09-14-11 Council Workshop Minutes

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MINUTES CITY COUNCIL SEPTEMBER 14, 2011 noted that this will appear as a property value reduction on tax statements. While the value exclusion lowers the City's tax base, the tax rate will increase even at a 0% gross tax levy. The tax burden will be shifted to higher valued homes as well as to commercial properties. The Director noted that given that the City of St. Paul has a large amount of lower valued homes, tax burden in Ramsey County is being shifted to the suburbs. The Director then reviewed Local Government Aid (LGA) over the past four years, noting that the LGA certified to be received in 2012 is 36.44% of what was certified for 2009. The Director compared the funding levels that the State certified for this time period with what was actually realized, pointing out that the City was above to absorb these decreases during this time period. The Director noted it is anyone's guess whether or not the City will receive the full $195,843 in LGA certified by the State for 2012. She noted that under the 0% gross levy increase, the City has budgeted an allowance of 30% in cuts in LGA. The Director pointed out that this results in a 0% gross levy increase. If the City budget fully relied on the certified LGA amount, a -2.26% gross levy reduction would result. If there was no reliance on LGA, then the gross levy would increase by 5.29 %. Blesener pointed out that the City's budget surpluses are typically the result of conservative budgeting. This conservative budgeting has been a means of protecting the City to a certain extent from impacts of the State cutting LGA after it has certified LGA amounts to cities. The Director replied that that was a fair statement. She also pointed out the City's effort to keep levied amounts on an even stance and avoid big fluctuations in the levy. Montour pointed out that the $195,000 LGA line item in Intergovernmental General Fund Revenues. The Director noted that the City would be relying on up to $137,000 of this revenue as part of the 2012 Budget reflecting the 0% gross levy increase. This would generate a $58,000 surplus in LGA. The City Administrator noted that one of the City's goals is to reduce dependence on LGA, and the City is doing this in the 2012 Budget. He noted that the City has never budgeted for full reliance on the certified LGA amount and pointed out the State's decrease in certified LGA amounts since 2009. The Administrator noted that to totally eliminate reliance on LGA would require a gross levy increase, and stated that this is not the time to do so. He reported that in a meeting of suburban Ramsey County cities, he learned that the majority are proposing 0% levy increases, some a decreasing their levies, and some are increasing up to 4 %. The Administrator pointed out that should the City enact a 0% gross levy increase, any property tax increase that property owners see will be the result of actions by the State or increases by other taxing jurisdictions. 4