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HomeMy WebLinkAboutCity Council Packet 12-02-2002 Special 1City of Plymouth 2003 Proposed Budget Truth in Taxation Hearing December 2, 2002, 7 pm Building a Quality NI- fjLL-fgtA" rn, rLt Truth in Taxation Meeting Convene Meeting Presentation on 2003 Proposed Budget Truth in Taxation Hearing Adjourn Truth in Taxation Meeting Announce Date for Adoption — December 17, 2002 Budget Process City Council Goals and Priorities Three Council Budget Study Sessions Preliminary Budget/Levy Adopted - Sept. 9 Truth in Taxation Hearing — Dec. 2 Public Hearing and Final Adoption - Dec. 17 Budget Approach No new services or programs 2003 Budget designed to minimize negative impact on existing service levels General Fund Increase 2.2% General Fund increase over the 2002 budget Factors: Drainage maintenance and street sweeping moved from General Fund to Water Resources Fund Recreation booklet printing and postage moved from General Fund to Recreation Fund Without the changes, General Fund increase would be 4.96% Average increase previous two years was 6.6% Levy Limit Implicit price deflator 0.7% Increase in households 1.4% 50% of increase in C/I construction value 0.4% New Allowable Levy Limit Growth 2.5% Previous Underlevy amount 2.1 Total levy limit increase available under state law 4.6% City Property Tax City tax rate is projected to decrease from 25.77 to 25.23 Overall City tax levy will increase by 4.1 City taxes on average valued home ($284,000 after 10.0% appreciation) will increase by $51.08, which is 7.68% City taxes on typical business ($1,000,000 after no appreciation) will decrease by $65.41, which is -2.06% Difference between residential and commercial properties is due mostly to the difference in appreciation of property values Estimated Tax Burden on Average Home 2002 2003 Average home value $258,200 $284,000 Total Tax Capacity 2,582 2,840 City Tax Rate 24.66% 24.19% Subtotal $636.64 $687.11 Market Value Levy: Open Space Bonds 9.94 10.42 Activity Center Bonds 18.64 18.78 Total City Tax $665.22 $716.31 Estimated Tax Burden on $ 1 ,000,000 Business 2002 2003 Business Value $1,000,000 $1,000,000 Gross Tax Capacity Value 1%250 1%250 Less Fiscal Disparities -6,837 -6,837 Net Tax Capacity Value 12,413 12,413 City Tax Rate 24.66% 24.19% Subtotal $35060.71 $303.20 Market Value Levy: Open Space Bonds 38.50 36.70 Activity Center Bonds 72.20 66.10 Total City Tax $3,171.41 $3,106.00 Tax on $284,000 Home BROOKLYN CENTER NEW HOPE BROOKLYN PARK GOLDEN VALLEY RICHFIELD CRYSTAL ST. LOUIS PARK MAPLE GROVE EDEN PRAIRIE BLOOMINGTON MINNETONKA EDINA 2003 TAX RATE Pro osed), 59.21 49.54 48.00 47.56 42.99 40.53 37.64 36.60 36.02 35.97 31.70 28.23 2003 TAX Estimated) 1,681.51 1,407.02 1,363.31 1,350.76 1,220.77 1,151.06 1,068.86 1,039.42 1,022.86 1,021.66 900.31 801.76 MORE THAN PLYMOUTH 965.20 690.71 647.00 634.45 504.46 434.75 352.55 323.11 306.55 305.35 184.00 85.45 Includes market value and HRA levies: Comparison of Tax Burden on Average Value Home 284,000 — 2003 School District Hopkins — 270 Osseo — 279 Robbinsdale — 281 Wayzata — 284 258,200 - 2002 Total Taxes 2002 2003 2,955 $3,406 3,005 $3,468* 3,405 $3,670 3,209 $3,385 Before new school referendum Increase 15.26 15.40 5.48 Comparison of Tax Burden on Average Business 1,000,000 — 2003 1,000,000 - 2002 Total Taxes School District 2002 2003 Change Hopkins — 270 36,192 34,711 4.1% Osseo -279 36,750 35,186* 43% Robbinsdale — 281 38,298 35,807 6.5% Wayzata -284 37,516 34,706 7.5% Before new school referendum General Fund Revenues 2002 Property Taxes 14,326,101 Permits & Licenses 293509900 Fines & Forfeitures 6639200 Interest Earnings 3969629 Intergovernmental 4349814 Charges for Services 898,800 Transfers 7479681 Other Revenues 56,000 TOTAL $19,874,125 2003 Difference 1499439735 $ 617,634 2,301,500 49,400) 6669000 2,800 3509400 46,229) 4469172 11,358 8669700 32,100) 6809891 66,790) 56,000 20,311,398 $437,273 2003 General Fund Budget Revenue Categories Trs Misc. Rew 0% Charges for Servic 4% Use of Money/Property 2% Fines and Forfeitures 3% Permits and License 12% IntergmA. 