09-09-2013 Council Minutes - Laserfiche WebLink

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MINUTES OF THE , ORONO CITY COUNCIL MEETING Monday,September 9,2013 7:00 o'clock p.m. (4. PRELIMINARY 2014 BUDGET AND TAX LEVY—PUBLIC INPUT INVITED, Continued) Olson noted the City's 2014 tax levy is not increasing from 2013 and is,in fact, at the same level that it was in 2011. The City's ta�c capacity did decrease by$235,000,which amounts to minus .88 percent. Olson indicated the City's tax capacity decreased slightly due to home values declining slightly. Last year the City experienced a 7.3 percent decrease in home values. Olson commented that hopefully the decline in values is starting to level out. The tax levy is made up of the general fund,the levy to support the general fund and the debt service. Olson stated the City's debt service in 2014 will be approximately the same as 2013. In 2015,the City's debt service drops significantly from$755,000 down to$633,000,and then in 2016 it drops again to $578,000. This decrease in debt service will give the City the ability to fund some items that have been underfunded in recent years. Olson indicated in 2010,the City's tax levy started to flatten out. In 2010, the increase was 2.2 percent; in 2011 it increased by three-quarters of a percent,and in 2014 it will not increase. Olson stated the graph on the overhead depicts the average tax levies in municipal talces across the state of Minnesota and shows that Orono is toward the bottom. Olson stated the next graph shows the effect of the 2014 tax levy and budget on residential properties. If a person's property value went down by 1.0 percent in value and your home in 2013 was worth$250,000, that person's t�es would decrease by$1.50 per year and a$2 million home would decrease by$9.00. If property taxes stayed exactly the same between 2013 and 1014,a$250,000 home would increase by $3.55 on a$250,000 home and$36 on a$2 million home. Olson noted the actual results will vary as not many homes go down exactly the same amount as the tax rate. Olson noted the City's entire budget for 2014 is$7,333,630 and the City's taxes will remain the same as 2013. The septic program fees are decreasing$15,000,which is approximately a 25 percent decrease and was driven by Council's request that Staff review some changes that happened to the septic program. As a result of that review, Staff determined the fee could be decreased. In addition,the consulting engineering fees are projected to decrease by$30,000 in 2014. Olson noted these particular fees are expenses that the City incurs on a variance application or a building permit when it is necessary for the consulting engineer to review it. Since the City decided to hire a public works director, Staff has utilized the consulting engineer less. Police contract revenues are expected to increase by$43,000,which is a result of the Mound police contract and an automatic inflation factor built into it. Overall the general fund revenues have decreased by$15,000. Olson noted this information is available on the City's website if anyone from the public would like to review it. As it relates to the general fund budget,the City's overall expenditures are projected to be$733,630, which balances with the anticipated revenues. Approximately 65 percent of the general fund expenditures consist of wages and another 12 percent are contracted services. Olson noted it is very difficult to cut expenditures significantly without dealing with staffing since 75 percent of the City's expenditures consist of contracted services or staffing. Olson noted as it relates to some expenses, such as elections, assessing and PERA,the City is unable to reduce since they are mandatory expenses required under previously entered contracts. Olson noted another factor that needs to be taken into consideration when looking at the budget is the fact that inflation from 2009 to 2013 has gone up 8.9 percent Olson noted some of the items that were done to balance the budget were to eliminate the deputy clerk position,which saved the City approximately$75,000,decrease golf course staffing levels, and the MN Legislature re-established the City's exemption. Page 2 of 11