4. 2012 Budget and Tax Levy Meeting Date: 12/13/2011
Agenda item: / /
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City Council Agenda Report
City of Scandia
14727 209th St. North
Scandia, MN 55073 (651) 433-2274
Action Requested: Hold the required public meeting on the 2012 Budget and Tax Levy.
Deadline/ Timeline: The location, date and time (6:30 pm) of the meeting were included on
proposed property tax statements mailed in November. The city must
certify its final 2012 tax levy to the County Auditor by December 28,
2011.
Background: • The draft budget prepared for the meeting incorporates direction
received during the Council's budget work sessions and meetings
up through the last discussion at the November I S meeting.
• It also includes the recommendations in the draft Capital
Improvements Program (CIP), as reviewed by the Council at the
budget work sessions. The Planning Commission held a public
hearing on the CIP at its November meeting and recommended
adoption without any changes.
• The most significant change in the proposed tax statements for
2012 is the change in homestead benefits. In 2011 the Legislature
repealed the Homestead Market Value Credit and replaced it with
a new Homestead Market Value Exclusion. Residents may have
questions about how this affects their tax bills. More information
on this change is included in the budget materials.
• The draft budgets are posted on the City's website.
Recommendation: Staff will present an overview of the draft 2012 budget, after which
the Council should take any questions or comments from citizens.
The Council should discuss any changes you may wish to make before
final approval. The Council should then announce the date of the final
budget and levy adoption hearing (7:00 p.m., Tuesday, December 20,
2011) at the conclusion of ineeting.
Attachments/ • Draft 2012 Budget for December 13, 2011 Public Meeting
Materials provided: . Handouts for the budget presentation will be provided at the
meeting
Contact(s):
Prepared by: Anne Hurlburt, Administrator
Colleen Firkus, Treasurer
(2012 Budget and Tax Levy Hearing)
Page 1 of 1
12/07/11
2012 Changes in Homestead Benefits
What is Chanaina?
The 2011 Legislature repealed the Homestead Market Value Credit, (the homestead credit), and replaced it with a new
Homestead Market Value Exclusion. The last year of the credit is for property taxes paid in 2011 and the exclusion
begins for property taxes payable in 2012.
What is a credit? i' What is an exclusion? l
; A credit is a reduction in the �� i �� ` An exclusion is a reduction in the amount 1
i amount of taxes due. � ��� � of property value subject to tax. �
;
Why is this Change Resulting in Tax Increases?
There are four reasons why this change in homestead benefits results in tax increases for most properties:
• State money is no longer reducing total taxes. By eliminating the homestead credit the state is saving$260
million per year and this amount is now being paid by local property tax payers.
• The reduction in taxable value increases tax rates. With the total taxable value being reduced by the exclusion,
collecting the same total amount of property tax as the prior year requires a higher rate.
• The reduction in taxable property value shifts the relative burdens of who pays. With homestead values
reduced,other property types (and homes with higher values) pay a larger share of the tax.
• The exclusion provides less benefit to most properties than the credit. The new homestead exclusion may not
be enough to offset the increases in tax rates and the elimination of the credit,especially in areas that have
lower total property tax rates like Washington County.
Comnutation of Credii and Exclusion Amounts
Even though the tax benefits of the credit and exclusion are not equal,the calculation of the exclusion amount is similar
to the calculation of the former credit.
Credit=0.4%of the first$76,000,minus Credit/Exclusion Comparison
' 0.09�of the value over$76,000 �j 2012
j Home
Exclusion=40%of the first$76,000, � Homestead Nomestead
Market Market Value Market Value
, minus 9%of the value over$76,000 ,� Value
.�: _�_ ....... _.�_.__� �....�..�_�----- ;, Credit Exclusion
Example: House valued at�'IS0,000 g�6,000 5304 $30,400
$150,000 $237 $23,700
Credit = (0.4%x$76,000)-($74,000 x 0.09%) $250�000 5147 �14,700
_ $304-$67 $300,000 $102 �10�200
- $23� $350,000 $57 �5,700
Exclusion = (40%x�76,000)-($74,000 x 9%� $400,000 $12 $1,200
_ $30,400-56,660 $450.000 $0 �0
_ $23,700*(rounded to nearest SI00)
Want More Details and Information?