2 Property Taxes 74% City of Plymouth 2003 General Fund Budget Category of Expenditure KAnterink-Mi innliAe Contractual Services 24% Personal Services 62% Capital Outlay/ Ilocations/Transfers 9% General Fund Budgets General Govt. Legal Comm. Dev. Park&Rec Finance Police Fire Public Works Other TOTAL 2002 1,091,288 374,00o 1,699,336 3,491,486 1,148,223 6,520,036 1,494,244 3,642,525 412,987 19,874.125 2003 1,053,709 377,000 1,763,667 3,63 5,610 1,188,027 6,827,445 1,642,919 3,304,304 518,717 20,311.398 Difference 37,579) 3,000 64,331 144,124 39,804 307,409 148,675 338,221) 105,730 437.273 2003 General Fund Department Budgets Percent of Total Parks and Recreation Finance Community Developmeni Legal Services General Goverrrathe Public vvorKs Fire Police 1,053,709 5% Legal Services 377,000 2% Cami"ty Development 1,763,667 9% Parks and Recreation 3,635,610 18% Finance 1,188,027 6% Police 6,827,445 34% Fire 1,642,919 8% Public WWorks 3,304,304 16% Other- 518,717 2% Total $20,311,398 100% Key Budget Features Shift Street Sweeping and Drainage Maintenance from General Fund to Water Resources Fund Add Water Resources Technician position Sewer utility Add maintenance worker Increased treatment costs Long-range lift station improvements Fire Department Add Captain position Grants Increase hours of Housing Eligibility Specialist MAJOR OPERATING FUNDS MGMT. 2002 2003 GENERAL 1998749125 2093119398 FUND RECREATION 192059476 193629169 HRA 393439599 397249024 TRANSIT 492459519 493919600 WATER FUND 397019323 397419241 SEWER FUND 595519373 793979997 ICE CENTER 8749200 8759000 SOLID WASTE 7499064 8969906 CENTRAL 159459066 290209592 EQUIP. RISK MGMT. 6199312 6219198 WATER 290999162 29393,847 RESOURCES FIELD HOUSE 3219000 2709000 DESIGNENG 3359538 352,994 EMPLOYEE 290979400 29255,500 BENEFIT INFO. 194669596 19546,101 TECHNOLOGY FACILITIES 8209905 831,317 MGMT. Strategies for Potential Loss of State Aid in 2003 Working Capital/Contingency $246,000 Capital Improvement Levy $309,000 2002 Surplus $280,000 est. Delay spending and hiring $ 1 00,000 Bond Street Reconstruction $1,283,400 Photos of Services shown on overhead) Community CLOSE WINDOW) Homeowners to take big hit on taxes Patricia Lopez and Dane Smith Star Tribune Property taxes may go up as much as $451 million in 2003 -- with increases averaging 10 percent statewide for all property taxpayers and as much as 15 percent for homeowners, state Revenue Department officials said Tuesday. Newly approved school levies account for about $200 million of the increase, said Dennis Emo, acting commissioner of the Revenue Department. The rest is a combination of property valuation increases and proposed local levy increases. On Tuesday, Emo called the voter -approved increases "a sign that property -tax reform is working." House Minority Leader Matt Entenza, DFL -St. Paul, said the Revenue Department's projection is proof that DFLers' warnings about the 2001 overhaul are coming to pass: "Homeowners are getting kicked in the teeth," he said. The overhaul -- led by Gov. Jesse Ventura, backed by Republicans and billed as "historic relief and reform" -- was supposed to yield an average drop of 18.5 percent for homeowners. DFLers said Tuesday that has flip-flopped in short order, with the longer -lasting result being double- digit increases and a decided shift in the tax burden from businesses to homeowners. Compared with the 15 percent average increase for Minnesota's homeowners, businesses are looking at a possible average increase of 2 percent, according to the Revenue Department. Farms could see an average increase of 6 percent, and apartments are projected to drop 4 percent. Gordy Folkman, a Revenue Department policy analyst, said "part of the intent of reform was to have a greater share of taxes shifted from apartments and industrial properties to residential." In addition, he said, homeowner valuation increases are outstripping the rise in business property values. Partisan shot In an opening partisan shot, Entenza laid the blame for increased taxes squarely on Republican Gov. - elect Tim Pawlenty, who was the House majority leader when the deal passed. The results of Governor -elect Tim Pawlenty's tax reform of 2001 mean that homeowners will suffer the largest increase they've seen in a decade," Entenza said. But state Rep. Dan McElroy, R -Burnsville, Pawlenty's incoming finance commissioner, said that the new system is doing what it was intended to do. I'm disappointed that the spending decisions by local governments have been