09-26-2016 Council Minutes - Laserfiche WebLink

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MINUTES OF THE ORONO CITY COUNCIL MEETING Monday, September 26, 2016 7:00 o'clock p.m. 4. 2017 BUDGET AND PRELIMINARY LEVY — RESOLUTION NOS. 6675 and 6676 (continued) In addition, workers comp for the police department adds $36,000. Olson noted the City's rating went from .75 to 1.0 and that the City did have a couple of very expensive workers comp claims, which resulted in an increase to the workers compensation premium. Other increases in the General Fund include software licensing at $8,000, cloud backup at $6,000, LOGIS application at $8,000, Comprehensive Plan updates and mapping at $18,700, professional services for the Navarre Plan at $30,000, for a total amount of $60,700. Olson stated also included in the tax levy is the debt service levy, which is staying the same in 2017. The pavement management levy is being increased to $401,506. The total of all proposed levies is $5,353,730. Olson noted there was some discussion at the August work session to leave the pavement management levy at its current level and to sell bonds. Olson stated a decision about whether to bond or not bond will need to be made tonight. Olson noted Council Member Printup sent him an email earlier today asking him what would happen if the pavement management levy disappeared. Olson stated basically the entire increase from last year's tax levy and this year's tax levy is $400,000 and that an argument could be made that every penny of the tax levy increase for the last two years has gone straight to road projects. Olson stated since 2011, Orono has been well below the average statewide number for property tax increases. Olson noted on an average tax bill in other cities, 28 percent goes to the school district, 28 percent goes to the city, 28 percent goes to the County, and 12 percent goes to the State of Minnesota for commercial/industrial property. In Orono, 46 percent of the tax bill goes to the County, 30 percent goes to the school district, and the City receives approximately 15 percent of the average tax bill. On average other cities have increased their taxes by 9.44 percent more than the City of Orono, which would equate to $475,000. Olson noted since 2010, Orono's levy has increased 6.18 percent, which is lower than a number of other local cities, and that the City of Medina increased their taxes by 36 percent since 2010. Olson stated overall Orono has done a very good job at controlling the tax rate but that the City Council will need to decide how to fund some necessary road improvements. Olson stated if there is no change in property values and with a tax levy increase at 8.06 percent, which would increase the pavement management levy to $401,000. On a $250,000 home, that would result in s savings of $10.82. On a $500,000 home, that would result in a savings of $23.00, on a million dollar home the property owner would save $51.75, and on a $2 million home the property owner would save $109.00. If a 5.19 percent increase is assumed on property valuations, taxes on a $250,000 home would increase by $12.00 per year and on a $2 million property the taxes would go up by $101.50. Olson noted those increases or savings only reflect the City's portion of the tax levy. Olson indicated he can answer any questions the Council may have. McMillan noted there are no assumptions being made for refunding in either of the resolutions adopting the preliminary budget and levy. Page 5 of 26