HomeMy WebLinkAbout12-03-1997 Truth in Taxation PacketPublic A ttendance
Meeting D ate .~?i . I ^
□□C ouncil
Planning C ommIeSsion
Park C ommission
OXHERTt^oTH ATnck)
Please fell out the information
REQUESTED BELOW FOR OUR CITY RECORDS.
NAME (please print)ADDRESS
PRESENT FOR (from agenda)
NAME OR NUMBER
5. _
6. _
7. _
8. _
9._
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15._
09119S.4
TO:
FROM:
DATE:
Mayor and City Council
Ron Moorse, City Administrat'r
November 26. 1997
r
f1
SUBJECT: Proposed 1998 Annual Budget
The proposed 1998 Budget accommodates a number of necessa»- xpenditure increases while
holding the tax le%7 to the planned increase of less than 3%. A nun. -Texpenditure requirements
have occurred simultaneously to cause the need to increase expenditures beyond the normal level.
Although the General Fund expenditures are proposed to increase by 5.53%, these expenditures can
be accommodated within a tax levy increase of less than 3% because several of the increases are
offset by related revenue increases.
Expenditures and Tax Lew
The city's 1998 General Fund budget expenditures are proposed at $3,638,095. This is an increase
of $190,490 or 5.53% over the 1997 budget. The tax lev'y required to fund the General Fund Budget
is $1,750,000. rhis is an increase of $69,020 or 4.11% over the 1997 general fund tax levy.
The total tax levy required to fund the overall 1998 city budget is $2,225,130. This is an increase
of $63,500 or 2.94% over the 1997 levy.
Property Tax Class Rate Reductions
The 1997 Legislature enacted property class rate reductions for both residential and commercial
property, fhe most significant changes in property class rates were the reduction of the residential
rate for value over $75,000 from 2% to 1.85%, and the reduction of the commercial class rate for
value over $100,000 from 4.6% to 4.0%.
Impact of the Budget and Tax Lew on Residential Properties
Because the property class rates were reduced, the city's tax capacity rate will be applied to lower
tax capacity amounts for individual properties. The result is that the city's share of the property tax
bill for homes in Orono will be reduced, assuming no change in valuations. For example, a home
valued at $100,000 paid $182.41 in city property taxes in 1997. A home valued at $100,000 would
pay $178.12 in city property taxes under the proposed 1998 budget. This is a reduction of 2.4%.
Program Highlights
The 1998 budget addresses several program needs. Tw o of the most significant are a planning intern
and a police sergeant. The need for the planning intern is caused by a verv ’ high level of planning
and zoning activity. This activity is producing additional revenue which will be used to fund the
position. The police sergeant position is needed to assist the Police Chief with supervisory and
administrative duties.
1
I
Proposed 1998 Annual Budget Continmd
The budget also includes $20,000 for special project expenditures which could include fire
inspection services, updating the City's Comprehensive Plan, and beginning a fund to finance parks
and open space capital projects.
Mandated increase
A new requirement recently passed by the legislature increases the city's pension contribution from
4.48% of gross pay to 5.18%. This w ill increase the city's pension costs by approximately $ 11,000.
This new requirement includes a new revenue source to fund it called "Payroll Aid", so the increased
expenditures will not require increased property taxes.
Capital Projects
The 1998 Budget reflects a number of substantial capital projects, ranging from roadway
reconstruction to sewer projects to sew'er and water infrastructure replacement projects.
Three road reconstruction projects are planned for 1998. These include the County Road 15 project,
the County Road 6 project and the Femdale Road project. Each of these three projects is to be
funded with MSA funds. The city's current MSA funds are sufficient to fund the County Road 15
and County Road 6 projects. The Femdale Road reconstruction project will require using
approximately 1 1/2 years of the city's future MSA allocation. The future years allocation is
available to the city at no interest. The city does not have any high priority MSA projects scheduled
in the next few years. The next MSA project was to be the reconstruction of the Willow Drive
bridge. However, this has been eliminated from the city's MSA plan because it will be accomplished
as part of the Highway 12 upgrade project.
The City Council has authorized the preparation of feasibility reports for providing sewer service
to two sewer hot spot areas in 1998. These projects would both be 100% funded by special
assessments.
