2024.12.02 CC Minutes - Laserfiche WebLink

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Council Meeting Minutes for December 2, 2024 Page 5 of 7 Public Hearing on the 2025 City Budget and Tax Levy State statutes required the City Council to hold a public hearing on the proposed city budget and tax levy for the 2025 fiscal year. Finance Director Anna Wobse presented the budget and tax levy to the Council prior to taking public comment. Anna began by explaining the year long process of establishing the budget beginning with the goal setting workshop held in January through this evening’s Truth-in-Taxation public hearing. She explained that 761 cities received Local Government Aid (LGA), and Hugo is one of 94 cities that did not. She cited Hugo’s tax rate being lower than the statewide average and the lack of unmet needs being some the reasons why. The median homestead value decreased by 5%, and Hugo saw a decrease of $85,145,200 (-3%) in taxable market value for 2025. Anna explained that changes made by the state to the Homestead Market Value Exclusion Program reduced the tax capacity by $35,618,400. Anna talked about the flat rate policy, approximately 39%, and the deviation from the flat tax rate policy to lower the rate in 2023 and 2024 due to the large home value increases. At the budget workshop, Council considered a 2025 budget prepared by staff that continued to deviate from the flat tax rate policy. Council directed staff to prepare the 2025 preliminary budget following the flat tax rate policy to help fund road, bridge and trail maintenance projects that added $850,000 to the Street CIP Levy. Anna explained what made up the City’s levy beginning with the Debt Service Levies that included three bonds totaling $15,145,000. This was $889 per capita compared to the statewide average of $1,936. Also levied for was $2,010,000 for streets, $300,000 for the Equipment Fund, $278,788 for the Stormwater Levy, and $92,000 toward the Park Improvement Levy, which will remain at this level going forward unless increased by Council. The Firefighter Relief Levy was set at $29,176. Anna talked about the continued use of contingency budgeting for expenditures and reviewed the largest fund, General Operations Fund, that included personnel and public safety. There were 26 regular full-time employees and three vacant position that would be filled on an as-needed basis. Personnel also included a 3% cost of living and a 2% salary matrix adjustment. Health insurance premiums would see a 13.4% increase, and Health Partners was not increasing deductibles. Hugo had received $703,253 in a onetime Public Safety Aid payment that was placed in the Special Revenue Fund to pay for a new deputy from 2024-2028. The total General Fund equaled $10,119,290 in expenses and was paid 90% from property taxes and 10% from other revenue sources, most of which were left at the 2024 levels. The total proposed Tax Levy for 2025 was $12,847,855. Anna explained Fiscal Disparities that, which were 8% of the City’s tax levy, lowered the amount of taxes paid by residents. With the proposed rate of 39.190%, residents would see a $15 decrease in City taxes on a median valued homestead of $377,896 after the market value exclusion. Hugo would remain in the middle of comparative tax rates with other cities in Washington County. Anna explained that Hugo did not collect other additional fees that other cities do, and the Hugo City tax was just one of the taxes collected from a possible 13 other jurisdictions. Anna explained the tax programs available to