13.9%); Plan