12-06-2010 Council Minutes Truth in Taxation

Home Browse Search

F r MINUTES OF THE TRUTH -IN- TAXATION MEETING ' Monday, December 6, 2010 . 7:00 o'clock p.m. ROLL CALL The Orono City Council met on the above - mentioned date with the following members present: Mayor James White, Council Members James Murphy, Cynthia Bremer, Lili McMillan, and Doug Franchot. Representing Staff were City Administrator Jessica Loftus, Finance Director Ron Olson, and Recorder Jackie Young. Mayor White called the meeting to order at 7:00 p.m., followed by the Pledge of Allegiance PUBLIC HEARING 1. 2011 BUDGET HEARING — 2011 BUDGET AND TAX LEVY White noted this is the truth -in taxation meeting to allow for public input on the City's 2011 budget. White stated the final budget will be adopted at the December 13'h City Council meeting. Olson stated the purpose of the meeting tonight is to discuss the budget and how it was arrived at and the City's levy. Olson stated a person's property taxes could increase even though their values have gone down since the tax rate is calculated based on a formula. The tax calculation begins with the value set by the assessor. This value is then multiplied by the tax class rate to determine a property's tax capacity. • Property class rates are set by the State, and for residential properties the rate is 1 percent of the first $500,000 and 1.25% of the value over $500,000. In Orono 93.6% of properties are residential. This calculation is performed for every property and added together to determine the City's total tax capacity. The tax capacity is divided by the amount of the tax levy to determine the City's tax rate. The tax rate multiplied by a property's tax capacity determines a property's tax. The City's tax rate is estimated to be 15.44 percent this year. _ Olson stated the total tax levy required to fund the 2011 budget is $4,724,200, which is an increase of $58,330, or 1.25 percent over the 2010 levy. General fund expenditures have the greatest impact on the proposed tax levy. The tax levy required to fund the 2011 general fund budget is $3,932,260. This is an increase of $42,550 or 1.09 percent over the 2010 levy amount. This is a decrease of $22,720 from the preliminary budget and below the 1.74 percent limit. It is estimated the City's tax capacity, based on the annual property revaluation conducted by the County Assessor, has decreased by approximately 7.53 percent. By applying the proposed tax levy to the estimated tax capacity, it results in a tax rate of 14.86 percent. This is an increase from the 2010 level of 13.677 percent. Olson noted almost half of the money collected in property taxes goes to Hennepin County, with another major share going to the school districts, and then the smaller portion going to the City. Olson stated if your property value went down by less than 7.6 percent, you will likely see an increase in your taxes. White stated one common question asked by residents is how they know their property valuation is accurate. The State of Minnesota requires assessors to follow a sales ratio that requires assessors to compare homes to comparable properties and the property must be valued within 90 to 95 percent of the • average market value. The properties in the City of Orono are valued at approximately 96 to 97 percent, which is determined by actual sales. PAGE 1 of 6