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HomeMy WebLinkAbout12-01-1993 Budget Hearing Minutes...+ WIC - MINUTES OF THE 1994 BUDGET HEARING CITY OF ORONO HELD DECEMBER 1, 1993 ( #1) ROLL The Council met on the above date with the following members present: Mayor Edward Callahan, Gabriel Jabbour, and JoEllen Hurr. Charles Kelley arrived at 7:18 p.m. J. Diann Goetten was absent. The following represented City staff: City Administrator Ron Moorse, Finance Director Tom Kuehn, Public Works Director John Gerhardson and Recorder Lin Vee. Mayor Callahan called the meeting to order at 7:06 p.m. Mayor Callahan explained the purpose of the meeting is to comply with the Truth in Taxation laws. ( #2) OPEN PUBLIC HEARING, 7:06 P.M. - 7:55 P.M. The Affidavit of Publication was noted. ( #3) BUDGET AND LEVY INFORMATION City Administrator Moorse explained the proposed budget which reflects a major effort to hold down general operating costs. The General Fund budget covers general operating costs of the City. The overall increase in the General Fund is .64 %. Moorse pointed out that the Council portion of the budget increased by approximately $5,000 because the LMCD fees have increased. The Elections portion of the budget increased because there is an election held in 1994 which did not occur in 1993. Engineering costs are higher because these fees have been taken out of the street maintenance budget so they can be combined into one account. Although only a .6% increase is proposed in the budget, City Administrator Moorse explained that the tax levy shows a 5.2% increase for the general fund. This is because interest revenue had been transferred from the building fund in past years which now needs to remain in the building fund to be used for the debt service on the new City facilities bond. The total levy for the City budget is increasing $147,163 or 8 %. Two causes for the increase are: 1. 1992 Bond levy for the City's portion of the Stubbs Bay Sewer Project. 2. 1980 Water and Sewer Bonds. Moorse presented a chart showing the effect of the tax levy increase on homes in Orono with valuations of $100,000, $200,000 and $300,000. Generally there is about a 3.1% increase if the value stays the same as the last year. t 1 MINUTES OF THE 1994 BUDGET HEARING CITY OF ORONO HELD DECEMBER 1, 1993 Moorse compared the City of Orono's tax rate with other cities of Hennepin County with populations over 2,000. Orono was ranked the 4th lowest in 1993 and would be the 3rd lowest in 1994. Moorse discussed the staffing and compensation levels. There has been little change in the last few years. The number of patrol officers and maintenance workers comprise significant numbers of the total employees. He noted that in 1992 there were 11 patrol officers and 3 lieutenants. In 1993 that changed when a lieutenant position was eliminated and a patrol officer was added to increase strength on the street. He also pointed out that the temporary part-time employee numbers change due to elections (judges) in election years. Moorse explained a chart relating to employee compensation. The enterprise fund is funded by fees and not taxes. There is only a 1.5 % total compensation increase (wages and benefits) from 1993 to 1994. The Truth and Taxation law requires the City to provide a list of independent contractors. Moorse indicated that in the City's prosecution services, Orono is cooperating with several other cities to receive the services of the City of Minnetonka's legal staff. All of the police and radio dispatch is done through Hennepin County so the City doesn't have to provide 24 hour service. Fire protection is provided by four neighboring cities - Maple Plain, Mound, Long Lake and Wayzata. A number of maintenance and repair contractors were also listed. Hurr asked how Moorse arrived at the ranking of Orono's tax rate since other cities are also in the process of budget hearings. Moorse responded that this information was provided from the County on "proposed" budgets. Mayor Callahan noted the police department is the major cost of running the City, approximately one -third of the budget. This is a service that is also contracted out to the cities of Minnetonka Beach, Long Lake and Spring Park so there is some revenue generated from these contracts amounting to one -third to one -half of the police budget. Mayor Callahan reiterated that the major increase in levy is due to a decrease in revenues, not an increase in costs. The decrease in revenues was caused partly because of the new building. Funds were being accumulated for the building and the interest used for the general fund. This has changed because money has been spent from the building fund for new construction and