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Tax Capacity Rate and the Impact of the Tax Levy on Property Owners The County Assessor provides an annual calculation of the City’s tax capacity based on the annual property revaluation. As of August 30, 2013 the City’s taxable market value is $2,351,684,135 with a tax capacity of $26,399,312. When compared to last year, taxable market value has decreased by 0.06% and the tax capacity by 0.88%. Applying the proposed tax levy to the estimated tax capacity results in a tax rate of 17.817%; this is an increase from the 2013 level of 17.667%. Using this tax rate and assuming a 7% decrease in a property’s value, the City’s share of the property tax bill would be: a decrease of $1.46 (-0.35% on a home previously valued at $250,000; a decrease in tax of $1.41 (-0.16%) on a $500,000 home; a $1,000,000 home will see a decrease of $5.40 (-.27%); and a $2,000,000 home will decrease $8.92 (-.21%). Because property’s will not experience the same change in value, tables assuming a 1% increase and a no change in value are included with this memo as attachment 3. General Fund Budget Revenues Total General Fund revenues are budgeted at $7,333,630 which is a decrease of $15,000 from the 2013 budget. Property taxes, representing 54% of the revenue in the General Fund is unchanged in 2014. The category for General Government Service Charges is being reduced by $45,200 (-12.7%). Two line items account for a majority of this reduction: Engineering and Legal Fees and On-Site Septic Program Fees. The Engineering Fees are being reduced because the addition the Public Works Director has resulted in a lessened dependence on outside consultants to review zoning applications and building permits. Costs associated with the use of the consultants were billed by the City to the applicant/homeowner. This revenue reduction represents a savings to individuals the Planning Building and Zoning Department. The On-site Septic program fee was reduced as the result of changes to the nature of the program and a reduction in related expenditures. The one revenue that is increasing significantly is the line for Coop Agreement-Police. This revenue line represents payments received from the City’s of Minnetonka Beach, Spring Park, and Mound for contracted police services. A detailed listing of all revenue lines changing by more than $1,000 can be found in attachment 4, Expenditures At the June work session the Council indicated that they would like to see an expenditure budget of $7,333,630; the same level as the 2013 budget. Working with the Council, staff was able to meet exceed this goal and the preliminary budget represents a $15,000 decrease over 2013. Within the expenditure budget, many line items have changed significantly. A listing of all expenditure line items changing by more than $5,000 is included in attachment 4. Item #04 - CC Agenda - 09/09/2013 Presentation - Preliminary 2014 Budget and Tax Levy [Page 2 of 68]