HomeMy WebLinkAbout12-02-2002 Truth In Taxation PacketMINUTES OF THE
CITY OF ORONO TRUTH-IN-TAXATION HEARING
Monday, December 2,2002
5:30 p.m.
ROLL
The Council met on the above mentioned date with the following members presciii. Mayor Barbara
Peterson; Council Members Jay Nygard, Bob Sansevere, and Jim White; Representing staff were
City Administrator Ron Moorse, and Finance Director, Tom Kuehn.
Absent was Council Member Jim Murphy.
iayor Peterson called the meeting to order at 5:39 P.M.
1. Tmlh-ia-Taiatloa Hcariag.
Mayor Peterson opened the public hearing at 5:40 p.m. Moorse summarized the proposed
2003 budget and tax levy information, and its impact on property owners. There being no
members of the public present, the Mayor closed the hearing at 5:45 p.m.
Nygard moved. White aecomled, to aanoonce that the Baal 2M3 budget and tax levy will be
adopted at the levy adoption hearing, which will be held at 7:00 p.m. on December 9,2002,
VOTE: Ayea 4, Nays 0.
ADJOURNMENT
Nygard moved. White seconded, to adjourn the Tmth-in-Taxation Hearing at 5:48 P.M.
VOTE: Ayes 4, Nays P
ATTEST:
Linda S. Vee, City Clerk Barbara Peterson, Mayor
PAGE 1
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REQUEST FOR COUNCIL ACTION
DATE: November 27/2002
ITEM NO:
Department Approval:Administrator Reviewed:Agenda Section:
Name Ron Moorse i/7 //]City Administrator’s
Title City Administrator Report
Item Description: Tmth in Taxation Hearing
Attachments: I. Tax Levies-Actual 2002 vs. Proposed 2003
2. Tax Capacity, Local Levy, and Tax Capacity Rates
3. Effect of 2003 Tax Levy and Budget on Property Owners
4. Hennepin County news release re: Truth-in-Taxation statements
Truth in Taxation Hearing
The Truth in Taxation hearing is an opportunity for the public to ask questions and provide
comments regarding the proposed 2003 budget and tax levy.
Proposed 2003 Budget
The proposed 2003 budget reflects an effort to limit expenditures in order to comply with a state-
imposed levy limit, as welt as to deal with other limited revenues, while maintaining current service
levels and providing funding for upcoming Are equipment and facility needs.
General Fund Budget
The proposed 2003 General Fund budget expenditures are $4,712,880. This is an increase of
$105,283, or 2.28% over the 2002 budget. While the proposed budget reflects necessary'
expenditure increases related to items such as annual compensation adjustments, fire service costs,
enhanced information technology, and motor fuel; the small overall expenditure increase was made
possible by a number of significant reductions in other expenditure items. The most significant
expenditure reduction resulted from the elimination of two staff positions.
Tax Lew. Tax Rate, and Impact on Property Owners
The total tax levy required to fund the proposed 2003 budget is $3,098,400. This is an increase of
$172,065, or 5.88% over the 2002 Levy. This increase is necessary both to fund the General Fund
budget expenditures, and to provide funding for upcoming fire equipment and facility needs.
The estimated tax capacity for taxes payable in the year 2003 is $15,549,329. This is an increase of
$ 1,701,834, or 12.29% over the 2002 tax capacity. Based on the City's increased tax capacity and
the proposed tax levy , the tax capacity rate will be 19.809%. This is a reduction of 5.49% from tlw
2002 tax capacity rate.
The reduction in tiie tax capacity rate will result in a minimal increase in the City’s share of the
property tax bill. Assuming a 10% increase in a home’s property value, the City’s share of the
property tax bill will increase 4%. For a home valued at $200,000, this is an increase of$ 16.60. For
a home valued at $3S0,000, the increase is $29.05. For a home valued at $500,000 the increase is
$41.49. •
Adoption of Final Budget and Tax Lew
The City is required to hold a levy adoption hearing, at which the final budget and tax levy are
adopted. This will be held at 7:00 p.m. on December 9,2002, which is a regular Council meeting
date.
