09-22-2014 Council Minutes - Laserfiche WebLink

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MINUTES OF THE ORONO CITY COUNCIL MEETING Monday, September 22, 2014 7:00 o’clock p.m. _____________________________________________________________________________________ Page 2 of 18 (3. ADOPTION OF PRELIMINARY 2015 TAX LEVY – RESOLUTION NOS. 6444 & 6445, Continued) Olson stated the graph on the overhead shows the City’s annual tax capacity and tax levy over the past number of years. Olson noted since about the mid 2000’s, the tax levy line has stayed very flat, with the last three budgets having a zero percent increase. From 2010 to 2014, Orono has remained 8.02 percentage points below the state average for cities in tax increases. Olson indicated the next graph shows the property tax distribution. Hennepin County receives 49 percent, the school district receives 34 percent, and the City receives 17 percent, which is well below average. Olson noted that Medina, Minnetonka Beach, and Wayzata have all had double digit increases since 2009. Olson stated over the years Orono has attempted to take a very conservative approach on its budget each year. Olson stated the City’s tax rate, even with taxes going up 1.5 percent, would still decrease from about 17.81 percent to 17.64 percent. Olson noted property values are going up faster than the City’s tax rate is increasing. Olson stated if your property is the same value in 2015 as it was in 2014, that person would actually see a slight decrease of .76 percent on the City’s portion of the taxes. If the house value increases by two percent, the taxes would go up $1.60 for the whole year on a $250,000 house and $56.31 on a $2 million house. Olson noted the City’s portion of the taxes is very small compared to the county and that while the City taxes are only increasing slightly, a person’s taxes could increase more given the county tax rate and/or the school district. Olson noted the City’s revenue budget is increasing by $246,000 or approximately 3.4 percent over last year. Most of the revenue increases are in non-tax revenues and represent an increase in construction activity. Olson stated the City’s revenue has been increasing for the past couple of years and is anticipated to do so again in 2015. The City’s general fund budget for 2015 is budgeting an additional $81,500 in the building permit category, an additional $35,000 in government service charges, and $66,000 in public safety charges. Olson noted as it relates to expenditures, the preliminary budget reflects an increase of $195,597 or 2.67 percent. The largest increase is the result of the newly created Community Development Director position. With benefits, this position adds $99,000 to the General Fund Budget. The costs associated with this position are partially offset by the elimination of the building inspector position and a decrease in professional services. The City Council also approved changing the position of customer service assistant to a full-time position, which adds $24,000 to the overall budget. In order to offset some of this increase, $10,500 of the IT technician’s wages and benefits are now being allocated to the Cable Fund. Olson noted 2015 will be the second year of the 3-year labor contracts for both the police officers and sergeants. As part of their contracts, the union employees will receive a 2.5 percent wage increase and a $75 per month increase in the insurance contribution for employees with family coverage. The preliminary budget also includes a 2.5 percent increase for non-union employees. That increase will be offset by the expiration of a lump sum payment of 1.5 percent that employees received in 2014.