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4.a) Staff Report-Certify Maximum Tax Levy L � �����, /�" /�_-^�.. .� ��.// r'L1'• 1'�'l"� /� e. SCANDIA Staff Report Date of Meeting: September 10, 2013 To: City Council From: Kristina Handt, Administrator Re: Certify Maximum Tax Levy Agenda Item #: 4.a) Background: The preliminary levy for taxes payable in 2014 must be certified to Washington County and the date of the public hearing must be set no later than September l6. The recommended property tax levy would be preliminary, to be used for the property tax notices that will be sent in November. The Council may make additional changes to the budget prior to its adoption in December, but the tax levy may not be increased. The Council has held budget work sessions in August and began the review of Capital Improvement needs in May. Issue: What amount should the Council certify for the preliminary levy for taxes payable in 2014? Proposal Details: There are four draft resolutions included in your packet. Resolution 09-10-13-01 A is the result of the discussion at the August 27, 2013 budget work session. It would provide for an increase in the levy of$10,000 or 0.46%. If the Council desires to have no levy increase for 2014 the following three options should be considered. Resolution 09-]0-13-01 B reduces the general fund levy by an additional $10,000 to account for the EDA/HRA levies. If this resolution is adopted the Council would have to determine where the $10,000 cut would come from in the draft budget documents. Resolution 09-10-13-01C reduces the general fund levy by $5,000 and the HRA levy is eliminated. If this resolution is adopted the Council would have to determine where the $5,000 cut would come from in the draft budget documents. As explained below, if the EDA ends up needing more than $5,000 next year the Council and EDA could agree to an interfund loan. Resolution 09-10-13-01 D eliminates any levy for the EDA/HRA purposes. Since the last meeting 1 have consulted with City Attorney Andy Pratt about funding for the EDA. It would be possible that is the Council did not include a levy in 2014 for the EDA but the EDA needed funds that an interfund loan could occur. This would reyuire the EDA and the City Council to pass resolutions agreeing to the interfund loan transfer. The loan would then be repaid by the EDA in 2015 with tax levy dollars. Since the EDA does not have specific plans for expenditures yet in 2014 but is concerned projects may be stalled if they don't ask for a levy this year, this may be one compromise that could meet both the goal of not levying funds for the EDA without knowing the use and also not delaying EDA efforts if it is determined funds are needed a few months from now. EDA Commissioner Greg Isaacson had asked what happens if the EDA needs money next year but doesn't seek a tax levy. At the time of the meeting 1 didn't know the answer but consulted with Attorney Pratt afterwards. August's Questions of the Month on the website were about the EDA. The first question asked what the top priority of the EDA should be. Three votes (23%) said attracting new businesses to Scandia, 8 (62%) said assist in the retention and expansion of existing businesses and 2 (15%) said other. Tourism and housing issues received no votes. The second question was about a levy for the EDA. Two votes (14%) said yes for EDA purposes, four votes (29%) yes for EDA and HRA purposes and 8 (57%) said no levy. Fiscal Impact: If Resolution 09-10-13-01A is adopted the levy could increase by $10,000 in 2014. If any of the last three resolutions are adopted, the levy would not increase in 2014. As mentioned previously, the impact of the lax levy on an individual property owner is impacted by a number of things. Preliminary information from Washington County shows a 9.8% decrease in the market value from 2013 to 2014. Assuming a property value decreased by 9.8%, their portion of the tax bill attributable to the City would decrease by 0.4-4.9% depending on the property value if the City adopted a $10,000 levy increase. Under those same circumstances, if there was no levy increase,the property owner could see a decrease in the City portion of the taxes of 0.9-5.4%. Copies of the Tax impact Worksheets are provided in your packet. RESOLUTION NO. 09-10-13-01A CITY OF SCANDIA, MINNESOTA RESOLUTION CERTIFYING MAXIMUM PROPERTY TAX LEVY PAYABLE IN 2014 WHEREAS,the City of Scandia has prepared a draft budget for the fiscal year commencing January l, 2014; and WHEREAS, the budget requires money to be raised from property taxes on