interest rates have dropped. Now the interest from the building fund needs to be kept in the building fund to assure there is funding for the bond payments. Mayor Callahan explained that the 1992 sewer bonds are for the Stubbs Bay sewer project for the City's portion of the cost of the sewer. He continued that in recent years the City has - 1-r, 11- s MINUTES OF THE 1994 BUDGET HEARING e CITY OF ORONO HELD DECEMBER 1, 1993 assumed a portion of the cost of sewer project and that the amount that can be assessed against an individual homeowner is related to the increased value of the land as a result of the sewer installation. This sewer bond is just beginning to be paid off. The 1989 sewer bond was for sewers planned for the area from Sixth Avenue North to Highway 12. At the time the sewer was projected, it was believed there would be considerable development. The Highway 12 project, the new City facility and lands being taken over by the school district have changed the projected residential development for this area. As a result, the City has to bear the cost of these bond payments until development increases. ( #4) PUBLIC COMMENTS Ward Edwards, 2474 Carman Street, asked if the value of his home changes yearly. Mayor Callahan responded that the Assessor physically visits approximately 1/4 of the, homes in the City each year. Those homes that are not actually visited are still subject to rcalculation of their values based on various assessing techniques. Mayor Callahan suggested Mr. Edwards attend the property tax hearings in April. He also indicated the tax information was readily available if Mr. Edwards contacted City staff with further questions. Hurr added that if there were building improvements, the value may change as the Assessor gets a copy of the building permits. Doug Hickey, 4301 Wayzata Boulevard, commented that the assessed value of his home has averaged a 12 % increase each year over the past six years. Jabbour explained that the budget is determined by the City and then the amount of money needed is distributed among all the homes. Mayor Callahan continued that the budget is sent to the County for calculation as to how the taxes are spread. Homes are classified differently so each statement is different. The tax statement reflects the amount of money each entity receives from the taxes paid. Kelley explained that the State legislature changed the tax rate percentage of the value of homes and how the money is allocated. At one time there was a 3 % and 2 % rate. The 3 % rate has been eliminated on the larger, more affluent homes. This resulted in the lower value homes paying a bigger percentage. Homes over $128,000 are now taxed at a rate of 2 %. Carl Johnson, 3105 North Shore Drive, stated that when he received his first home valuation, it was 30% over the previous year. This was readjusted by the Assessor to 19%. When he received his statement, the increase was 10 %. He asked if there was a state law that limits an increase of market value to 10% per year. Mayor Callahan responded there was not such a law a MINUTES OF THE 1994 BUDGET HEARING CITY OF ORONO HELD DECEMBER 1, 1993 but a law that limited the amount the actual real estate taxes paid could increase in one year to 10%. This could be 12% now. If the taxes to be paid were over a 10% increase, there was a tax form available to apply for a refund. John Hedberg, 4740 North Arm Drive West, commented that the market value on his home went up 6.3 %, yet the Orono taxes went up 12.3 % based on a relatively small increase in the budget and asked if there was an explanation. Mayor Callahan thought it may be related to the classification changes made by the State legislature. Jabbour added that originally homes valued at $0 - $72,000 were taxed at a rate of 1 %, from $72,000 - $115,000 at 2% and over $115,000 at 3 %. Since the third tier was eliminated, basically homes over $72,000 are taxed at 2 %. This actually causes a double increase to those homes in the middle range. They are asked to pay more from the City and they are absorbing the cost from the third tier. Doug Hickey requested copies of the overheads presented at the meeting. Mayor Callahan encouraged anyone with further questions to contact the City Administrator. Hurr asked about the income vs. the budget at the golf course. City Administrator Moorse confirmed that in recent years, revenues have exceeded expenditures. The public hearing closed at 7:55 p.m. ( #5) COUNCIL ACTION Mayor Callahan announced that the 1994 budget and levy will be adopted at a meeting to be held on Monday, December 13, 1993 at 7:15 p.m. ADJOURNMENT The meeting was adjourned by Mayor Callahan at 7:55 p.m. n G Edward J. Call , Jr., Mayor _is is