Property Tax Impacts from All Taxing Jurisdictions
The total property tax bill for Orono residents, as well as for many resident throughout Hennepin
County, will increase substantially in 2003, but only a small portitm of the increase will be related
to City levy increases. The attached news release indicates the County’s portion of property taxes
will increase substantially. Also, voters in many school districts have approved levy referenda,
which will have a substantial impact on the property tax bill.
COUNCIL ACTION REQUESTED:
Motion to aimounce that the final 2003 budget and tax levy will be adopted at the levy adoption
hearing which will be held at 7:00 p.m. on December 9,2002.
*
-I u ^ ‘! -j ^ '!fl*Hp>v(|i^-. •
fc:*'
CITY OF ORONO
TAX LEVIES
ACTUAL 2002 vs PROPOSED 2003
t
TAX LEVY COLLECTIBLE
TAX LEVIES
General
Infrastructure (PIR)
Park Land Acquisition and Development
Equipment Acquisition (Imp & Equip O/L)
TOTAL LEVY SUBJECT TO LEVY LIMIT
2002 2003
S2.381,655 (a) $2,509,684 (a)
35,450 35,450
5,000 5,000
90,000 0
2,512,105
Special Levies:
General Fund • PERA Rate Increases
General Fund • COPS Grant Decrease
General Fund - Capital Equipment Cert
1992 Improvement Bond Debt Service
1997 Improvement Bond Debt Service
1999 Improvement Bond Debt Service
2000 Improvement Bond Debt Service
1998 HRA Refunding Bond Debt Service
Fire Facility and Equipment Bond Debt Service
4,830 (a)
35,400 (a)
50.000 (a)
45.000
15.000
14.000
-0-
250,000
2,550,134
4,980 (a)
14,786 (a)
75.000 (a)
45.000
15.000
15,500
-0-
250.000
128.000
TOTAL SPECIAL LEVIES
TOTAL TAX LEVIES FOR ALL PURPOSES
414,230 548,266
$2^26,335 $3,098.400
NOTE! Levy limits were relastitutcd by the 2001 Lcgisiatarc.
Total Geaeral Ftoad 2^471^^ (a) 2.604.450 (a)
INCREASE
(DECREASE)
$128,029
0
0
(90,000)
38,029
150
(20,614)
25,000
0
0
1,500
0
0
128,000
134,036
$172,065
132.565
PERCENT
CHANGE
5.38*/.
0.00%
0.00%
1.51%
3.11%
-58.23%
50.00%
0.00%
0.00%
10.71%
0.00%
0.00%
32.36%
5.88% i
5J6%
BuaGrrunaTnainn.Lfairitiu
'y "i f'
City of Orono
Tax Capacity, Local Levy, & Tax Capacity Rates
TAX CAPACITY
Real Estate
Personal Property
Deduct Tax Increments
Deduct Contrib Fiscal Disp
Add Distribution Fiscal Disp
Net Tax Capacity (To calculate rate)
local LEVY
Total levy all fUnds
TAX CAPACITY RATES
General Revenue
nR Infrastucture-Storm Sewer / Roads
Parks - Land Acquisition & Development
Improve ft Equip • CapiUil Equipment
Debt Service
HRA Building Bonds
Fire Facility ft Equipment Bonds Debt
Total Local Tax Capacity Rate
avKn\2mTAXCAn.iti
Actual
2002
$13,847,495
109,057
0
(211,708)
195,732
.S134?4P,576
$2.926.335
17.705%
0.254%
0.036%
0.645%
0.529%
1.791%
0 I I U
2ft960%
A-2
Estimated
2003
$15,549,329
110,057
0
(237,708)
219,732
$15.641.411
13jO?8,4pO
16.651%
0.227%
0.032%
0.000%
0.483%
1.598%
0.818%
19.809%
2003 Over (Under) 2002
Amount
$1,701,834
1,000
0
(26,000)
24,000
$1,700,835
$172.06 5
-1.054%
-0.027%
-0.004%
-0.645%
-0.046%
-0.193%
0.818%
-1.151%
Percent
12.29%
0.92%
0.00%
12.28%
12.26%
12.20%
5.88%
-5.95%
-10.77%
-11.20%
100.00%
-8.75%
-10.76%
-5.49%
•4
UMim a'nitiiififiiatiiiifiiifiii riidta Uihiaab.-.
