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AGENDA ITEM 3B(ii) STAFF ORIGINATOR Al Rolek DATE September 5, 2001 TOPIC Consideration of adopting the preliminary 2001 Tax Levy, collectible in 2002. Simple Majority VOTE REQUIRED BACKGROUND Minnesota State Statutes require the City of Lino Lakes to adopt and certify a preliminary tax levy for the coming year on or before September 15th of each year. Legislative action during the last session has made a large impact on the City's levy for the coming year. The legislature took over funding of general education and compressed the property class rates for all classes of property. The state legislature also eliminated Homestead and Agriculture Credit Aid (HACA) to cities for this and future years. This funding will be used to offset the state's cost of general education funding. This leaves a large funding gap for the city if services are maintained at their present level. The legislature has allowed cities to increase their levy to make up this funding gap. The proposed levy for Lino Lakes includes such an increase to make up this difference. This increase will be more than offset by a decrease in the school district levy, which will be made up by the state. The net result should be a decrease in property taxes in 2002. The proposed levy may be decreased when the final levy is adopted in December. The final levy can not be more than the proposed levy. The total levy includes dollars for the general operating budget as well as dollars for general bonded debt. The levy will be further reviewed by the City Council and staff between September 15th and December 10th, for changes if necessary. OPTIONS 1. Adopt the proposed 2001 tax levy, collectible in 2002. 2. Return to Staff for further review. RECOMMENDATION' Option 1