taxable property in the City of Scandia; NOW, THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCANDIA, WASHINGTON COUNTY, MINNESOTA, that the following sums of money are the maximum amounts to be raised by property tax payable in 2014: 2014 Property General Purpose Tax Levy General Fund $1,649,168 Debt Service Funds $327,506 Capital Improvement Fund $194,400 EDA Purposes $5,000 HRA Purposes $5,000 Total Property Tax Levy $2,181,074 FURTHER BE IT RESOLVED, that said maximum property tax levy shall be certified to the County Auditor of Washington County. Adopted by the Scandia City Council this l Oth day of September, 2013. Randall Simonson, Mayor ATTEST: Kristina Handt, Administrator/Clerk RESOLUTION NO. 09-10-13-01B CITY OF SCANDIA, MINNESOTA RESOLUTION CERTIFYING MAXIMUM PROPERTY TAX LEVY PAYABLE IN 2014 WHEREAS, the City of Scandia has prepared a draft budget for the fiscal year commencing January 1, 2014; and WHEREAS, the budget requires money to be raised from property taxes on taxable property in the City of Scandia; NOW, THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCANDIA, WASHINGTON COUNTY,MINNESOTA, that the following sums of money are the maximum amounts to be raised by property tax payable in 2014: 2014 Pronerty General Purpose Tax Levy General Fund $1.639,168 Debt Service Funds $327,506 Capital Improvement Fund $194,400 EDA Purposes $5,000 HRA Purposes $5,000 Total Property Tax Levy $2,171,074 FURTHER BE IT RESOLVED, that said maximum property tax levy shall be certified to the County Auditor of Washington County. Adopted by the Scandia City Council this l Oth day of September, 20l 3. Randall Simonson, Mayor ATTEST: Kristina Handt, Administrator/Clerk RESOLUTION NO. 09-10-13-01C CITY OF SCANDIA, MINNESOTA RESOLUTION CERTIFYING MAXIMUM PROPERTY TAX LEVY PAYABLE IN 2014 WHEREAS,the City of Scandia has prepared a draft budget for the fiscal year commencing January 1, 2014; and WHEREAS, the budget requires money to be raised from property taxes on taxable property in the City of Scandia; NOW,THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCANDIA, WASHINGTON COUNTY, MINNESOTA, that the following sums of money are the maximum amounts to be raised by property tax payable in 2014: 2014 Property General Purpose Tax Levy General Fund $1,644,168 Debt Service Funds $327,506 Capital Improvement Fund $194,400 EDA Purposes $5,000 Total Property Tax Levy $2,171,074 FURTHER BE IT RESOLVED, that said maximum property tax levy shall be certified to the County Auditor of Washington County. Adopted by the Scandia City Council this l Oth day of September, 2013. Randall Simonson, Mayor ATTEST: Kristina Handt, Administrator/Clerk RESOLUTION NO. 09-10-13-01D CITY OF SCANDIA, MINNESOTA RESOLUTION CERTIFYING MAXIMUM PROPERTY TAX LEVY PAYABLE IN 2014 WHEREAS, the City of Scandia has prepared a draft budget for the fiscal year commencing January 1, 2014; and WHEREAS, the budget requires money to be raised from property taxes on taxable property in the City of Scandia; NOW,THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCANDIA, WASHINGTON COUNTY, MINNESOTA, that the following sums of money are the maximum amounts to be raised by property tax payable in 2014: 2014 Property General Purpose Tax Levy General Fund $1,649,168 Debt Service Funds $327,506 Capital Improvement Fund $194,400 Total Property Tax Levy $2,171,074 FURTHER BE IT RESOLVED, that said maximum property tax levy shall be certified to the County Auditor of Washington County. Adopted by the Scandia City Council this 1 Oth day of September, 2013. Randall Simonson, Mayor ATTEST: Kristina Handt, Administrator/Clerk Proposed Pay 2014 Property Tax Impact Worksheet Taxing District: 0400 Scandia STEP 1 - Calculate the Taxing DistricYs Tax Rate: Actual Proposed % Item Pay 2013 Pay 2014 Change A B C 1. Lev before reduction for state aids $2,171,074 $2,181,074 0.5% 2. State Aids - $0 $0 0.0% 3. Certifed Pro ert Tax Le = $2,171,074 $2,181,074 0.5% 4. Fiscal Disparity Portion of Levy - $98,030 $108,152 10.3% 5. Local Portion of Le = $2,073,044 $2,072,922 -0.0% 6. �ocal Taxable Value 2014 is an ESTIMATE + 5,558,582 5,020,487 -9.7% 7. Local Tax Rate = 37.294% 41.289°/ 10.7°/ 8. Market Value Referenda Le $0 $0 0.0% g, Fiscal Disparity Portion of Levy(SD only) - $0 $0 0.0% 10. Local Portion of Le = $0 $0 0.0% 11. Referenda Market Value P014 is an ESTIMATE • O 0 0.0% 12. Market Value Referenda Rate = 0.00000°/a 0.00000°/ 0.0°/ STEP 2 - Calculate the Impact of the Taxing DistricYs Rate on Residential Homestead Taxes: 13. Assumes a 9 8% change in market value from 2013 to 2014,which is the city median change. D E F G H Market Homestead Taxing Value Market Taxable District Before Value Market Tax Portion of Exclusion Exclusion Value Ca aci Tax Actual Pa 2013 Pay 2013 76,000 @40°/a 500,000@1.0% (A7 x G)+ MV -rem 9% (D • E rem 1.25% A72 X D 14. 