- V t ' :
City of Orono
Effect of 2003 Tax Levy & Budget on Homes
Market Vahic for 3002 Taiee
Eatlwated Market Value
Tax Capacity (Net) *
Tax Capacity Rate
Net Tax
$$ Increase (Dectease) from 2002
% Increase (Decrease) from 2002
2!
S200.000
2,000
20.960%
$419.20
2m
S%incr
$210.000
2,100
19.009%
$415.99
($3.21)
-0.8%
2m I.
10%incr
S220.000
*
2400;
19.809%:
$435.80
$16.60 • \
!.J
4.0%!I'-!
.1
2m 2m
5%incr
$350.(
3,500
20.960%
$733.60
3,675
19.809%
$727.98
($5.62)
•0.8%
* 2002 Tax Capacity (net) * 1% of first $500,000 market value, plus 1.25% of all value over $500,000
2003 Tax C^Mcity (net) - 1% of first $500,000 market value, phis 1.25% of all value over $500,000
evacnumTAXimctu
A-3
2022
I0%incr
' I 2m
$367.500 $385.1
3,850
19.809%
t • $500.(
- ♦ * »
$762.65 !(■
$29.05
4.0%
$500.(
5.000
20.960%
$1,048.00
2202 2002
5% incr 10% incr
$2211
5,250
$550,000
5,500
19.809% 19.809%
$1,039.97 $1,089.50
($8.03) $41.49
•0.8%4.0%
Hennepin Hennepin County News
Public Affairs • 612-348-3848 * 3005.6* St, Minneapolis, NIN 55487-0011
Nov. 8,2002 Draft
Contact: Jim Ufcr, Office of Budget & Finance, 612'348-4989
Pat O'Connor, Taxpayer Services, 612-348-4084
Truth-ln-Taxation statements being sent to Hennepin residents
Hennepin County will soon begin mailing notices to all property owners in the
county showing the impact of various factors, including the county’s maximum property
tax levy and rising residential property values, on each parcel of land for 2003.
%
The Truth-in-Taxation statements, which are required by state law, also indicate
the impact of taxes proposed by other local units of government, such as cities, school
districts and special taxing districts.
The Hennepin County Board is considering a 2003 county budget which includes
a proposed property tax levy of S511 million (Gret Pertiek to provide Itnat
which is actually less than the 3-percent maximum levy set by the board in September for
Truth-in-Taxation purposes.
Tax statements, however, show that the county's portion of property taxes for
many homeowners will increase by more than 10 percent. For example, owners of most
median-valued homes (about $146,000 in the City of Minneapolis and $188,000 in the
suburbs) will see increases of 13-14 percent in the county portion of their tax bills.
A number of factors create the discrepancy between the 3-percent maximum
increase in the county tax rate and the double-digit increases shown on Truth-in-Taxation
statements, according to Heanqiin officials.
i
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Key components include: ^
■ Various economic factors have resulted in commercial/industrial property
values becoming flat, while the value of many residential properties has
increased. The result is a 4.7 percent increase in tax liability for residential
properties.
■ A reduction in state aid to the county (Homestead and Agricultural Credit
Aid) and a reduction in revenue because of the state’s takeover of Hennepin
District Court begLming in July 2003 together total 2.8 percent, which has to
be made up at the county level.
■ And, the portion of the Hennepin County levy paid with Fiscal Disparities
dollars has changed, resulting in an increase in the local tax levy of 2.7
percent.
«
Added together, these factors result in an increase of 13-14 percent in the county's
portion of 2003 property taxes for many homeowners.
In addition to the count>'s share, a homeowner ’s total tax bill is affected by
taxpayer-approved levies, city and school district budgets, and the budgets of special
taxing districts, such as the Metropolitan Council.
Hennepin Taxpayer Services Department officials said that the good news is that
a property tax refund program for homeowners, often called the "circuit breaker,"
provides relief to persons who meet certain guidelines in 2003.
For example, if a homeowner has an income of S70,000 and property taxes of
$3,000, the refund would be SlOO; for an income of 540,000 and taxes of 52.000, the
refund would be $488; and, for an income of $20,000 and taxes of $2,000, the refund
would be $990, or almost half of the total tax.
The targeted portion of the circuit breaker pro^m offers relief, no matter what
the person ’s income. If property taxes rose more than 12 percent and at least $100, the
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