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Home My WebLink About12-06-2004 Truth in Taxation Hearing Packet\ Mimms OP THB TRUTH IN TAXATION HHARZNG HELD AT 5:30 P.M. ON MONDAY, DBCBMBBR 6, 2004 IN THE ORONO COUNCIL CHAMBERS MftMbftra Praaanti Mayor Peterson and Council Members McMillan, Sansevere and White. Staff Praaant: City Administrator Ron Moorse and Finance Director Tom Kuehn. Mayor Peterson called the meeting to order and opened the hearing at 5:34 p.m. There were no members of the public present. Moorse outlined the proposed budget and tax levy increases, and summarized the reasons for the increases. There being no public comments. Mayor Peterson closed the hearing. Council Maabar Sanaavara novad. Council Meabar White aacondad tha announcaaant that tha 2005 budget and tax levy will be adopted at a hearing to be held at 7:00 p.m. on Monday, Dacaabar 6, 2005. Vote: 4 Ayaa, 0 Maya. ADJOURl Council MaMhar SauSavara moved. Council Maabar White aacondad, that tha meeting be adjourned at 5:37 p.m. Vote: 4 Ayaa, 0 Naya. ATTBST: J I Linda S. Vee, City Clerk Barbara A. Peterson, Mayor ^ * e fr* ^ ^ C t Td r y I (3 i REQUEST FOR COUNCIL ACTION DATE: December 3,2004 ITEM NO: Department Approval: Name Ronald J. Mootse Title City Administrator Administrator Reviewed:Agenda Section: City Administrator ’s Report Item Description: Truth in Taxation Heaftng-2005 Budget and Tax Levy Attachments: 1. Tax Levies—Actual 2004 vs. proposed 2005 2. Tax Capacity, Local Levy, and Tax Capacity Rates 3. Effect of 2005 Tax Levy on Property owners Truth in Taxation Hearing The Truth in Taxation hearing is an opportunity for the public to ask questions and provide comments regarding the proposed 2005 budget and tax levy. Proposed 2005 Budget The proposed 2005 budget reflects an effort to address a number of deferred needs, as well as to fund a number of special projects, while managing the impact of the tax levy on property owners. Goals of the 2005 Budget The following is an outline of the goals of the 2005 budget • To improve service delivery and customer service • To provide a sustained drug enforcement effort • To increase the City's capacity to use information technology • To improve the maintenance of the City's infrastructure • To take advantage of the opportunity to re-think the design and function of current Highway 12, in preparation for the turnback of this roadway from the State to the County. • To begin to address long term public improvement needs Onnortunitv To Address Deterred Needs Over the past 10 years, the tax levy has been increasing at an average rate of 3.98% per year. This has been an important factor in enabling the city's tax rate to remain one of the lowest in the County. Over the past several years, a number of priority needs have been identified. Howc\ er. the impacts of the State’s budget problems, including State .^id cuts and levy limits, have caused these needs to be deferred. The 2005 budget is the first opportuniU ’ the City has had to address the deferred needs, in order to have a substantial impact on the level and quality of services provided in the areas of Police. F ►k > Fire, Streets, Stormwater Management, Sewer, and Water, as well as substantially strengthening the City’s ability to use and manage technology to improve productivity and customer service. Tax Capacity Rate Reduction Results in Minimal Property Tax Impact on Property Owners Based on the proposed budget and tax levy, and the substantial increase in the City’s tax capacity (tax base), the City’s share of the property tax bill for Orono property owners will increase by 1.1%. Tlie City's tax capacity has increased by approximately 17.9%. Applying the proposed tax levy to the estimated tax capacity results in a tax rate of 16.22%, which is a substantial reduction from the 2004 level of 17.641 %. Using this tax rate, the City's share of the property tax bill on a home valued at $300,000, assuming a 10% value increase, will increase by $6.03, or 1.1%. For a home valued at $800,000, the City’s share of the property tax bill will increase bv $37.86, or 2.5%. Tax Lew The total tax levy required to fund the proposed 2005 budget is $3,461,670. This is an iiicrcasc of $263,740, or 8.25 % over the 2004 levy. The breakout of the use of tax levy revenues by fund is shown on the attached chart titled Tax Levies. The General Fund expenditures have the greatest impact on the proposed tax levy. In addition, the Infrastructure levy in the PIR Fund (for street rehabilitation) has been increased from $35,450 to $69,950. The tax le\7 