12-14-2022 Council Packet - Laserfiche WebLink

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The City’s property tax levy is divided by the taxable value to determine the City’s tax rates, which is applied to each property’s tax capacity to determine that property’s City property tax amount before any credits are applied. Between 2022 and 2023, the City’s tax rate is expected to decrease from 25.551 to 25.292 (-1.01%). This tax rate is estimated to be the 4th lowest in Ramsey County. Ramsey County generates an Assessor’s Report that measures the percentage change in estimated market for value for residential homestead properties from year to year. Overall, residential property in Ramsey County increased in value by 14.21%. The Little Canada median value home experienced a 16.9% increase in value from $303,900 to $355,300. This median value home will pay approximately $899 in city property taxes in 2023 based on this levy compared to $776 in 2022. State Budget Conditions and Aid Distribution The state budget includes approximately $564 million for the Local Government Aid (LGA) program which provides financial aid to approximately 90 percent of Minnesota cities including Little Canada. The 2023 Operating Budget includes LGA of $220,919. Due to the potentially volatile nature of LGA, only 20% of LGA has been budgeted in the General Fund and 80% has been budgeted in the General Capital Improvement Fund. The 2023 LGA amount is a 49.20% reduction or $213,990. The decrease is due to the loss of a one-time, “hold-harmless” supplemental aid increase approved by the Legislature in 2021. The Legislature debated to extend the supplemental hold-harmless bill for a second year, however the Legislature failed to pass the extension. Had it passed it would have prevented a loss of LGA to at least 150 cities in 2023. Additionally, during the 2022 legislative session, the Legislature debated but did not pass a bill developed by the League of Minnesota Cities, Metro Cities, the Coalition of Greater Minnesota Cities, and the Minnesota Association of Small Cities that would have updated the nearly decade-old LGA formula that would have increased the LGA appropriations. Unless the funding formula is changed, the City will likely see additional reductions in future years. The City receives Municipal State Aid (MSA) funds that help with the maintenance and construction of certain roads in our community. The maintenance portion of these funds are included in the General Fund Budget and the construction portion of these funds are included in the Infrastructure Capital Improvements Fund. MSA funds are derived from the state’s gas tax. It should be noted that the State of Minnesota, through the Department of Revenue, does provide various tax relief programs intended to assist individual homeowners and renters. These offerings include the Homestead Credit Refund, the Renter’s Property Tax Refund, and the Property Tax Deferral for Senior Citizens programs. Additional information on these programs is available at https://www.revenue.state.mn.us/property-tax-refund. Property Taxes and Property Tax Levy The State has granted local municipalities with the authority to levy taxes in order to fund operations and debt payments. For the City of Little Canada, the property tax levy accounts for approximately 77.99% of the General Fund revenues. Per the City’s Financial Policy, “A safe margin of 97.5% of property tax collections shall be the starting point for each budget year”. The safe margin will allow for property tax collections of 97.5% in any given year. The 2023 Budget continues to include this 97.5% collection rate. 5