|
MINUTES OF THE
<br />ORONO TRUTH-IN-TAXATION MEETING
<br />Monday, December 12, 2011
<br />6:00 o’clock p.m.
<br />_____________________________________________________________________________________
<br />
<br /> Page 1 of 4
<br />
<br />The Orono City Council met on the above-mentioned date with the following members present: Mayor
<br />Lili Tod McMillan, Council Members Cynthia Bremer, Doug Franchot, Aaron Printup, and David Rahn.
<br />Representing Staff were City Administrator Jessica Loftus, Finance Director Ron Olson, and Recorder
<br />Jackie Young.
<br />
<br />Mayor McMillan called the meeting to order at 6:05 p.m., followed by the Pledge of Allegiance.
<br />
<br />
<br />2012 BUDGET AND TAX LEVY
<br />
<br />Ron Olson, Finance Director, stated the purpose of the public hearing is to discuss the 2012 budget and
<br />tax levy for the City of Orono. It is not to discuss property values, which is done at the Local Board of
<br />Review hearing in the spring.
<br />
<br />Olson stated the amount of tax that an individual property pays is calculated by multiplying the property’s
<br />taxable value by the City’s tax capacity rate. The tax capacity rate is also a calculated number that is
<br />determined by dividing the City’s tax levy by the total taxable market value of all properties in the City.
<br />The taxable market value for the City has decreased by $202,371 or 7.3 percent. Based on the 2012
<br />taxable value, the City’s tax capacity rate for 2012 will increase from 14.991 to 16.233 percent.
<br />
<br />A majority of the decrease in tax capacity is the result of the overall decrease in home values. Part of the
<br />decrease, however, is the result of the change from the Market Value Homestead Credit to the Market
<br />Value Exclusion. This change instituted by the State of Minnesota resulted in $13,067,192 of the
<br />decrease. The total tax levy required to fund the 2012 budget is $4,701,760. This is the same amount as
<br />the 2011 levy.
<br />
<br />Olson stated the MN Legislature this year passed the Market Value Exclusion and eliminated the Market
<br />Value Homestead Credit. Under the Market Value Exclusion system, on values up to $76,000, 40 percent
<br />of the value of the home is excluded from the tax base, with the percentage being phased out totally on a
<br />home worth $413,000. As a result, a $76,000 home would have a tax capacity of only $45,600. On a
<br />$300,000 home, it would be $289,760, and on a $500,000 home, it would be $500,000 for calculation
<br />purposes. That resulted in an increase in the tax capacity rate for the City from 16.160 to 16.233 percent.
<br />The lower valued homes might pay a little extra in property taxes, but the change primarily pushes the tax
<br />to higher valued homes, commercial/industrial properties, and non-homesteaded properties. From 2011
<br />to 2012, the property tax levy is exactly the same, but the City's tax rate increases slightly.
<br />
<br />Olson stated 46 percent of a person's tax dollar goes to Hennepin County. Schools receive 29.57 percent,
<br />the City receives 14.98 percent, and other is 9.29 percent. The other category includes Hennepin Parks,
<br />Hennepin County Regional Rail Authority, and the HRA, which raises Hennepin County's share to 51
<br />percent. The general fund receives $3.9 million, the park fund receives $5,000, and debt service receives
<br />$764,000. For the City’s purposes, 52 percent of the expenditures are for public safety, which is police
<br />and fire; 13 percent goes to street maintenance; 8 percent goes to planning and zoning; and 12 percent
<br />goes to general government.
<br />
<br />As it relates to the tax affect on a home, assuming a $250,000 home experienced a 5.8 percent decrease in
<br />value, their taxes would decrease by $18.46. On a $500,000 house that experienced a 5.8 percent
<br />decrease in value, they would experience an increase of $3.26. A two million home would experience an
<br />Item #02 - CC Agenda - 01/09/2012
<br />Approval of Truth-in-Taxation Meeting Minutes 12/12/2011
<br />[Page 1 of 4]
|