required to fund the propo.sed 2005 General Fund budget is $3,005,470. This is an increase of $354,240, or 13.36% over the 2004 levy amount. Of this amount, $80,000 is not a levy increase, but rather is a shifting of tax levy from the Improvement and Equipment Outlay Fund to the General Fund. Excluding the $80,000 of expenditures shifted to the General Fund, the lew inciease is $274,240. or 10.3%. General Fund Budget Expenditures The proposed expenditures in the General Fund arc having the greatest impact on the tax le\y. The proposed 2005 General Fund expenditures are $5,132,950. This is an increase of $431,460, or 9.18% over the 2004 budget. The largest expenditure increase is the transfer of S80.000 of vehicle replacement expenditures from the Improvement and Equipment Outlay Fund to the General Fund. The other main items causing the General Fund expenditure increase include the addition of a police investigator and a narcotics investigator, the addition of a part-time Finance Clerk, annual compensation adjustments. Navarre Fire Station operating costs, and funding for consultant assistance related to the turnback of current Hiehwav 12 from the State to the Countv. Adoption of Final Budget and Tax Lew The City will hold a levy adoption hearing at 7:00 p.m. on December 13. 2004. at which tlic final budget and tax lew will be adopted. COUNCIL ACTION REQUESTED Motion to announce that the final 2005 budget and tax lew will be adopted at the lew adoption hearing, which will be held at 7:00 p in. on Monday. December 13.2004. y TAX i.i-vins CcncrnI Fund General I.evy General Add Back W^/a of aids reduction General Fund - PERA Rate Increases General Fund - COPS Grant Decrease Cieneral Fund - Capital Equipment Cert, Total <^neral Fund Levy CITY OF ORONO TAX LEVIES Actual 2004 vs Proposed 2005 Proposed 2005 Increase (Decrease) Infrastructure (PIR) Park Land Acquisition and Development Imp & Equip Outlay - Capital Equip Cert 1997 Improvement Bond Debt Service 1999 Improvement Bond Debt Service 2003 Imp Refunding Bond Debt Service 1998 I IRA Refunding Bond Debt Service 2003 Fire Facility and Equipment Bond Debt Service Total All Other Levies TOTAL, TAX LEVIES FOR ALL PLIRPOSF.S Actual Proposed From Actual 2004^ _ 2004_2005 Amount_Percent _ $2,509,684 (a)$3,005,470 38,216 (a)— 5,540 — 14,790 — 83,000 — —• ------------------—---------------... — —— J2,65 1,230 $3,tM)5,470 $354,240 13.36% 35,450 (a)69,950 34,500 97.32% 5,000 (a)5,000 0 0.00% 125,000 —(125,000)-100.00% 18,000 18,000 0 0.00% 5,000 5,000 0 0.00% 35,000 35,000 0 0.00% 250.000 250,000 0 0.00% 73,250 73,250 _ - —O._ 0 00% $546,700 $456,200 ($90,500)-16.55% $3,197,930 $3,461,670 X——^ • $263,740 Total "levy limif--2,588,350 (a)-0- rL f MI}3 '• ' . ■ ' • . ' « ^ . ■. «. City of Orono Tax Capacity, I-ocal Levy, & Tax Capacity Rates TAX CALACniY R<*al Rstate Personal Property Deduct Tax Increments Deduct Contrib Fiscal Disp Add Distribution Fiscal Disp Net Tax Capacity (To calculate rate) mCALUlVY Total levy all funds TAX CAPACITY RAT_t-_S General Revenue PIR Infrastucture-Storm Sewer / Roads Parks - Land Acquisition & Development Improve & liquip - Capital Lquipment Debt Service I IRA Building Bonds Fire Facility & Lquipment Bonds Debt Total I^rcal Tax Capacity Rate milKinMOBSTAXCAri. 12 J 2005 Over (Under) 2004 _ Actual Estimated 2004 2005 Amount Percent $18,108,033 $21,341,620 $3,233,587 17.86% 120,534 132,587 12,053 10,00% (60,625)(66,688)(6,063)10.00% (279,146)(307,061)(27,915)10.00% 219,720 _ 241,692 21,972 10.00% $ 18,108,5 16_____$21,342,I^L $3,233,635 I7.86%_ _$3,197,930.$3,461,670^_______$263,740^8.25% 14.624%14.012%-0.612%-4.19% 0.196%0398%0.202%103.20% 0.028%0.023%-0.005%-16.33% 0.690%0.000%-0.690%• 0.320%‘ 0.272%-0.048%-15.07% 1.379%1.171%-0.208%-15.06% 0.404%0.343%-0.061%— IT64l%_ 16.220%•1.421%-8.06% i rfAaiik Effect of 2005 Tax Levy & Budget on Homes 2004 Tax Capacity (net) = I % of Orst $500,000 market value, plus ! .25% of all value over $500,000 2005 Tax Capacity (net) = 1% of lirsi $500,000 market value, plus 1.25% of all value o\cr $500,000 .Sk«f#iliDCnuafiS\Tau(b<.III M»rktiJ^lHfJan:ZOMJj!iPS $300,000 $800,000 2QQ1 200i 5% incr 2005 10% incr 2004 2005 5% incr 2005 10% incr y^tlffiated Markct yalue $300.000 $315.000 $330,000 $800,000 $84QJ)Q0 $380.000 Tax Capacity (Net) *3,000 3,150 3,300 8,750 9,250 9,750 l ax Capacity Rate 17.641%16.220%16.220%17.641%16.220%16.220% Net fax $529.23 $510.93 \ $535.26 $1,543.59 $1,500.35 $1,581.45 $ Inticasc (Decrease) from 2001 mm ($18.30)$6.03 ($43.24)$37.86 % Increase (Decrease) from 2004 --3.5%1.1%-2.8%2.5%