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Home My WebLink About[07] 2009 Preliminary BudgetCi'P1' OF tiT. J(~Sfsl'N Council Agenda Item 7 MEETING DATE: September 4, 2008 AGENDA ITEM: 2009 Preliminary Budget SUBMITTED BY: Administration/Finance BOARD/COMMISSION/COMMITTEE RECOMMENDATION: PREVIOUS COUNCIL ACTION: BACKGROUND INFORMATION: The Council has been working on the 2009 Budget realizing that the City has levy limits which will determine in part the levy for 2009. The levy limits make the budget a different process then other years. The City is required to submit a preliminary levy no later than September 15, 2008. Once the levy is certified the amount can be decreased but not increased. The budget that we have been working on had a higher levy and staff is continuing to reduce that number. On Tuesday the staff will be sending out a revised budget along with a proposed resolution for approval. The resolution includes the levies that are required for existing debt of the City and the levy for 2009. It is anticipated that the levy amount will equal $ 1,184,246. Even after the budget is submitted the Council will continue to work on the budget and capital improvement plan. Adopting a preliminary budget does not guarantee approval for 2009, rather it serves as a guide for continuing discussion and review until a final budget is approve. If at the end of the meeting on Thursday the Council is not ready to adopt a preliminary budget a special meeting must be established to meet the certification deadlines. BUDGET/FISCAL IMPACT: ATTACHMENTS: MN Department of Revenue Levy Limits REQUESTED COUNCIL ACTION: Adopt a preliminary budget to be certified or establish a special meeting to continue working on the budget. ~E~~~~~~ MINNESOTA- REVENUE AUG ~ 2 2008 Payable 2009 Initial Overall Levy Limitation 1~~oti~e~~ ~ios~PH ST JOSEPH 8/8/2008 JUDY WEYRENS CLERK PO BOX 668 ST JOSEPH, MN 56374 The following is a listing of the factors used in determining your city's payable 2009 overall levy limitation See the enclosed letters for an explanation of these factors and for additional information concerning your city's overall levy limitation. I. PAYABLE 2008 FINAL TOTAL LEVY 1,746,733 2. PAYABLE 2008 TOTAL SPECIAL LEVIES 626,673 3A. 2008 LOCAL GOVERNMENT AID 801,839 3B. 2008 TACONITE AIDS p 3C. 2008 WIND ENERGY PRODUCTION TAX 0 3D. 2008 TOTAL CITY AID (3A + 3B + 3C) 801,839 4. PAYABLE 2008 LEVY AID BASE (1 - 2 + 3D) 1,921,899 5. INFLATION ADJUSTMENT (3.9%) 1.039000 6A. 2006 HOUSEHOLD POPULATION 1,661 6B. 2007 HOUSEHOLD POPULATION 1,743 6C. 50 PERCENT OF HOUSEHOLD INCREASE ((6B - 6A) x .5) 41 6D. HOUSEHOLD ADJUSTMENT FACTOR -GREATER OF 1 OR (1 + 6C/6A) 1.024684 7A. PAYABLE 2007 TOTAL TAXABLE MARKET VALUE 273,311,300 7B. PAYABLE 2008 MARKET VALUE -NEW INDUSTRIAL CONSTRUCT 815,800 7C. PAYABLE 2008 MARKET VALUE -NEW COMMERCIAL CONSTRUCT 214,700 7D. PAYABLE 2008 MARKET VALUE -NEW C/I CONSTRUCT (7B + 7C) 1,030,500 7E. 50 PERCENT OF MARKET VALUE OF NEW C/I CONSTRUCT (7D x .5) 515,250 7F. NEW C/I ADJUSTMENT FACTOR -GREATER OF 1 OR (1 + 7E/7A) 1.001$85 8. PAYBALE 2009 ADJUSTED LEVY LIMIT BASE (4 x 5 x 6D x 7F) 2,050,000 9A. 2009 LOCAL GOVERNMENT AID 865,754 9B. 2009 ESTIMIATED TACONTIE AIDS 0 9C. 2009 ESTIMATED WIND ENERGY PRODUCTION TAX 0 9D. 2009 UTILITY VALUATION TRANSITION AID 0 9E. 2009 TOTAL CITY AID (9A + 9B + 9C + 9D) 865,754 _ ___ 10. PAYABLE 2009 INITIAL OVERALL LEVY LIMIT (8 - 9E) 1,184,246 Property Tax Division Tel: 651-556-6095 Mail Station 3340 Faz: 651-556-3128 St. Paul, MN 55146-3340 rrr: Call 71 1 for Minnesota An equal opportunity employer MINNESOTA• REVENUE August 8, 2008 DEAR ADMINISTRATOR: Enclosed is your payable 2009 initial overall levy limitation certification along with explanations of the factors used to calculate the limit. This letter and enclosures contain important information for understanding your overall levy limit, and should be forwarded to the appropriate official in your county or city if these matters do not fall under your purview. In June, the