Taxpayers may find more detailed explanations of this change by visiting the county website at
wivw.co.washinUton.mn.us and click on the link titled'2012 Homestead Benefit Changes"
�`'`f'
12/13/2011
�� City Budget Process
❑ June/July- staff drafts budgets
;5C1�Nv�A ❑ August/September- Council workshops
1 ' ❑ September 15- certify maximum
Public Meeting property tax levy
(former/y"Truth in Taxation Hearing') O November- county mails proposed
property tax statement
2012 Budget ❑ December- Public meeting(s)
December 13, 2011 ❑ December 28- certify final tax levy
(may not increase)
Purpose of Meeting? Scandia's Budget
❑ Purpose: to gather public comment ❑ General Fund
on the City's budget, and the ■ Operating Budgets by Department
property taxes needed to pay for the ❑ Debt Service Funds
expenditures in 2012 i streets,Buildings,Equipment
❑ Capital Funds
❑ Meeting held in each taxing ■ Capital Improvements, Parks,Equipment
jurisdiction (county, city, school Replacement
d'IStriCt, etC.) ❑ Enterprise Funds (201 Sewer)
❑ Mandated by State Legislature ❑ Special Revenue Funds (Uptown Sewer-
NEW)
y�.,, T� �,i�iiiiiiPi�iCiii�
^i....�
��' �� Proposed 2012 Spending, All Funds
•. EMerprise Spad�l
_ _. �,_,,,.`� Fund� Raranue
_ _ �i \ Gp{t�l� 7% � �%
�'""�i CId55iflCd[iOfl 4%
_� � "
_ and Value DebtServi�a
'_ � Informa[ion is96
_ �u I,
�• -�r _. .._ '. �
� . PrOp050d � Gmaral/
� Clty Tax op�ntlnq
` — 7�%
City of Scandia, 2012 Budget Meeting 1
12/13/2011
Proposed General Fund Spending,
Proposed 2012 Spending, All Funds by Function, 2012
� Total proposed ��•�«•� , P��k��
spending: � � . comm.a,
$2,503,422 .�:.o..� ; � — — e� - /c.�iiiv.ao�n
��
r
■ -3.86%from 2011 .�.o.,.» ' `
budget - �.����oi
■ Less spending on "'°"»° ' f`°°°;a%'"" '-- io•�°
EIS � --
.�...o,.� . -----
� Includes transfers pp�.Ce
..�,� .' i - --- � � ,a�
� Iflra
w ams am.aoo>>aw zoos:oao aou ao» 16Yo
�
�ew...i eo.r oMdi� .a.e.mw rmx...... �
Proposed Spending all Funds, General Fund Spending by Function,
By Category, 2012 2008- 2011 & Proposed 2012
Tran�ten 5800,000 _ _ ._
DeMServlce �'b Panonal
15% � servlces �600�000
I.. -� . ,25%
Gpltal � ..� .4,_, � Materlals■
OuHays r-�. upD��n �400,000 ,
7% s°*
�"-- ;200,000 i
I
�'' --
� � � ro 2 0 ; �! �, ��..,
Contractual � ,
s�rv�«. i■zoo9'I �'` `�.M �,� cr �+' �°
41% '��2010I � �ya E.F'
■2011 �c° �\�
' 2012
Proposed 2012 Spending, Proposed Spending General Fund,
General Fund By Category, 2012
❑ Proposed ��.»�.� , _ -- - ---
spending: .�»..«. i- ----- Tnnden Venonel
$1,847,798 ....�.». �Y•�__ •% �3%
■ -6.05%from .�.�.� � � 3`'� -J - - �
2011 budget �,,,,,,,,, � � -
�
.,....,� '
Nm,aao 1 I -.__
�wa.ee0 �'"' .
� � ' - _ �.we�� .
�'0°."O �� f �- � COMractual -Materielsa
Services �PW�es
�am.oaa �. F- � 53% 7%
w - .. . __ L.. . _ .-..'� .
]Oos]ON]Op)]OM 30M]OSO m1l iol]
City of Scandia, 2012 Budget Meeting 2
12/13/2011
General Fund- Spending Changes Debt Service Funds
❑ 2%wage increases (first in 3 years) ❑ Proposed spending: ��,,,,,
❑ Some costs increasing faster than inflation $381,098 w„�„
(insurance) ■ +25.83°io from .,,,,,,,
❑ Zavoral Mining and Reclamation Project EIS 2011 budget �,,,,,,,
(approx. $62k compared to$200k in 2011) ❑ Added payments ,..