272,900 12,700 260,200 2,602 $970.39 15. 110,900 27,300 83,600 836 $311.78 16. 166,300 22,300 144,000 1,440 $537.03 17. 277,200 12,300 264,900 2,649 $987.92 18. 443,500 0 443,500 4,435 $1,653.99 Pro osed Pa 2014 Pay 2014 MV 76,000 @40% 500,000@1.0% (67 x G)+ X 0.902 -rem 9% D -(E rem �.25°k 612 x D 19. 246,200 15,100 231,100 2,311 $954.19 20. 100,000 28,200 71,800 718 $296.46 21. 150,000 23,700 126,300 1,263 $521.48 22. 250,000 14,700 235,300 2,353 $971.53 23. 400:000 1,200 398,800 3,988 $1,646.61 Percenta e Chan e from 2013 to 2014 24. -9.8% 18.9% -11.2% -11.2% -1 7% 25. -9.8% 3.3% -14.1% -14.1% -4.9% 26. -9.8% 6.3% -12.3% -12.3% -2.9% 27. -9.8% 19.5% -11.2% -11.2% -1.7% 28. -9.8% 0.0% -10.1% -10.1% -0.4% Proposed Pay 2014 Property Tax impact Worksheet Taxing District: 0400 Scandia STEP 1 -Calculate the Taxing District's Tax Rate: Actual Proposed % Item Pay 2013 Pay 2014 Change A B C 1. Le before reduction for state aids $2,171,074 $2,171,074 0.0% 2. State Aids - $0 $0 0.0% 3. Certifed Pro ert Tax Lev = $2,171,074 $2,171,074 0.0% 4. Fiscal Disparit Portion of Le - $98,030 $108,152 10.3% 5. Local Portion of Le = $2,073,044 $2,062,922 -0.5% 6. Local Taxable Value 2011 is an fSTlMATE 5,558,582 5,020,487 -9 7% 7. Local Tax Rate = 37.294% 41.090°/ 10.2°/ 8. Market Value Referenda Le �0 $0 0.0% 9. Fiscal Disparity Portion of Levy(SD only) - $0 $0 0.0% 10. Local Portion of Le = $0 $0 0.0% 11. Referenda Market Value 2011 is an ESTIMA7E r 0 0 0.0% 12. Market Value Refere�da Rate = 0.00000% 0.00000°/ 0.0� STEP 2 - Calculate the Impact of the Taxing District's Rate on Residential Homestead Taxes: 13. Assumes a -9 8% change in market value from 2013 to 2014,which is the city median change. D E F G H Market Homestead Taxing Value Market Taxable District Before Value Market Tax Portion of Exclusion Exclusion Value Ca acit Tax Actual Pa 2013 Pay 2013 76,000 @40% 500,000�1.0% (A7 x G)+ MV -rem 9% D -(E rem 1.25% (Al2 X D 74. 272 900 12,700 260,200 2,602 $970.39 15. 110,900 27,300 83,600 836 $311.78 16. 166,300 22,300 144,000 1,440 $537.03 17. 277,200 12,3Q0 264,900 2,649 $987.92 18. 443,500 0 443,500 4,435 $1653.99 Pro osed Pa 2014 Pay 2014 MV 76,0�0 @40% 500,000(�1.0'Yo (87 x G)� X 0.902 -rem 9°k D - E rem 1.25Mo 612 x D 19. 246,200 15,100 231,100 2,311 $949.59 20. 100,000 28,200 71,800 718 $295.03 21. 150,000 23,700 126,300 1,263 $518.97 22. 250,000 14,700 235,300 2,353 $966.85 23. 400,000 1,200 398,800 3,988 $1,638.67 Percenta e Chan e from 2013 to 2014 24. -9_8% 18.9% -11.2% -11.2% -2.1% 25. -9.8% 3.3% -14.1% -14.1% -5.4% 26. -9.8% 6.3% -12.3% -12.3% -3.4% 27. -9.8% 19.5% -112% -112% -2.1% 28. -9.8% 0.0% -10.1% -10.1% -0.9% instructions for Calculating a Residential Homestead Property Tax: D. Market Value of Residential Homestead Assumes that the Pay 2014 market value changed from Pay 2013 by-9.8%. Countywide,the median change in market value from Pay 2013 to Pay 2014 is 2.4%. E. Calculate the Homestead Market Value Exclusion 40%of the first 76,000 of market value(D),reduced by 9%on the market value over 76,000 The exclusion decreases as the market value over 76,000 increases, until a 414,000 home receives 0 exclusion. F. Calculate Taxable Market Value Market Value before Exc�usion(D)-Homestead Market Value Exclusion(E). G. Calculate the Net Tax Caaacitv of a Residential Homestead Pay 2013: 1 st 500,000 of(F)Taxable Market Value @ 1.00%, remainder @ 1.25% Pay 2014: 1 st 500,000 of(F)Taxable Market Value @ 1.00%, remainder @ 1.25% H. Calculate the Taxin4 DistricYs nortion of the Tax Pay 2013: multiply the Pay 2013 net tax capacity(G)by the Pay 2013 tax capacity local tax rate(A7),plus multiply the Pay 2013 market value before exclusion(D)by the Pay 2013 market value tax rate(Al2) Pay 2014: multiply the Pay 2014 net tax capacity(G)by the Pay 2014 tax capacity local tax rate(B7), plus multiply the Pay 2014 market value before exclusion(D)by the Pay 2014 market value tax rate(B12) 19-23. Line 19 will default to the median residential homestead value for the taxing authority for taxes payable in 2014. 24-28. Calculate the%increase/decrease from 2013 to 2014 (2014-2013)/2013 There is no longer a homestead credit. The market vaiue homestead credit was eliminated starting with taxes payable in 2012 and was replaced with a market value exclusion for homestead property.