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MINUTES OF THE
<br />ORONO CITY COUNCIL MEETING
<br />Monday, December 11, 2017
<br />6:30 o'clock p.m.
<br />1. 2018 BUDGET HEARING — Continued
<br />Olson stated the tax levy is used to fund the general operations of the City, pay the debt service on the
<br />City's outstanding bonds, and to fund the Pavement Management Fund. The breakdown of the 2018 levy
<br />is $711,000 for debt service, $383,000 for roads, and the remaining $4,345,951 is used in the General
<br />Fund.
<br />The City's tax capacity, based on the annual property revaluation, is $2,879,524,978, with a tax capacity
<br />of $32,961,379. When compared to last year, Orono's taxable market value has increased by 5.44 percent
<br />and the tax capacity by 5.76 percent. As a result of the City's increased tax capacity, the tax capacity rate
<br />will decrease from 16.844 percent in 2017 to 16.529 percent in 2018.
<br />Using this tax rate and assuming no change in a property's value, the City's share of the property tax bill
<br />would be a decrease of $7.4 on a home previously valued at $250,000; a decrease in tax of $15.75 on a
<br />$500,000 home; a $1,000,000 home will see a decrease of $35.44 percent; and a $2,000,000 home will
<br />see a decrease of $4.81.
<br />Olson reviewed the City's proposed 2018 General Fund budget, noting the City's primary revenue source
<br />is the property tax levy. The 2018 General Fund tax levy is proposed at $4,355,050, which is 3.8 percent
<br />higher than the 2017 General Fund levy. Total General Fund revenues are budgeted to increase by
<br />$205,540 in 2018.
<br />As it relates to expenses, the expenditure budget is set at $8,193,036 or a 2.57 percent increase over the
<br />2017 budget. The budget for the Police Department is increasing $132,275 and is primarily due to wage
<br />increases. Other notable increases are $27,034 in administration, which is due to the hiring of a full-time
<br />administrator; the elections category is increasing by $22,392 because 2018 is an election year; the street
<br />department is increasing by $26,068; and the parks budget is increasing by $56,667 due to the hiring of a
<br />full-time golf course/parks supervisor. The budget for the Planning Department is decreasing by $22,741,
<br />which is due in part to staffing changes. The majority of the decrease is due to the reduction of contracted
<br />services. The other significant decrease is in the Special Projects and Contingencies Department, which
<br />has been removed from the budget.
<br />Special Revenue Funds consist of the Park Fund, the Drug Forfeiture Fund, and the TIF Fund. Special
<br />revenue funds have a primary source of revenue that is dedicated for a specific purpose. The primary
<br />revenue source of the Park Fund consists of park dedication fees collected from developers. By state law,
<br />these funds must be used for parkland acquisition and development. The Drug Forfeiture Fund receives
<br />its primary funding from the Police Department's drug and alcohol enforcement activities, such as DWIs
<br />and vehicle confiscation. Those funds must be used for drug and alcohol related activities. The TIF Fund
<br />is used to account for revenues related to the Orono Woods Senior Housing Development.
<br />The 2018 levy for debt service is $711,000. This levy is used to pay the debt service on the City's
<br />outstanding bonds.
<br />The Water, Sewer, Stormwater, and Recycling Funds are designed to account for the business type
<br />activities of the City. These funds do not receive any property tax revenue. As part of the 2018 fee
<br />schedule, the following rate increases are being recommended: water at 6 percent; sewer at 6 percent, and
<br />stormwater at 10 percent. It is the City's long-term goal to fully fund infrastructure improvements
<br />through utility rates and not use special assessments.
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