11-12-08 Council Workshop Minutes

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MINUTES CITY COUNCIL NOVEMBER 13, 2008 reviewed a list of additional budget adjustments identified since September, such as an adjustment in the City's uncollectable tax rate and a reduction in Sheriffls Department costs by $18,072. She then reviewed several levy scenarios for the Council's consideration, as well as Ramsey County proposed tax rates for taxes payable in 2009 and a Net Tax levy Comparison of Ramsey County taxing jurisdictions. The final piece of information reviewed with the Council was a comparison of property tax impacts of gross levy increases of 5%, 4%, and 3% on a median value homestead (includes single-family, condos, and townhouses) as well as on asingle-family median valued home. It was noted that given the County's decrease in the median value of both homestead and single-family homes, these gross levy increases all result in decreases in the City tax. The Finance Director noted that based on property value impacts, ~}8% of the City's residential properties will see a decrease or no increase in taxes based on the proposed 20091evy. The Finance Director noted that based on tax rates used for Truth In Taxation notices, Little Canada will have the 7`h lowest tax rate of the Ramsey County cities. The Council then discussed Local Government Aid and the potential risk that the State will reduce LGA to address its budget crisis. It was noted that a study of the LGA formula will be undertaken and is due at the end of 2010. It is hoped that the results of that study will be an equitable and stable formula for determining LGA so that cities can rely on this aid. It is anticipated the new formula will not be implemented until 2012 at the earliest, and until that time there is substantial volatility risk in LGA to cities. The Finance Director reported that the City is using $207,000 of LGA in the General Fund and reserving $320,000 as a hedge on possible budget cuts by the State. Blesener suggested that some of the $320,000 could be reserved in the Capital Improvement Fund for a future fire truck purchase. The City Administrator indicated that given the volatility in LGA, he looks as these dollars as unexpected revenue and felt it preferable to use this money for one-time capital purchases. The City could use LGA to cut the tax rate, however, if LGA then goes away, the City will be forced to impose a large levy increase. The Administrator noted that utilizing LGA for capital expenditures, the taxpayers still win as we avoid future tax increases for these purchases. The Administrator noted that once the LGA formula is stabilized, the City can take another look at the use of these dollars moving forward.