The budget also includes the rehabilitation of the Navarre w ater plant. This project is necessarj' to
enable the plant to continue to provide iron and manganese removal and water softening. This
project will be funded by a combination of Water f und reserves, an internal loan to be repaid by
Water Fund operating revenues, and special assessments on properties in the Navarre water service
area.
ir
Funding for Mqior Infrastructure Rehabilitation/Construction
The 1998 budget follows the direction set by recent budgets toward putting the city into a better
position to address both current and long term needs for infrastructure rehabilitation/construction.
The three main areas of infrastructure rehabilitation/construction are sewer and water infrastmeture,
street infrastructure, and stomi drainage infrastructure.
.V 1ft--
Proposed 1998 Annual Budget Continued
needs, water rates
3.2% per year over the next 20 years
In summary the 1998 budget is a fiscally conservative budget that minimizes the tax levy increase
whiradS priority Lice needs and both short term and long term infrastructure needs.
]
/V. , \
August 28,1997
Ron Moorse ^
.KyTO:
FROM: __
RE; Update of the ^r^rty Class Tax Rates
Chris Miller Oy
Pr^ri
COUNCIL MEETING
DEC 3 1997
CITYOFORONO
Ron,IVUIl,
tax rates for 1998. The new rates will pr current and adopted 1998 tax rates for
Cunent
Value R3l£
<=$72,000 1-00 “/®
> 72,000 2.00%
Adopted 1998
yalue Rfttfi
c= <7S.000 I -00%
> 7S.000 _LS5%
' ------ 9
The impact of the new rates on residential t“tS'^«°cipaci“
rates for commercial property is shown below.
Current
Value _
<=$100,000
> 100,000
Rate
3.00%
4.60%
Adopted 1998
Value ^l£
c=:<iso.ooo 2t703^
•> 1 sft.000 4i0ft%
For a commereial property valued at $500,000 the city can expect to lose $3,350 in tax eapacty.
The tax capacity for
tax capacity for 1998 taxes would have been
rates, the m capacity for 1998 taxes will be approximately $14,921,498.
Tyremtalamountoftaxcapacitythecitywilllos^
is over $1,257,000. Thisisalossofappmx.™*'^:*^ from 14.251% to
than expected *ass ,ax rates remained the same, the city would have
Snlt'aitt!m-fnt tax'ca^ct resulting in a reduction of its tax rate to approximately
13.541%--‘
Step 1 - Calculate the Net Tax Can >itv The net tax capacity represents the amount used in the calculation of a property's taxes. The 1998 net tax capacity for residential homes is calculated by taking 1% of the first $75,000 market value, plus 1.85% of all market value over $75,000.
Estimated Market Value = $200,000
75,000
X .01 plus
125,000
X .0185 = $3,062.50
= $750 = $2,312.50
The net tax capacity for a $200,000 home is $3,062.50.
Step 2 - Determine the City's Tax Capacity Rates
The tax capacity rate is a percentage based on the total assessed
market value of all property in the city, and the total tax levy. It
is the rate which is used to calculate the taxes on individual
properties. The tax capacity rate for 1997 and the estimated tax
capacity rate for 1998 is 14.246%, and 14.690% respectively.Step 3 - Calculate the Net Property Tax (City Portion Onlvl The net property tax (City Portion) is calculated by multiplying a property's net tax capacity by the City's tax capacity rate. 1 he
following example shows the calculation for a residential home
valued at $700,000.
1997 1998
Net Tax Capacity
Tax Capacity Rate
3,280
X .14246
= $467.43
3,063
X .14690
= $449.88
In this example, a property whose assessed market value
remained at $200,000 would see a decrease of $17.55 in their
estimated 1998 property taxes paid to the City. The net tax
capacity decreased due to a change in the property class tax rate.
4
1
City of OronoEffect of 1998 Tax Levy & Budget on Homes
Market Value for 1997 Taxes $100,000 $200,000 $300,000
1997 1998 1997 1998 1997 1998
0% incr 5% incr U% incr 5% incr 0% incr 5% incr
U U U U U U
Estimated Market Value
For 1998 Taxes $100,000 $100,000 $105,000 $200,000 $200,000 $210,000 $300,000 $300,000 $315,000
Tax Capacity (Net) *1,280 1,213 1,305 3,280 3,063 3,248 5,280 4,913 5,190
Tax Capacity Rate 14.251%14.690% 14.690%14.251%14.690%14.690%14.251%14.690%14.690%
Net Tax $182.41 $178.12 $191.70 $467.43 $449.88 $477.06 $752.45 $721.65 $762.41
$$ Increase (Decrease) from 1997 ($4.30)$9.29 ($17.55)$9.62 ^($30.81)$9.96
% Increase (Decrease) from 1997 -2.4%5.1%-3.8%2.1%-4.1%1.3%
n.
