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Home My WebLink About9A - 2006 Property Tax Levy- 16200 Eagle Creek Avenue S.E. Prior Lake, MN 55372-1714 CITY COUNCIL AGENDA REPORT MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DECEMBER 19, 2005 9A Ralph Teschner, Finance Director CONSIDER APPROVAL OF RESOLUTION ADOPTING 2006 PRIOR LAKE BUDGETS AND CERTIFYING FINAL 2006 CITY OF PRIOR LAKE PROPERTY TAX LEVY TO SCOTT COUNTY DEPARTMENT OF TAXATION DISCUSSION: Introduction The purpose of this agenda item is to consider approval of the City of Prior Lake's 2006 Operating Budget and Enterprise Fund Budgets and to determine the City's final 2006 property tax levy for certification to the Scott County Department of Taxation office. History The official budget process started in the middle of May with the Council approving an initial budget timetable. This timetable outlined the budget development process and required truth-in-taxation steps necessary to prepare and eventually adopt the City's 2006 operating budgets. The City Council conducted its initial budget study session June 6, 2005 at which time the directive to staff was to prepare an operating budget that would be responsive to the financial elements of the 2030 Vision and Strategic Plan and have a financially responsible property tax impact for next year. A second workshop was conducted on August 15, 2005 where the Council reviewed the proposed 2006 draft budgets and programs associated with it. September 6, 2005 the City Council approved the preliminary budgets for the general and enterprise funds and initial levy under Resolution 05-155 with a proposed property tax increase of approximately 5.6%. Following public notification in the Prior Lake American and individual parcel mailings, the truth- in-taxation hearing was then conducted on December 5, 2005. Approximately 25 residents were in attendance. A total of nine citizens addressed the council with their concerns, which centered primarily on the property tax increase. Current Circumstances The 2006 General Operating Budget submitted for your consideration totals $10,840,734.00, which includes necessary taxing for general operating expenditures, capital outlay and debt service levies. New elements of the proposed budget are summarized as follows: o Bonding for new city hall and police station o Hire of one street maintenance employee o Funding for state mandated PERA pension costs o Allocation for fuel cost increase www.cityofpriorlake.com -''''j' <::m!'!""',Y\NO""8,'j\l lililLil c,'<YWitill'\4"4'flfl2!)ji?Jjil\," 'njPfj'''''; RI<.tS.\i/i)j,"'"kd4"1E>"..d!r< "j,') I".... cHlt. \-,,".,n l'~}':;-\~>q"V "j \LYnoi1€';/.:i"~~ 't.~' ;.~~V '/"""rax T'::i:J-G.l~ql).~t; ;:)v~..h,< thv:." , A'>.I...,. ISSUES: At the December Truth in Taxation hearing, various questions were raised. The staff will address each of the following: Q. Why are property taxes on a typical home $2,000 in some communities and $3,000 in Prior Lake? A. A community which has more properties of less value supporting approximately the same levy will have lower taxes. If that community has significant commercial, each residential property will bear substantially less tax burden. Q. How many cities have a communication department? A. Many cities have or will have communication resources in 2006. They include: Savage, Shakopee, Farmington, Lakeville and Burnsville, to name a few. Scott County and the Prior Lake-Savage School District also have this resource. Approximately 50% of the proposed 2006 communications budget is paid by cable television franchise fees. Q. Why isn't growth paying for itself? A. New homes, while they require services from the day they are Occupied, do not carry their full tax burden for at least two years. This is the system under state law. Q. How does market value affect taxes? A. More expensive homes will pay a disproportionately higher tax compared to lower valued homes, because the market value credit is phased out when a home exceeds $400,000 in value and the tax valuation base is increased for homes greater than $500,000 as well. This is state law. Q. Why don't we slow growth down? A. Growth in Prior Lake has been declining rapidly from 2002 when we issued 813 permits, to 2005 when we expect to issue only 250 permits. The City can initiate moratoriums, but only under very strict rules and only for limited times. Q. Why can't we reduce the debt service on city hall to $200,000 a year? A. Two buildings are being built - the police station and the city hall. Contracts are signed and the city is obliged to pay the cost of these buildings which will serve the community for 50 years. FINANCIAL IMPACT: This budget