12-03-07 Council Special Minutes

Home Browse Search

MINUTES CITY COUNCIL DECEMBER 3, 2007 With regard to the future, the Director expected that there will be Local Government Aid reforms, increases in the Sheriffls Contract both due to formula changes, and increasing energy prices. The Director concluded the Truth In Taxation presentation, and indicated that the proposed 2008 Budget will be adopted at a budget hearing scheduled for Wednesday, December 19, 2007, at 7:30 p.m. at the Little Canada City Center. One property owner present asked for a definition of Local Government Aid. 1'he Finance Director reported that it is State Aid provided to cities based on a formula that is comprised of several factors. Some of these include amount of pre-1940's housing stock, accident rating, and changes in tax base. The Director reported that there are ongoing discussions about the equity of the formula, and there is a push to have this formula reworked. She noted that Little Canada has not received LGA for the past 4 years, and was taken by surprise this year when it became the recipient of aid for 2008. It was noted that of the 19 Ramsey County cities, only 3 or 4 receive LGA. The City Administrator indicated that the receipt of $225,000 in LGA has created a unique situation for Little Canada. The Council was faced with the question of whether to buy down the tax levy and provide tax relief with these dollars. The danger of this is becoming depending on one-time dollars. If the LGA formula is revamped and Little Canada loses this aid, the result would be a spike in the tax levy. The Administrator noted that the City Council has worked over the years to keep the tax levy fairly flat. The Administrator stated that it is his belief that Little Canada will not remain on the receiving end of LGA dollars should the formula be reworked. The Administrator indicated that the Council's decision was to use a portion of these dollars for tax relief in 2008, and set aside the remaining money for one-time expenditures such as future fire truck replacement. Bob Bruski questioned the fact that home values are declining yet property taxes increasing. Blesener agreed that while home values go down, budgets go up. He noted that the majority of the City's budget is police and fire protection, and these costs are increasing. The City Administrator indicated that if a residential property has no value increase, there should be a slight decrease in the City's share of property taxes. He noted that the City is only one component of property taxes. The Administrator noted the unprecedented increase in property values in previous years, and the market correction to those values over the last year or two. It was noted that the County's property tax system may take a year or two to adjust to the market.