11-29-2023 Council Packet - Laserfiche WebLink

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estimated market for value for residential homestead properties from year to year. Using a 6.08% estimated increase in assessed value Little Canada median value home increased from $355,300 to $376,902. As a result, a median home will pay approximately $30.33 or 3.35% more in city property taxes in 2024 when compared to 2023. State Budget Conditions and Aid Distribution The state budget includes approximately $644 million for the Local Government Aid (LGA) program which provides financial aid to approximately 90 percent of Minnesota cities including Little Canada. The 2024 Operating Budget includes LGA of $410,287 which is a 53.84% increase from 2023 LGA. A new allocation to the General fund was used in the 2024 budget. City staff recommends increasing the allocation to the General Fund to 40%, a 20% increase form 2023. The remaining 60% has been budgeted in the General Capital Improvement Fund. The 2024 LGA amount increase is due to a current formula change approved during the 2023 legislature session under the omnibus tax bill and an increase of $80,000,000 in LGA revenues to the program. 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 69.80% of the General Fund revenues. Per the City’s Financial Policy, “the total sum appropriated for the General Fund shall be less than the total revenue by a safe margin”. It is the policy of the City that this “safe margin” will allow for property tax collections of 97.5% in any given year”, however at its discretion City Council can adjust the safe margin. During the last eighteen years, 2006 through 2009 property tax collections were less than the 97.5% collection rate. Therefore, we believe this is a conservative budget approach. Since the average collection rate 2011-2022 has been approximately 98.72%, City Council decided to adjust the safe margin from 97.5% to 98.5% for the 2024 budget. The one percent change resulted in a levy decrease of approximately 1%. The following shows a historical perspective of the City’s property tax gross levy: 5