Department of Revenue asked counties and levy limit cities (cities with a population over 2,500) to provide final payable 2008 special levy amounts via the Certification of Payable 2008 Special Levies. Collecting these levies allowed the Department to calculate a levy limit base for each county and city, which equals 2008 final certified levy, minus any that would have qualified as special levies, plus 2008 property tax aid. With the levy base established, and the value, population, and aid data needed to calculate the payable 2009 initial levy limit now available, the Department is able to proceed with the next step -certifying each county or city's initial payable 2009 overall levy limit and claims on the payable 2009 PT form 280. The PT Form 280 and instructions will be available on our website during the week of August 7- August 11: You can cut and paste the following link in your browser to obtain the materials when they become available. http://www.taxes. state.mn. us/taxes/property_tax_administrators/other_supporting_contenUlevy_limits_pay09.shtml The PT form 280 is due back to the Department on or before September 30, 2008. Please note that September 15 continues to be the deadline for certifying the payable 2009 proposed levy to the county auditor. Since the final levy can not exceed the proposed levy, each county and levy limit city needs to include any special levies that will be claimed in the proposed levy certified on September 15, even though it will be over two weeks until they are due to the Department of Revenue. If you exercise the option not to claim a special levy for payable 2009 for any of the purposes for which an amount was provided for 2008 on the Certification of Payable 2008 Special Levies, the Department will restore the payable 2008 levy amount to your levy limit base and issue a revised final payable 20091evy limit. All special levy claims must be pre-approved by the Department of Revenue. We will review the special levy claims and report back to the county or levy limit city by December 10, 2008. We Continued... Property Tax Division Tel: 651-556-6095 Mail Station 3340 Fes: 651-556-3128 St. Paul, MN 55146-3340 recognize December 10 is late in process so we will make an effort to report back to you well in advance of that date. The Department's approval of special levies (in the amount claimed or at a reduced level) or denial is final. No county or levy limit city will be allowed to levy more than the sum of its levy limitation and approved special levies. The Department of Revenue will also certify to the county auditors, on or before December 29, 2008, the sum of the levy limit and the approved special levies for the county and for each levy limit city within the county. If a final levy certified to the county auditor exceeds the sum of the levy limitation plus approved special levies, the county auditor must reduce the certified final levy accordingly. Please note that all special levies relate to the amount of property taxes levied for the costs that may be described. For example, the special levy for the wages and benefits for sheriff, police, and fire personnel is not equal to the total wages and benefits of those personnel, but only the share of those wages and benefits for which a levy is made. For more details on the special levies please refer to the forthcoming instructions for the PT Form 280 when those are made available. Sincerely, Shawn Wink State Program Administrator Principal Shawn.wink@state.mn.us 2 MINNESOTA• REVENUE August 8, 2008 To: County Auditors and Finance Officials of Cities Over 2,500 Population Re: Payable 2009 Overall Levy Limitation Enclosed is your Payable 20091nitial Overall Levy Limitation Notice. The factors involved in the calculation of your payable 2009 initial overall levy limitation are shown on the notice. The following is an explanation of the calculation factors. Line 1 -- PAYABLE 2008 FINAL TOTAL LEVY: Line 1 is the final payable 20081evy amount you were required to certify to the county auditor