CC PACKET 09071999 - Laserfiche WebLink

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MEMORANDUM DATE: September 7, 1999 TO: Mike Morrison, City Manager FROM: Roger Larson, Finance Director ITEM: TAX RATE CERTIFICATION/PUBLIC HEARING A new law requires that all cities over 500 population to pass a resolution if the levy for the subsequent year will result in a tax rate increase. Under the law, the city council must adopt a resolution at a public hearing if its levy will result in an increase in the tax rate over the baseline tax rate. Essentially, a base line tax rate is computed based on the prior year's levy and the current year tax base. The intent of the law is to provide the public with added information about the levy process. Specifically under the current calculation methods used, a city could increase its levy or increase spending, yet experience a tax rate decrease due to an increase in their Total Local Tax Capacity (valuation increasing). Citizens could incorrectly assume that a reduction in their "city taxes" equals no increase in spending. Early indications are that for budget year 2000 St. Anthony will be a prime example of what the intent of the law is intended to accomplish. The information is as follows: 1999 Levy 2000 Levy Increase/(Decrease) $1,616,147 $1,646,970 $ 30,823 Estimated 1999 Tax Rate 2000 Tax Rate 32.229% 30.358% (1.871%) *Estimated by Hennepin County 9/7/99. It is important to understand that because we are early in the Truth in Taxation process, the year 2000 tax rate calculation is subject to change. The reason for the anticipated reduction in St. Anthony's tax rate is a $300,000 increase in the City's Total Local Tax Capacity. Recommendation: Council pass resolution XX-XXXX to comply with the new law (Minn. State 204b.135, Subdivision 5) as amended by 1999 laws indicating its intention to increase the levy.