� Eliminate 1FTE Building Official/Maintenance for equipment ,.�,.o. � - - --
Supervisor(Planning & Building) certificate .,.�,«. --
� Assumes contracting building official ����
functions half year, part-time position half
year(to be determined) "°°•°°° �
w
Uptown Sewer Special
General Fund- Spending Changes Revenue Fund
❑ Add 1 FT'E Maintenance Superintendent ❑ Separate from General Fund for first
(Public Works) (Note: assumptions in
budget may change) time
❑ Increase .75 FfE Deputy Clerk to 1.0 FTE ❑ Improvements recommended by
o Increase planning, legal expenses 2011 Master Plan ($99,601)
❑ Decrease pension contribution for Fire ■ Equalization tank and aerobic
Department (PERA) pretreatment unit
❑ 2012 election costs ■ Uptown pump tank and run time meters
❑ Reduce transfers to Equipment Replacement
Fund from $110k to$80k
General Fund Capital Spending Capital Funds
❑ Contractual street maintenance ($300,000) ❑ Capital ImprOvement Fund-
❑ Skid Loader and trailer($35,000) inter-fund loan to Uptown Sewer
Ci Miscellaneous($10,500) Special revenue fund ($99,601)
■ O�ce Equipment
■ Purniture and Fixtures ❑ Parks Capital Improvement Fund-
partial funding of Lilleskogen parking
lot improvements ($4,000)
City of Scandia, 2012 Budget Meeting 3
12/13/2011
2012 Revenue Budgets Property Tax Levy, 2003-2012
❑ No local government aid
❑ No state levy limit on property taxes ;z,soo,000
❑ Interest earnings, permit revenues continue �,,..,,.�,��°"' '•
to be low ;2'0°°'0°° *','°',
❑ Elimination of state MVHCA, no special levy sl,soo,000 =.�`"��°"''������
to make up state payments ''"''��
❑ Revenues offset extra costs for EIS as ;i,000,000 r �
proposer reimburses city for contractual and � � ,
staff costs ssoo,000 , ! i I
❑ No new borrowing- proposed internal loan to ' '
fund Uptown Sewer improvements ;0
3003 2001 2006 2006 t007 3008 i009 2010 3011 3012
2012 Proposed Revenues*,
All Funds by Source Property Tax Rate, 2003-2012
Fin��t SDKIaI
C�arqu for � p��er 40.000% 35.776%
FoA�kun
S�rviu 1� i��5b . . ...33.56)9b��
f% � __ 35.000% .036% 8.276
IM�rpovYnw 30.000% ��-=6;5=%... 5.09296<-'1�--- -�
1% 23.9969�
75.000%
�Ic�nw• 7ax�s 20.000% : ,
P�rmib f2°Ae � �.
3% ""_'..:,�f}q.� 15.000% j
�� � 30.000% .
-_' _'_- .,... . 5.000% �.
0.000% ... ---
�ExcluGes transfers between funds 2005 2006 2007 2008 2009 2010 2011 2012
Tax Revenue Property Tax Levy and Rate
❑ Property taxes, except: ,� w�
■ Sand and Gravel Tax ���
■ $10,700 revenue to Public Works Budget �°�°°��°°°Y ,.�
.�.....a.f ;::a "
.�.o...� .,.�
;,
„�,.� ,...� —
.o '�..._m,_.........� �p ,.�__,_L...wa...�
Tax Levy Tax Rate
City of Scandia, 2012 Budget Meeting 4
12/13/2011
Scandia Levy History Your Proposed Property Tax Bill
O Will also be affected by:
zoos Si,368,iso 566,968 s.io^i ■ Valuation changes different than median(0.0%)
2006 $1,483,752 $115,602 8.40%
■ Classification changes
■ Homestead Market Value Exclusion
zoo� gi,533,930 #so,i�e 3.00� ■ School district differences,levy referenda
2ooe gi,�o3,ss9 $169,659 ii.o5i a Watershed district differences
2009 $i,860,892 $157,303 9.23% ■ Other taxing distriCts(MQtro Council,Mosquito
2010 $1,918,647 $57,755 3.30% COf1C�01,County HRA,T�0f151t)
2011 $2,013,651 $95,004 4.95%
2�12 52,055,174 541,523 2.06%
Im acts on Tax a ers City Share of Property Tax (2012)
p p y (ISD 831,Car-Mar-St.Croix WSD-inGudes estimated school levy)
O Elimination of Market Value
ISD B31
Homestead Credit 2..9%
E Reduced individual taxes by .40%of first si�9 �,, �w�
$76,000 market value less .09%of rem., r r, <-
phased out at$414,000 value)
■ Difference paid by state to local taxing - --
�;
jurisdictions ;�.' �
■ State withheld much or all of payments co��,� aher
6.6%
in recent years due to budget cuts '0.6%
�,��.P.�P.�.�.,..���,o�.a,�ae�..oao,
Impacts on Taxpayers Next Steps
O New Homestead Market Value ❑ Open hearing for comments and
Exclusion for 2012 questions
� Reduces taxable value of eligible ❑ Adoption of 2012 budget and tax
properties; similar calculation levy, and 2012-2016 Capital
■ Reduces city's tax base(-4.16%from Improvement Program (CIP) at
2oii to 2oi2) regular Council meeting on
■ Increases tax rates and shifts tax Tuesday, December 20, 2011
burdens (7:00 p.m.)
■ Not worth as much as old Credit
City of Scandia, 2012 Budget Meeting 5