1997 Tax Capacity (net)
1998 Tax Capacity (net)
1% of first $72,000 market value, plus 2% of all value over $72,000
? % of first $75,000 market value, plus 1.85% of all value over $75,000
w-
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Market Value for 1997 Taxes
1997
Estimated Market Value
For 1998 Taxes
Tax Capacity (Net)
Tax Capacity Rate
Net Tax
$$ Increase (Decrease) from 1997
% Increase (Decrease) from 1997
$100.000
1,280
14.251%
$182.41
City of OronoEffect of 1998 Tax Levy & Budget on Homes Without ChanECS in the Property Class Tax Ratr.$100.000 $200,000 $300,000
1998
0% incr
ii
1,280
$173.31
($9.10)
-5.0%
5% incr
. ii
1997 1998
0% incr
ii
5% incr
ii
1997 1998
0% incr
ii
5% incr
ii
$105,000 $200,000 $200,000 $210,000 $300,000 $300,000 $315,000
1,380 3,280 3.280 3.480 5,280 5,280 5,580
13.540%14.251%13.540%13.540%14.251%13.540%13.540%
$186.85 $467.43 $444.11 $471.19 $752.45 $714.91 $755.53
$4.44 ($23.32)$3.76 ?($37.54)$3.08
2.4% i -5.0%0.8% ’-5.0%0.4%
i •.
■.. . - -. r ■ tv;---
vr trvyw>-City of OronoEffect of 1998 Tax Levy & Budget on Commercial PropertyFor Market Value of $500,000•1997
0% Incr.
1998
5% Incr.
U ii
Estimated Market Value
For 1998 Taxes $500,000 $500,000 $525,000
Tax Capacity (Net) *21,400 18,050 19,050
Tax Capacity Rate 14.251%14.690%14.690%
Net Tax $3,049.71 $2,651.55 $2,798.45
$$ Increase (Decrease) from 1997 ($398.17)($25127)
% Increase (Decrease) from 1997 -13.1%-8.2%
► Ji ' V
jmmm
. J»ug »■,
•V '•"i CityofOronoIK,Effect of 1998 Tax Levy & Budget on Commercial PropertyFor Market Value of $500,000
" I iniaMiin fi
... :
1997
0% Incr.
1998
5% Incr.
U
Estimated Market Value
For 1998 Taxes $500,000 $500,000 $525,000
Tax Capacity (Net) *21,400 21,400 22,550
Tax Capacity Rate 14.251%13.540%13340%
Net Tax $3,049.71 $2,89736 $3,053.27
$$ Increase (Decrease) from 1997 ($152.15)$3.56
% Increase (Decrease) from 1997 -5.0%0.1%
N
•!
City of Orono1998 Combined Fund RevenuesInterest Income
494,150 5.4%
Charges for Services 2,110,145 22.9%
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Miscellaneous
801,635 8.7%♦♦ <
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■■■■iiiik Fines & Forfeits
66,000 0.7%
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Use of Fund Balance
1.564,995 17.0%
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Intergovernmental
1,386,480 15.0%
Special Assessments
382,040 4.1%
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■ R'-'-’iV it ,ir 'Licenses & Permits
202,000 2.2%
General Property Taxes
2,225,130 24.1%
Total Combined Fund Revenues $9,232,575
_____
City of Orono1998 Combined Fund Expenditures
Water Operating Fund
1,024,875 11.1%
Debt Service Funds
1,220,870 13.2%
\
Sewer Operating
843,495 9.1%
Golf Operating
191,715 2.1%/y/yVyyyvAyyyvyAyyt
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Capital Projects
1,473,450 16.0%
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Special Revenue Funds
840,075 9.1%
General Fund
3,638,095 39.4%
Total Combined Fund Expenditures $9,232,575 Debt Service includes Water and Sewer Revenue Bonds
City of Orono1998 General Fund Revenues
General Property Taxes
1,750,000 48.1%
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Licenses & Permits
202,000 5.6%
Miscellaneous
125,635 3.5%
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Intergovernmental
497,800 13.7%
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Fines & Forfeits
66,000 1.8%
Charges for Services
996,660 27.4%
Total General Fund Revenues $3,638,095
—■■■
City of Orono
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1998 General Fund Expenditures
Capital Outlay
161,740 4.4%
General Government
810,385 f//////;.
