HomeMy WebLinkAbout[06] 2012 Preliminary Budget c` rry OF ST- JUSkyu Council Agenda Item
MEETING DATE: December 1, 2011
AGENDA ITEM: 2012 Proposed Levy/Budget Hearing — Requested Action: Public
Hearing on the Proposed Levy and Budget for payable 2012
SUBMITTED BY: Finance
BOARD / COMMISSION /COMMITTEE RECOMMENDATION: The EDA, Fire Board and Park
Board met to recommend their respective 2012 budgets.
PREVIOUS COUNCIL ACTION: City Council adopted the preliminary 2012 levy on September
15, 2011. The Council also set December 1, 2011 at 7:OOPM as the public hearing date for the payable
2012 levy and budget. The Council met in October and November to discuss possible adjustments to the
2012 levy and budget before public discussion on the proposed levy and budget. City Council did not
make any changes to the preliminary levy at their budget discussions and agreed to continue to discuss the
budget in December.
BACKGROUND INFORMATION: According to MN Statutes the City must hold a public hearing on
their proposed total budgets and proposed property tax levies for the taxes payable in 2012. The public
hearing may be part of the City's regularly scheduled meeting. The public hearing must be conducted
between November 25 through December 28, 2011.
According to MN Statutes the City must adopt a final budget and certify it to Stearns County for payable
on or before December 28, 2011. The final levy cannot be higher than the adopted preliminary levy
except for special "add -on" provisions in the law.
The City received a 2012 levy impact of 56.543% (an 8.049% increase over 2011) for the preliminary
levy certified in the amount of $1,863,490. In addition, tax statements were mailed out to City property
owners in November.
BUDGET/FISCAL IMPACT: Preliminary General 2012: $2,440,925 budget, $1,863,490 levy
ATTACHMENTS: Request for Council Action — 2012 Proposed Levy/Budget Hearing
2012 Net Tax Capacity — Based on Preliminary Levy
2012 3 -Tier Breakdown Preliminary
2012 Preliminary General Revenue Budget
2012 Preliminary General Expenditure Budget — Summary
Samples of 2012 Preliminary Tax Effect
REQUESTED COUNCIL ACTION: Hear public testimony on the payable 2012 preliminary
budget/levy.
NOTES TO THE
2012 Preliminary
Budget
City of St. Joseph, PO Box 668, St. Joseph MN 56374
The following are some additional comments regarding the proposed 2012 preliminary budget. When the City
Council adopted the preliminary budget, it was estimated that the proposed budget would increase the tax rate by
approximately 4 %. This rate was based on information provided to the City by the Stearns County Auditor's Office.
Unfortunately, when the actual information was available, the Market Value decreased seven percent greater than
what they had provided in September. At the same time the City was working on the budget, the impact of the
newly enacted Legislation relating to market value credit was being analyzed and it was not until the individual
property tax statements were mailed that the final numbers were available.
The impact of the removal of the market value exclusion resulted in the lowering of residential market values and
this coupled with the general decrease in market value resulted in increased property taxes. Therefore, the actual
change in the City tax rate increased from the 2011 certified 48.494% to the proposed preliminary tax rate of
56.543 %.
With that said, the Council continues to work on the budget and each department and Board or Commission that
has budget impact is reviewing the budget. The EDA will be reviewing their budget on November 30, the Fire
Board will be reviewing their budget on December 12 and the Department Heads will be meeting on November 30.
The LELS contract was negotiated in 2010 for 2011, 12, and 13 and the budget impact for 2012 is 3% (COLA). The
AFSCME Contract is in the process of negotiations and the new agreement and the terms have not been resolved
yet. The preliminary budget included a 3% COLA across the board and while the amount has not been removed
from the detail, it is noted on the sides of the detail. It is anticipated that $ 21,515 will be reduced from the
budget lowering the tax rate by .653 %.
