HomeMy WebLinkAboutCity Council Packet 12-02-2002 Special 1City of Plymouth
2003 Proposed Budget
Truth in Taxation Hearing
December 2, 2002, 7 pm
Building
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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.