HomeMy WebLinkAbout10B - 1999 Tax Levy Request
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MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
JUNE 15, 1998
lOB
RALPH TESCHNER
CONSIDER Ar.t'KOV AL OF MVTA 1999 TAX LEVY REQUEST
DISCUSSION:
The Minnesota Valley Transit Authority is once again requesting
that the City of Prior Lake certify the maximum allowable transit
property tax levy for payable 1999 on behalf of the transit authority.
This agenda item requests that the council act upon this issue.
Council must take action on this item, because the City needs to
notify the State by 6/30/98 of our intentions regarding the transit
levy.
Historv
On June 17, 1996 the City Council approved Resolution 96-66
which authorized the City of Prior Lake to levy the transit tax levy
in lieu of the Regional Transit Board. Statutory language was
amended to allow opt-out communities to select this option.
Previously the MVT A basically received up to 90% of the maximum
levy allowed from the Metropolitan Council. The problem became
that the Metropolitan Council treated this levy as a sort of
discretionary financial assistance whereby the MVT A had to
continually submit requests to receive these dollars. The financial
advantages were basically that if the opt-out cities would levy
directly, the MVTA would be assured of these dollars in their full
amount and would receive them on a regularly scheduled basis.
Current Circumstanr.p-s
A requirement of Minnesota Statutes 473.388 subd. 7 is that the City
either notify the Commissioner of Revenue by June 30th if it intends
to levy the tax or defer the transit levy authority to the Metropolitan
Council. This year the MVT A levy limit has increased to an amount
of $379,950 which is nearly 21% or $78,779 higher than the
$301,171 amount that the City has levied on behalf of the MVTA
the past two years, including 1998.
The City assumed the original amount of $30 1,171 beginning with
our 1997 property tax levy because the Legislature allowed a
separate line item comparison for the transit levy in the 1997 Truth-
in-Taxation notices. The purpose was so that cities would not be
held responsible for the percentage increase as a result of combining
the city and transit levy together. However for 1998 property tax
notices, the separate breakout was disallowed. Therefore the Council
16200 E!i!Jfeme~~~2~. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
AN EQUAL OPPORTUNITY EMPLOYER
ISSUES:
ALTERNATIVES:
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elected to levy the exact same amount of $301,171 so that the
citizens would not see a rise in their city property tax.
Of the 7 cities within the Minnesota Valley Transit Authority, 4
levied the maximum allowed in 1998 while two decided not to
assume the transit levy at all. Prior Lake was the only community to
elect the option of levying an amount other than the maximum or
nothing. In discussion with Rich Gardner of the State of Minnesota
Revenue Department, it was clarified that the citizens in any of the
opt out communities are taxed the full amount of the maximum levy
allowed because the Metropolitan Council levies the difference. if a
city chooses to levy less than the maximum allowable transit levy.
This is not how the staff understood the levy to work. It was our
understanding that if the city app.uved $301,171 that was the
amount levied. The fact is that regardless of the city's levy, the
Metropolitan Council levies the remaining amount to the maximum
allowable. This year that amount is $379,950.
Because of this situation it appears that either the City should elect
to levy the transit levy amount in the maximum. amount or defer the
levy to the Metropolitan Council. By taking no action the maximum
levy is automatically assumed by the Metropolitan Council. So no
matter who does the levying in 1999, Prior Lake taxpayers will pay
an amount of $379,950 as indicated in the attached Transit Service
Levy Limitation calculation.
The preference of the MVTA is for the City to levy the full amount
of the transit levy. Although the legislature apfJ1uved a separate
transit line item for 1999 property tax notices it would still appear
under the City heading and would be calculated as part of our
overall tax capacity rate. The downside to continuing the MVTA
levy in the city's levy is that it will distort the tax comparisons
between Prior Lake and other cities who do not have the transit levy
incorporated in their local levy. Also if the city levies the maximum
MVT A levy it will reduce the amount available to fund city
programs under the city's general overall levy limitation. The upside
is that removing the transit levy from the city's total levy will lower
the city portion of the property tax. However, in reality the taxpayer
will be taxed the same amount only by two different taxing
jurisdictions (City & Metropolitan Council).
The fOllOwing alternatives are available to the City Council:
1. Defer the transit levy authority to the Metropolitan Council by
not exercising the transit services local. levy option for the taxes
payable year 1999.
RECOMMENDED
MOTION:
REVIEWED BY:
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2. Approve the property tax levy request by the Minnesota Valley
Transit Authority in the maximum amount of $379,950.00 to 1;>e
included in the City of Prior Lake's local levy for the taxes payable
year 1999.
3. Approve a transit property tax levy in the same amount of
$301,171.00 as in 1998 with the difference being picked up by the
Metropolitan Council.
From Staffs perspective Altern ive #1 should be the course of
action. We see no reason to i te the Metropolitan Council from
its a~untability fi its tot vy. The only disadvantage of this
opti,*, '0..... A mi h only collect 90% of $341 ,955.
1. Payable 1998 Levy Limit * $ 343,257
2. Pay-able 1997 Total Taxable Market Value ** $ 613,431,600
3. Payable 1998 Total Taxable Market Value ** $ 679,006,100
4. Payable 1998/Payable 1997 City Market Value Ratio (3/2) 1.106898
5. Payable 1999 Levy Limit (1 x 4) * $ 379,950
* Before HACA reduction.
* * Includes tax increment values, fiscal disparity values, and powerline credit values.
However, the amounts shown are after (1) limited market value adjustments and (2)
market value exclusions for improvements made to qualifying homestead property
("This Old House" exclusions).
Prepared by: Minnesota Department of Revenue
Property Tax Division
May 22, 1998
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