The Council has a scheduled budget workshop for December 14 at 5:30 PM. While the public hearing is December
1 at your regular meeting, it was anticipated that discussion would continue on December 14 and any additional
budget cuts by Boards /Commission would be presented at that time with hope of approving the final budget on
December 15. This is the next regular Council meeting. The final budget must be adopted no later than December
28.
City of St. Joseph, Minnesota
2012 Net Tax Capacity
Preliminary Estimate as of December 1, 2011
Net Tax Capacity 3,675,356 3,295,711
2011 2012
No levy limits for 2012 -1.71% - 10.33%
Estimated Tax Impact of the Preliminary 2012 Budget
Adopted 2011 Preliminary 2012
Lever Levy
General Fund Levy 1,212,695 32.997% 1,223,570 37.126%
Cobom's Abatement 50,000 1.359% 50,000 1.517%
Special Levy - PERA 38,835 1.057% - 0.000%
EDA Levy - 0.000% 87,000 2.640%
Bond 2003 32,500 0.884% - 0.000% Note: Removing
Bond 2005 111,000 3.020% 110,000 3.338% the 3% increase
Bond 2006 61,000 1.660% 56,000 1.699% results in a .653
Bond 2007 28,500 0.775% 8,500 0.258% Rate change to
Bond 2008 67,000 1.823% 67,000 2.033% 55.904%
Bond 2009 137,800 3.763% 140,800 4.272%
Bond 2010 43,000 1.156% 45,500 1.381%
Bond 2011 - 0.000% 75,120 2.279%
1,782,330 1,863,490
48.494% 56.543%
Levy % change 11 to 12 4.55% mill rate chg 8.049%
Levy $ change 11 to 12 $ 81,160
38.5% city tax of total tax bill for 2011 MVHC allocation Net Tax Estimated
Impact Analysis 1 2011 NTC 2011 Tax J Capacity I Impact
100,000 Homestead 1000 484.94 718 405.98
Increase in taxes MVHC 280.00 -16% (78.96)
150,000 Homestead 1500 727.41 1,263 714.14
Increase in taxes MVHC 237.40 -2% (13.27)
200,000 Homestead 2000 969.88 1,808 1,022.30
Increase in taxes MVHC 180.00 5% 52.42
250,000 Homestead 2500 1,212.35 2,353 1,330.45
Increase in taxes MVHC 147.40 10% 118.10
250,000 Business 4,250 2,061.00 4,250 2,403.07
Increase in taxes 17% 342.08
500,000 Business 9,250 4,485.70 9,250 5,230.22
Increase in taxes 17% 744.52
750,000 Business 14,250 6,910.40 14,250 8,057.36
Increase in taxes 17% 1,146.97
1,000,000 Business 19,250 9,335.10 19,250 10,884.50
Increase in taxes 17% 1,549 .41
$1 M 20 Unit Apt. 12,500 6,061.75 12,500 7,067.86
Increase in taxes 17% 1,006.11
Mill rate change by 1% $ 33,000
f CITY OF ST JOSEPH 11/23/11 1:14 PM
' ".sel l
'-S72M 2012 eneral Ex enditure Budget
Page 1
20 2 G p g
Adopted
September 15, 2011
2011 2011 2012
I DEPART DEPART Descr 2009 Amt 2010 Amt YTD Amt Adopted Budget
FUND 101 General
41110 Council $39,348.51 $40,708.76 $36,014.29 $48,750.00 $48,615.00
41120 Legislative Committees $4,129.19 $5,307.62 $2,821.66 $8,980.00 $11,565.00
41130 Ordinance & Proceedings $2,656.44 $2,203.66 $2,474.65 $3,000.00 $2,700.00
41310 Mayor $9,603.53 $9,415.63 $8,288.19 $14,110.00 $13,970.00
41410 Elections $295.51 $10,213.45 $0.00 $3,000.00 $3,000.00
41430 General Adminstration $202,404.65 $205,402.57 $178,376.20 $227,230.00 $211,870.00
