Minutes - 2009/09/14 - Laserfiche WebLink

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Mounds View City Council September 14, 2009 Regular Meeting Page 3 Mayor Flaherty stated the Council reduced expenditures by 6.71 % and they are considering what will be done to maintain services when the levy reduction fund is depleted in 2018. He noted that the level of services provided by the City to its citizens impacts the quality of life. Clerk-Administrator Ericson noted the proposed budget is almost 8% less than the 2008 budget and without using the levy reduction fund there would be a tax increase. He noted all communities are facing this issue, but government spending is not continuing to increase in Mounds View, and staff will continue to look for those reductions. Mr. Amundsen stated he appreciates the impact of a lower net tax base and believes property values will be lower, resulting in fewer taxes being received so staff cuts may needed or wages frozen. He suggested addressing what will happen in the next two to three years with regard to expected revenue and urged the use of the levy reduction fund instead of increasing the levy. Mayor Flaherty explained that once certified, the levy amount could be lowered but not increased. He stated this issue would be discussed from now until the December Truth in Taxation meeting. Finance Director Beer stated that a 1 % increase in the levy would generate $11 increase in property taxes on a median home and the lower tax capacity equals $39. He explained that having no levy increases for the past five years has compounded the problem and resulted in the City falling behind. Council Member Hull asked how much principle would be used from the levy reduction fund. Finance Director Beer estimated $40,000 to $50,000 depending on the rate of interest. Clerk- Administrator Ericson stated when the TIF Districts retire it will bring back a significant portion of tax base into the base levy. Unfortunately, the City remains limited in how much they may increase the levy because of the Charter cap and possibly a State levy cap. Mr. Amundsen stated the Charter levy cap language is CPI plus 2.5% so the Council has a 2.5% opportunity to catch up. It was pointed out that the correct cap language if 2% plus CPI, or 5%, whichever is less. Finance Director Beer restated that CPI was a negative 1 % so the maximum under the levy cap would be less than 2.5%. MOTION/SECOND: Mueller/Hull. To Waive the Reading and Adopt Resolution 7494, Authorizing Certification of the Proposed General Fund Budget and Property Tax Levy for Fiscal Year 2010. AMENDMENT MOTION/SECOND: Stigney/Hull. To amend Resolution 7494 to remove the 1 % levy increase from the general fund. Council Member Stigney thanked Mr. and Mrs. Werner and Mr. Amundsen for their comments. He stated the City used to subsidize the golf course and the sale of that property has provided money for the levy reduction fund. He stated that it is not known what the market values will be, whether LGA will be unallotted, and the Council does not have a "crystal ball," but has a fixed amount of money to subsidize City operations. Council Member Stigney suggested using that