08-08-2022 Council Work Session Packet Special

Home Search

WS – Item 1 WORK SESSION STAFF REPORT Work Session Item No. 1 Date: August 8, 2022 To: City Council From: Hannah Lynch, Finance Director Re: 2023 Budget & Tax Levy Background A high-level overview of the draft 2023 Budget & Tax Levy is provided for your review. The draft was prepared by department directors and reviewed by the City Administrator with the intention of providing the resources needed to continue city services at their current levels. The draft includes a proposed tax rate of 33.873% and a $847,770 or 7.17% increase in the total tax levy. Staff is looking for Council’s direction regarding where attention should be given to reduce the tax levy and rate, if desired. Council adopted a 2022 budget and tax levy that resulted in an anticipated tax rate of 40.088% with a resulting final 40.154% tax rate after tax capacity figures were finalized by Anoka County. Market values have increased significantly for taxes payable 2023 resulting in an arbitrary decrease in the tax rate. Over the last five years the average net tax capacity increase was 7.03%. If that increase was applied to the 2023 net tax capacity with the current levy proposed the tax rate would be 41.125%. Talking in the same context, to have a “flat” tax rate in this scenario would require a $265,000 decrease in the current levy proposed. Page one of the budget book highlights the 7.17% increase in the total tax levy and 3.96% increase in General Fund expenditures. In light of the proposed tax rate not being comparable to prior years, historical increases for the total tax levy and General Fund expenditures are provided below: 2018 2019 2020 2021 2022 Total Tax Levy 9,776,732 10,055,416 10,491,518 11,141,815 11,819,287 Annual % Change 2.85% 4.34% 6.20% 6.08% Total General Fund Expenditures 10,946,031 10,974,316 11,195,170 11,519,400 11,664,762 Annual % Change 0.26% 2.01% 2.90% 1.26%