represents an increase ($874,701) of approximately 8.7% above the current level of expenditures, and will produce a final property tax levy of $8,086,236 that includes a revolving equipment fund levy of $280,000, special debt levies of $875,000, a general obligation building bond levy of $538,735 and market value referendum levies of 751,300 with the remaining amount allocated for general city purposes. The total property tax levy represents an increase of $772,567 or 10.6% above the current year. For Prior Lake taxpayers experiencing the typical 10% market valuation adjustment this will result in an average increase of 5.6% on their 2006 property tax bill. As the Council is aware, the Star Tribune contained an article illustrating proposed property tax bills in most metropolitan communities. Prior Lake had the 26th lowest overall property tax movement of the 82 cities, which should please the Council and our taxpayers. Also requested for approval are the 2006 Enterprise Fund Budgets of $3,904,298 that support our water and sewer utilities, storm water and transit systems. This number actually reflects a decrease of 1.56% from last year. ALTERNATIVES: The following alternatives are available to the City Council: 1. Approve Resolution Adopting 2006 Prior Lake Budgets and Certifying Final 2006 City of Prior Lake Property Tax Levy to Scott County Department of Taxation. 2. Amend Resolution according to specified Council changes. RECOMMENDED MOTION: Alternative 1. Staff would recommend that the City Council approve the resolution as submitted as this is the last regular meeting date in 2005. The final property tax levy amount must be certified to the Scott County Department of Taxation Office no later than 5 working days after December 20th (December 28,2005.) as prescribed by Minnesota statute. Rev(jedl" : 111V~ ____..___.,.....,.~..._~.......____.. "._.____.._...~ ......... ~"," ...._.~.,_~__.-...-.....__--....'..."....._W""+ _'. ,._.._.,~__....,.'_._.., .. '. ._.._,____~_______~~_._~_,~.__,_,._"_.._._____.._ ,-, -- -......, 16200 Eagle Creek Avenue S.E. Prior Lake, MN 55372-1714 RESOLUTION OS-xx RESOLUTION ADOPTING 2006 PRIOR LAKE BUDGETS AND CERTIFYING FINAL 2006 CITY OF PRIOR LAKE PROPERTY TAX LEVY TO SCOTT COUNTY DEPARTMENT OF TAXATION Motion By: Second By: WHEREAS, The City Council of the City of Prior Lake hereby adopts the 2006 General Fund Operating Budget in the amount of $10,840,734.00, an Enterprise Fund Budget of $3,312,230.00 and Transit Services Budget of $592,068.00 following a period of comment and discussion during the course of a public hearing held December 5, 2005. WHEREAS, The City of Prior Lake's general fund operating budget tax levy is hereby equivalent to $6,931,236.00. WHEREAS, The revolving equipment fund levy amount is calculated to be $280,000.00. WHEREAS, Special debt levies account for an additional tax levy of $875,000.00. WHEREAS, The total property tax levy approved has been determined to be $8,086,236.00. NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA as follows: 1. The recitals set forth above are incorporated herein. 2. That the proposed tax levy be distributed upon the taxable property in said City for the following purposes in payable 2006: Purpose Amou nt * For General City Purposes $5,641,201.00 * Revolving Equipment Fund $280,000.00 * G.O. Improvement Bonds '96 (Northwood) $55,000.00 * G.O. Improvement Bonds '97 (Pike Lake) $56,000.00 * G.O. Improvement Bonds '98 (Duluth) $58,000.00 * G.O. Improvement Bonds '99 (Candy Cove) $55,000.00 * G.O. Improvement Bonds '00 (Oak Ridge) $71,000.00 * G.O. Improvement Bonds '01 (Frog Town) $59,000.00 * G.O. Improvement Bonds '02 (Pixie Point) $59,000.00 * G.O. Improvement Bonds '03 (150th Street) $106,000.00 * G.O. Improvement Bonds '04 (Breezy Point) $185,000.00 * G.O. Improvement Bonds '05 (Fish Point) $171,000.00 * G.O. Building Bonds '05 (EDA) $538,735.00 ** Fire Hall Referendum Bonds '93 $175,540.00 ** Park Referendum Bonds '97 $575.760.00 Total... $8,086,236.00 ;;ett )(Js\Tcrn~ Jcityoiprborilake,cornCi"ii\\CSC, ',,(f,C" Phone 952.447.4230 / Fax 952.447.4245 Note: Single starred funds shall be spread over the entire consolidated City of Prior Lake. Note: Double starred funds represent market value based referendum taxes and shall be spread over the entire consolidated City of Prior Lake. Note: All other bond issues have sufficient fund balances to cover debt requirements. PASSED AND ADOPTED THIS 19TH DAY OF DECEMBER, 2005. YES NO Haugen Haugen Fleming Fleming LeMair LeMair Petersen Petersen Zieska Zieska Frank Boyles, City Manager C:\Documents and Settings\cgreen\Local Settings\Temporary Internet Files\OLK162\06taxresolution (2).doc