as high as they have," McElroy said. "This is about the choices made by local units of government." The reforms were intended to expose taxpayers to the true cost of government services, McElroy said. Previously, because businesses -- which do not vote -- paid a higher share, homeowners were shielded from a portion of the expense, he said. That, according to proponents of the overhaul, created an appetite for more expensive services. Ventura, who has been complaining publicly about proposed property -tax increases on his Maple Grove ranch, said in an interview earlier this week that his overhaul "took property taxes back to what they were supposed to be." If subsequent local tax increases fail or succeed, he said, "that's not my responsibility." Disgruntled taxpayers "shouldn't look to me to whine and complain," the governor said. "They should whine and complain to their local unit of government, 'cause that's the one that's doing it to them." When is it enough?' Entenza said the school increases were traceable to a state underfunding of education. When the deficits hit hard early in 2002, he said, Ventura and House Republicans did not follow through on a commitment to fully fund education, resulting in 90 separate school district levy referendums across the state this year. McElroy challenged the notion that schools were underfunded. "They are, perhaps, insufficiently creative," he said. McElroy said Minnesota continues to rank in the top 10 nationally for per capita school funding. When is it enough?" McElroy said. "That is now up to local taxpayers to decide. They're the only ones who can bring local spending increases under control." But local officials say the proposed increases are driven more by economic troubles. Ramsey County budget director Julie Kleinschmidt said part of that county's proposed levy increase of 5.89 percent is due to the cost of unfunded state mandates and declining revenue from the county's investment income. Relief and reform Back in 2001, the reforms were billed by the Ventura administration as "a tax system that makes sense for Minnesota." It was to bring relief, in the form of significantly lowered taxes, and reform -- a system that was fairer and more transparent. But even as officials were making the case for an overhaul, there were hints that the outcomes would not make everyone happy. In 2001, Matt Smith, then revenue commissioner, wrote that tax relief requires less overall government spending. This may well mean that some citizens will have to get used to receiving fewer or less -costly services from government than they've received in the past." Reform, he said, might well mean that some would pay less than before, while others, "particularly if they've gotten a good deal compared to others in the past, may well end up paying more." Who got a "good deal" in the past? Homeowners historically have paid a smaller share than businesses. Outstate homeowners have paid less than metro homeowners. Owners of lower -valued homes have paid lower rates than those with higher -valued homes. In each case, those who paid less may well have to get accustomed to paying more. Unless, McElroy said, they get involved, which was the whole underlying point of reform. The proposed levy increases by cities and counties appearing on truth -in -taxation notices are still just that -- proposals, he said. "Final taxes often are lower than that. The more people speak up, the better the result will be. I hope citizens go to their truth -in -taxation hearings. People have to speak up." Erno said that apart from the tax overhaul, galloping increases in property values have driven much of the tax increase. Part of the shift from business to homeowners, he said, could be traced to a statewide business property tax, created as part of the 2001 overhaul. Unlike local levies, which result from local spending decisions, the statewide business property tax is tied to inflation, Erno said, which for 2003 was set at one-half of 1 percent. Inflation is at a historic low," Erno said, "so to some extent businesses are insulated from local increases." Staff writers Kevin Duchschere, M.L. Smith and Dan Wascoe contributed to this report.— The writers are at plope_z a startr bung c_om ands_d_smith&tartribune.com. Copyright 2002 Star Tribune. All rights reserved.