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Street Maintenance
i5 14.0%0»D
Miscellaneous
113,595 3.1%
Parks & Recreation
57,665 1.6%
Recycling
72,250 2.0%
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Public Safety
1,914,355 52.6%
Total General Fund Expenditures $3,638,095
% Increase in General Fund Expenditures
Percent
1
1993 1994 1995 1996 1997 199»*
Inflation « General Fund Expenditure Increase
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City of OronoGeneral Fund Expenditures By Major Category
Dollar
1997 1997
Increase
(Decrease)
%
Increase
Major Expense Category Budget Budget From Prior Yr. (Decrease)
Personal Services 2,009,530 2,153,825 144,295 7.18%
Supplies & Maintenance 380,380 388,730 8,350 2.20%
Professional Services 548,705 579,545 30,840 5.62%
Insurance 66,900 66,900 0 0.00%
Other Expenses 276,560 283,415 6,855 2.48%
Capital Outlay 69,400 69,820 420 0.61%
Transfers to Other Funds 96,130 95,860 (270)-0.28%
3,447,605 3,638,095 190,490 5.53%
‘ i
City of Orono1998 Tax Levy Breakdown
Infrastructure-Storm Drainage
40,900 1.8%
General Government
561,400 25.2%•ooooooo
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Debt Service
0 18.9%
Infrsstructurc~Ro3ds v-v-\-.vv-v-v-v-v-v-v-
14 480 0 7%
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Street Maintenance
244,475 11.0%
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Police Operations
666,925 30.0%
Bldg.Inspec. & Zoning
164,150 7.4%
Fire Protection
113,050 5.1%
Total 1998 Tax Levy $2,225,130
City of OronoWhere Does Your Tax Dollar Go?
Orono School U27S
52.0%
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City of Orono
11.9%
Hennepin County
29.5%
Miscellaneous
6.6%
1997 Actual Tax Levy
City of OronoTax LeviesActual 1997 vs Proposed 1998
Tax Levies Tax Levy Collectible
1997 1998 Increase
(E)ecrease^
Percent
Change
General
PIR Infrastructure—Storm Sewer
PIR Infrastructure-Roads
Sewer & Water Bonds
$1,680,980
40,000
45,500
$1,750,000
40,000
14,480
$69,020
0
(31,020)
4.11%
0.00%
-68.18%
1982 G.O. Bonds 4,500 0 (4,500)-100.00%
1995 (1989) Water Refunding Bonds 105,650 105,650 0 0.00%
1992 G.O. Bonds 30,000 35,000 5,000 16.67%
1995 (1985) Refunding Bonds 30,000 35,000 5,000 16.67%
1997 G.O. Bonds 0 10,000 10,000 0.00%
1991 Public Facilities Bonds
Total
225,000
$2,161,630
235,000
$2,225,130
10,000
$63,500
4.44%
2.94%
The tax levies are shown as reduced by HACA aid from the State, but have not been reduced by Fiscal Disparities Credit.
a 1997 1998
Increase
fDecreasel
Percent
Change
Tax Levy Net of HACA $2,161,630 $2,225,130 $63,500 2.94%
State Paid HACA
Total Tax Levy Including HACA
300,730
$2,462,360
302,680
$2,527,810
1,950
$65,450
0.65%
2.66%
it:-
City of OronoTax Capacity, Local Levy, & Tax Capacity Rates 1998 Over (Under) 1997TAX CAPACITYReal Estate
Personal Property
Deduct Tax Increments
Deduct Contrib Fiscal Disp
Net Tax Capacity (To calculate rate)
LOCAL LEVY
Gross Levy
Deduct ElACA
TOTAL LEVY NET OF H ACA
Deduct Fiscal Disparities
Net Local Levy
TAX CAPACITY RATES
General Revenue
PIR Infrastucture—Storm Sewer
PIR Infrastructure—Roads
Debt Service
HRA Building Bonds
Total Local Tax Capacity Rate
Actual Estimatedmi1998 Amount Percent$15,009,193 $14,921,500 ($87,693)-0.58%202,352 206,600 4,248 2.10%
0 0 0 0.00%
(336,726)(345,100)(8.374)2.49%
$14,874,819 $14,783,000 ($91,819)-0.62%
$2,462,360 $2,527,810 $6S,4S0 2.66%
(300,730)(302,680)($1,950)0.65%
$2,161,630 $2,225,130 $63,500 2.94%
(51,753)(53,100)($1,347)2.60%
$2,109,877 $2,172,030 $62,153 2.95%
11.082%11.555%0.473%4.27%
0.264%0.264%0.000%0.05%
0.300%0.096%-0.204%-68.13%
1.122%1.226%0.104%9.26%
1.483%1.552%0.069%4.63%
14.251%14.693%0.442%3"l0%
TAX CAPACITY — The real estate and personal property tax capacity amounts are reduced by any tax increments and the contribution amount to the
fiscal disparities to arrive at the total value of tax capacity used for calculating the tax capacity rate.
