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Home My WebLink AboutCC 12-07-2010 Levy & Budget 2011 COMMO MAYOR & COUNCIL COMMUNICATION -- page 1 -- DATE: 12/07/2010 REGULAR Public Hearing ITEM #: 11 MOTION Resolution No. 2010-068A Resolution No. 2010-068B AGENDA ITEM: Public Hearing - 2011 Final Property Tax Levy & 2011 General Fund Budget SUBMITTED BY: Tom Bouthilet, Finance Director THROUGH: Bruce Messelt, City Administrator REVIEWED BY: Joe Rigdon, KDV SUMMARY AND ACTION REQUESTED: The City Council is respectfully requested to convene a Public Hearing on the Proposed 2011 Property Tax Levy & 2011 General Fund Budget. Following receipt and consideration of public comment, the City council is requested to affirmatively consider approval of Resolution 2010-068A, adopting the 2011 final property tax levy, and Resolution 2010-068B, adopting the 2011 General Fund budget. The recommended motions to act on this are as follows: SUGGESTED “Move to approve Resolution 2010-068A, adopting the 2011 final property MOTIONS: tax levy” “Move to approve Resolution 2010-068B, adopting the 2011 General Fund budget” BACKGROUND INFORMATION: Under Minnesota law, the City is required to adopt and certify to the County its annual tax levy, this year by December 28th, 2010. In addition, the City adopts at the same time its annual Operating and Capital budgets, all of which become effective January 1st, 2011. While State statutory requirements to hold a truth in taxation public hearing have been repealed, the City is still required to hold an advertised meeting at which the public is allowed to speak and the annual budget and property tax levy are discussed. Tonight’s public meeting was duly advertised on December 1st in the Oakdale/Lake Elmo Review and no public comments have been received, to date. Subsequent to the public meeting but no later than December 28th, the City must adopt a final property tax levy and final budget. The final property tax levy can not exceed the proposed levy City Council Meeting 2011 Final Property Tax Levy and 2011 General Fund Budget – Public Hearing December 7th, 2010 Regular Agenda Item # 11 -- page 2 -- certified to Washington County in September. Of note - the attached proposed Final 2011 Budget is a consolidated budget which includes all funds of the City. However only the General Fund is legally required to be adopted. STAFF REPORT: On September 7th, 2010, the City Council reviewed and approved the proposed Preliminary 2011 General Fund Budget. In addition, the City Council adopted the “2011 Proposed Levy Certification” for submission to the Washington County Auditor, shown below in Table 1. General Fund Levy 2010 MVHC Ratified Unallotment Recovery 2011 MVHC Cut Recovery 2004 G.O. Capital Improvement Plan Bonds 2006 G.O. Equipment Certificates of Indebtedness 2009B G.O. Improvement Bonds 2010A G.O. Improvement Bonds $2,409,867 37,518 37,518 140,000 56,118 50,544 57,994 Total: $2,789,559 (Table 1 – 2011 Proposed Levy Certification) The 2011 General Fund expenditures and transfers out are budgeted at $2,919,223, or a 2.5% increase from the 2010 General Fund budget. The 2011 General Fund budget is considered “balanced”, with overall General Fund budgeted revenues also at $2,919,223, or a 2.5% increase. The overall 2011 property tax levy of $2,789,559 is 1.7% higher than the 2010 total levy of $2,743,346. The General Fund levy of $2,484,903 for 2011 (including market value homestead credit unallotment/cut recovery levies) is 2.9% higher than the 2010 General Fund levy of $2,415,630. While maintaining levels of government services, the City is proposing to increase the payable 2010 city tax rate by 6.6%, from 20.479% in 2010 to 21.826% in 2011. In other words, property owners with no change in market values from payable 2010 to payable 2011 should experience a 6.6% increase in the City portion of their overall property tax bill. In the event of a market value decrease or increase from payable 2010 to payable 2011, City property taxes would change proportionately. Per Washington County, the median value change of a homestead’s property value in Lake Elmo is a decrease of 6.2% from 2010 to 2011; meaning the median value home in Lake Elmo will likely see little or no increase in the City’s portion of their property tax bill. Table 2 on the following page shows the anticipated impact on