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MINUTES OF THE ORONO CITY COUNCIL MEETING Monday, September 10, 2012 7:00 o'clock p.m. _____________________________________________________________________________________ Page 23 of 26 (15. ADOPT PRELIMINARY 2013 TAX LEVY AND BUDGET, Continued) With a 5 percent decrease in property values, the $250,000 home would decrease by approximately $18 and the $500,000 home would see a $20 increase. On a $2 million home, it would amount to an $85 increase. Comparing the tax impact at a zero percent change in value, all property classes on the chart would show an increase, with a $250,000 home coming in at $6.28 and the $2 million home coming in with an increase of $304. Olson noted there are not a lot of homes that have not done some improvements that would reflect a zero percent change in value. Olson stated as it relates to the City's tax rate history, it shows that in the early 2000s the City’s tax levy was increasing fairly significantly, but at the same time the City's tax rate was decreasing. From 2009 to 2010, the City started seeing an increase in the tax rate even though the City's tax levy leveled out. Olson illustrated the City's debt service needs on the overhead and the amount of levy that will be required to fund the debt service on existing bonds. Between 2014 and 2015, there is a significant decrease of approximately $80,000 in the debt levy needed and in 2016 there is another significant decrease. Olson stated the City's preliminary tax levy is $4,701,760. This is the same amount that was levied in 2011 and 2012. Olson noted the approval of the Mound service contract will not affect the levy but the revenues and expenditures will change significantly with the Mound contract. The general fund tax levy did increase by $14,000, which was offset by a decrease of $9,000 in the debt service and elimination of the park levy of $5,000. Building permit revenue has been increased by $35,000, which is a significant increase but is approximately $100,000 lower than last year. Olson noted there are some minor changes ranging from $1,000 to $2,000 in the various budgets but that overall the City's revenue budget did not increase from 2012. In addition, conditional use and variance fees are being reduced by $19,000 to reflect the actual amounts received in prior years. Golf course revenues have been decreased by approximately $15,000. Engineering/legal fees are pass-through charges that are accompanied by a $10,000 decrease in the expenditure budget. The decrease of $10,000 in the Drug Task Force revenue is based on information supplied by the task force regarding what they anticipate Orono will receive in the way of distributions. The expenditure budget was built with a 1 percent increase in wages, which is what the union contract calls for. There is a $50 increase a month for families who choose to have health insurance. Inflation has increased at 3 percent, which was determined by using the CPI Urban for the Minneapolis/St. Paul region, which is from July 1st of last year to June 30th of this year. The Council had indicated they would like to see an expenditure budget at the same level as the 2012 budget. Staff was able to meet this goal and the preliminary budget represents a 0 percent increase from 2012. Planning and zoning had a net decrease of $14,000, which includes an increase of $10,000 in wages and benefits. The decrease is due to the RFP for engineering services that the City underwent last year. The engineering department and the general fund have been decreased by $15,000. The funding to the Gillespie Center was reduced by $9,500. Olson stated as it relates to the engineering and attorney costs, the City experienced significant decreases this year as well as from 2011 to 2012, when the City decreased the engineering and attorney expenditures by $25,000. Item #02 - CC Agenda - 09/24/2012 Approval of Council Minutes 09/10/2012 [Page 23 of 26]