LOCAL LEVY - The amount of gross tax is reduced by the state paid HACA (Homestead and Agricultural Credit Aid), and by the Fiscal Disparities
distributed through the county.
TAX CAPACITY RATE - The net local levy amount is divided by the tax capacity to arrive at a percentage or tax capacity rate.
City of OronoEffect of 1998 Tax Levy & Budget on HomesMarket Value for 1997 Taxes $100,000 > -$200,000 $300,000
•
1997 1998 • .*1997 1998 1997 1998
0% incr 5% incr 0% incr 5% incr 0% incr 5% incr
U U U U
U a
Estimated Market Value
For 1998 Taxes $100,000 $100,000 $105,000 $200,000 $200,000 $210,000
$300,000 $300,000 $315,000
Tax Capacity (Net) *1,280 1,213 1,305 3,280 3,063 3,248 5,280 4,913 5,190
Tax Capacity Rate 14.251%14.690%14.690%14.251%14.690% 14.690%14.251%14.690%14.690%
Net Tax $182.41 $178.12 $191.70 $467.43 $449.88 $477.06
$752.45 $721.65 $762.41
$$ Increase (Decrease) from 1997 ($4.30)$9.29 ($17.55)$9.62 ($30.81)$9.96
% Increase (Decrease) from 1997 -2.4%5.1%-3.8%2.1%-4.1%1J%
1997 Tax Capacity (net) = 1% of first $72,000 market value, plus 2% of all value over $72,000
1998 Tax Capacity (net) = 1% of first $75,000 market value, plus 1.85% of all value over $75,000
i
City of OronoHennepin County Property Tax Comparisons
Ten Lowest Prooertv Taxes for All Taxing Districts. **
City Rank Population
Combined
Taxes
Payable
Medina 1 3,493 1,794
Mound 2 9,584 1,922
Champlin 3 19,154 1,956
Corcoran 4 5,549 1,984
Plymouth 5 58,960 2,005
Orono 6 7,476 2.020
Independence 7 3,017 2,023
Bloomington 8 86,912 2,036
Edina 9 46,845 2,050
Minnetrista 10 3,831 2,082
* * Based on 1997 property taxes for a home valued at $120,000, in cities with populations
in excess of 2,500.
r City of OronoHennepin County Property Tax Comparisons
Ten Lowest Property Taxes for City—Portion Only,
City—Portion
Taxes
City Rank Population Payable
Deephaven 1 3,531 200
Plymouth 2 58,960 231
Orono 3 7,476 239
Medina 4 3,493 247
Edina 5 46,845 263
Corcoran 6 5,549 283
Shorewood 7 6,794 294
Minnetonka 8 50,927 308
Champlin 9
•
19,154 309
Mound 10 9,584 312
** Based on 1997 property taxes for a home valued at $120,000, in cities with populations
in excess of 2,500.
■1
City of OronoTax Share by Jurisdiction For 1997 Tax Capacity Rates$100,Amount IJII Home % Share III Home
$799.85 51.973%
454.59 29.539%
182.41 11.853%
MCrO, Met Council, Mosquito Control
Hennepin Parks
Minnehaha Creek Watershed District #3
63.05
2Z18
16.88
4.097%
1.441%
1.097%
$1.538.97 100.000%_
H' ------Amount % Share$2,049.61 51.973%
1,164.89 29.539%
467.43 11.853%
161.57 4.097%
56.84 1.441%
43.26 1.097%
$3,943.61 100.000%-
III HomeAmount% Share$3,299.37 51.973%
1,875.19 29.539%
752.45 11.853%
260.09 4.097%
91.50 1.441%
69.64 1.097%
$6,348.25 ,100.000%