sample Lake Elmo residential properties. • Revenue Notes: Other than the proposed modest levy increase, the City is again forecasting a conservative increase or no increase in other revenues, especially including local fees. This is reflective of the current state of the local and national economy. City Council Meeting 2011 Final Property Tax Levy and 2011 General Fund Budget – Public Hearing December 7th, 2010 Regular Agenda Item # 11 -- page 3 -- • Expenditure Notes: The 2011 budget continues existing hiring freezes and makes permanent recent staffing and program reductions. On the operations side, the budget does include a 2% salary increase for employees, though it now appears this will almost all be consumed by higher health care costs. • Other increases in operating expenditures are reflected in inflation and use of consumables, as well as street maintenance. Major capital spending increases reflect City Council priorities relating to street and parks improvements. 2010 CITY PROPERTY TAXES City Local CityMarketTaxTax Capacity PropertyValueCapacityRateTaxes20102010Pay 2010 2010 $100,000 $1,000 20.479%$205 $300,000 $3,000 20.479%$614 $500,000 $5,000 20.479%$1,024 $700,000 $7,500 20.479%$1,536 2011 CITY PROPERTY TAXES (WITH NO MARKET VALUE CHANGE) Market City Local City Property PercentageValueTaxTax Capacity Property Taxes Tax 2011 Capacity Rate Taxes Increase Increase NO CHANGE 2011 Pay 2011 2011 (Decrease)(Decrease) $100,000 $1,000 21.826%$218 $13 6.6% $300,000 $3,000 21.826%$655 $40 6.6% $500,000 $5,000 21.826%$1,091 $67 6.6% $700,000 $7,500 21.826%$1,637 $101 6.6% 2011 CITY PROPERTY TAXES (WITH 6.2% MARKET VALUE DECREASE) Market Value City Local City Property Percentage 2011 Tax Tax Capacity Property Taxes Tax DECREASE OF Capacity Rate Taxes Increase Increase -6.2%2011 Pay 2011 2011 (Decrease)(Decrease) $93,800 $938 21.826%$205 ($0)0.0% $281,400 $2,814 21.826%$614 ($0)0.0%$469,000 $4,690 21.826%$1,024 ($0)0.0%$656,600 $6,958 21.826%$1,519 ($17)-1.1% (Table 2 – Impact of Proposed 2011 Levy Increase) RECOMMENDATION: Based upon the above background information and staff report, it is respectfully recommended that, upon completion of the Public Hearing and due consideration of public comment, the City Council affirmatively consider adoption of Resolution 2010-068A, adopting the 2011 final property tax levy, and Resolution 2010-068B, adopting the 2011 General Fund budget. The suggested motions to do so are as follows: City Council Meeting 2011 Final Property Tax Levy and 2011 General Fund Budget – Public Hearing December 7th, 2010 Regular Agenda Item # 11 -- page 4 -- SUGGESTED “Move to approve Resolution 2010-068A, adopting the 2011 final property MOTIONS: tax levy” “Move to approve Resolution 2010-068B, adopting the 2011 General Fund budget” Alternatively, the City Council does have the authority to table this item for consideration on December 14th, but must take action then in order to complete the certification process with Washington County by December 28th, 2010. The Council may also further discuss, deliberate and/or, if appropriate, amend the recommended levy and/or budget as deemed appropriate. If the Council elects to revise the proposed levy and/or budget, the appropriate motion of the Council following such would be: “Move to approve Resolution 2010-068A, adopting the 2011 final property tax levy [as amended]” And “Move to approve Resolution 2010-068B, adopting the 2011 General Fund budget [as amended]” ATTACHMENTS: 1. Resolution 2010-068A 2. Resolution 2010-068B 3. 2011 Budget SUGGESTED ORDER OF BUSINESS: - Introduction of Item .............................................................. City Administrator - Report/Presentation of Item ......................................................Finance Director - Questions from Council to Staff ..................................... Mayor & City Council - Opening and Conduct of Public Hearing ............................... Mayor Facilitates - Closing of Public Hearing ...................................................... Mayor Facilitates - Call for Motion ............................................................... Mayor & City Council - Discussion/Comments............................................................. Mayor Facilitates - Action on Motion ............................................................ Mayor & City Council