by December 28, 2007 in accordance with M.S. 275.07. Line 2 -PAYABLE 2008 TOTAL SPECIAL LEVIES: Line 2 is the total amount of all special levies as identified on the Certij~cation of Payable 2008 Special Levies form. Line 3A, 3B, 3C, and 3D - 2008 PROPERTY TAX AIDS: Local Government Aid (cities only), County Program Aid (counties only), Taconite Aids, and Wind Energy Production Tax received by the local government in 2008 are identified on Line 3A, 3B, and 3C respectively, and totaled on Line 3D. Line 4 -PAYABLE 2008 LEVY AID BASE: Line 4 is your levy aid base which equals your payable 2008 final total levy (line 1) less your payable 2008 total special levies (line 2) plus your 2008 property tax aids (line 3D). Line 5 -INFLATION ADJUSTMENT: line 5 equals the lesser of 3.9 percent or the percentage growth in the implicit price deflator. The implicit price deflator growth for government consumption expenditures and gross investment for state and local governments prepared by the Bureau of Economic Analysis of the United States Department of Commerce for March 2007 compared to March 2008 was 6.1967 percent so the 3.9 percent adjustment will be used. Line 6A, 6B, 6C, and 6D -HOUSEHOLD GROWTH ADJUSTMENT: Line 6A is the April 1, 2006 household estimate for your county or city. Line 6B is the April 1, 2007 household estimate for your county or city. The household estimates are determined by the State Demographer (for nonmetropolitan counties or cities) or by the Metropolitan Council (for counties and cities within the seven county metropolitan area). Line 6C is half of the difference between 2007 and 2006 household estimates. Line 6D is one plus the ratio of Line 6C to 6A. If the calculated ratio for your county or city is less than 1.000000 it has been changed to 1.000000 because the adjustment is only for increases in the number of households. Continued... Property Tax Division Tef: 651-556-6095 Mail Station 3340 Fax: 651-556-3128 St. Paul, MN 55146-3340 rrr: Ca11711 for Minnesota Relay An equal opportunity employer Line 7A, 7B, 7C, 7D, 7E, 7F -NEW C/I CONSTRUCTION ADJUSTMENT: Line 7A is the payable 2007 total taxable market value ~of all property for your county or city. Line 7B and 7C are the payable 2008 market value of new construction of class 3 industrial and commercial property for your county or city. Line 7D is the total of Line 7B an 7C. Line 7E is 50 percent of Line 7D. Line 7F is one plus the ratio of Line 7E to Line 7A. Line 8 -PAYABLE 2009 ADJUSTED LEVY LIMIT BASE: This is the Payable 2008 Levy Aid Base (Line 4), multiplied by the Inflation Adjustment (Line 5), multiplied by the Household Growth Adjustment (Line 6D), and multiplied by the New C/I Construction Adjustment (Line 7F). Line 9A, 9B, 9C, 9D, 9E - 2009 Property Tax Aids: Local Government Aid (cities only), County Program Aid (counties only), Taconite Aids, and Wind Energy Production Tax and Utility Valuation Transition Aid (cities only) to be paid to local governments in 2009 aze identified on Line 9A, 9B, 9C, and 9D respectively, and totaled on Line 9E. Line 10 -Payable 2009 Overall Initial Levy Limitation: Your county's or city's Adjusted Levy Limit Base for Payable 2009 (Line 8), minus your city's 2009 Property Tax Aids (Line 9E) is your overall levy limitation for payable 2009. This is the most that your county or city may levy for the taxes payable year 2009 for all purposes except special levies and special assessments. Note: If you choose not to claim a special levy for payable 2009 for any of the purposes for which a payable 2008 amount was provided on the Certification of Payable 2008 Special Levies form, we will restore the payable 20081evy amount to your levy limit base (remove it from line 2) and issue a revised payable 2009 levy limit. If you have any questions concerning this letter or the enclosed Payable 2009 Initial Overall Levy Limitation Notice, please contact me at (651) 556-6095. Sincerely, f~'' ~ ~i Shawn Wink State Program Administrator Principal S h aven. wi nk~a state. mn. us 2