41530 Finance $118,238.75 $102,950.43 $89,893.34 $107,060.00 $112,430.00
41540 Audit Service $23,920.00 $24,780.00 $25,000.00 $25,900.00 $25,000.00
41550 Assessing $18,570.79 $18,849.35 $19,285.00 $19,000.00 $19,500.00
41610 City Attorney $11,750.65 $28,456.87 $12,067.88 $20,000.00 $20,000.00
41910 Planning and Zoning $2,535.93 $4,668.40 $1,766.93 $2,450.00 $2,300.00
41941 General Government $18,363.89 $22,379.76 $19,466.64 $31,380.00 $22,455.00
41942 City Offices $27,876.46 $28,854.03 $34,462.62 $26,525.00 $28,665.00
41943 Facilites and Planning $0.00 $60.00 $0.00 $0.00 $0.00
41950 Cable Access $12,702.27 $16,429.43 $10,550.56 $8,355.00 $11,320.00
42120 Crime Control & Investigation $799,594.14 $780,948.73 $673,274.62 $819,660.00 $804,215.00
42140 Police Training $4,775.79 $4,339.65 $2,842.92 $10,000.00 $10,200.00
42151 Communication Service $10,874.47 $11,799.54 $9,794.76 $18,700.00 $12,015.00
42152 Automotive Services $50,039.00 $53,647.98 $48,444.44 $68,675.00 $71,870.00
42401 Building lnspec. Admistration $113,904.52 $99,544.01 $70,063.71 $82,550.00 $90,000.00
42500 Emergency Management $2,412.09 $3,195.02 $18,963.52 $5,800.00 $5,800.00
42610 Signal Lights CSAH 75 $885.99 $1,781.68 $1,627.34 $800.00 $2,000.00
42700 Animal Control $848.13 $1,832.37 $1,185.65 $1,150.00 $1,150.00
42860 Ordinance /Easement Enforce $0.00 $0.00 $0.00 $300.00 $0.00
43120 Street Maintanence $230,355.75 $217,782.08 $284,908.73 $255,430.00 $265,035.00
43125 Ice & Snow Removal $72,411.42 $86,885.96 $66,667.13 $76,285.00 $98,445.00
( 43131 Engineering Fee $42,637.51 $51,891.64 $28,969.86 $37,000.00 $37,000.00
43160 Street Lighting $50,320.73 $45,249.82 $37,502.11 $42,500.00 $47,500.00
43220 Street Cleaning $16,008.31 $12,188.10 $9,708.31 $26,010.00 $18,005.00
45123 Skate Park and Ice Rink $3,008.95 $5,062.68 $2,064.64 $4,280.00 $3,745.00
45201 Maintenance Shop $19,230.79 $18,484.20 $19,478.73 $25,200.00 $21,990.00
45202 Park Areas $192,592.74 $192,875.92 $182,461.53 $208,200.00 $222,815.00
49200 Community Support $4,336.68 $4,400.00 $6,900.00 $14,220.00 $12,515.00
f 49300 Other Financing Uses $28,505.00 $198,326.79 $56,000.00 $188,965.00 $0.00
I 49305 Fire Protection $86,138.12 $91,818.92 $93,076.08 $92,920.00 $96,010.00
FUND 101 General $2,221,276.70 $2,402,735.05 $2,054,402.04 $2,524,385.00 $2,353,700.00
FUND 150 Economic Development
I 46500 Economic Development Auth $52,829.00 $49,717.57 $48,256.95 $83,990.00 $87,225.00
FUND 150 Economic Development $52,829.00 $49,717.57 $48,256.95 $83,990.00 $87,225.00
$2,274,105.70 $2,452,452.62 $2,102,658.99 $2,608,375.00 $2,440,925.00
Note: Removing the 3% wage
provision reduces the expenditures by
$ 21,515 for a revised expenditure
total of $ 2,419,410
r CITY OF ST JOSEPH 11/21/11 4:07 PM
JAI ) A 9 _ f\f` Page 1
2012 Preliminary General Revenue Budget
Adopted
September 15, 2011
2011 2011 2012 Note: Removing
SOURCE SOURCE Descr 2009 Amt 2010 Amt YTD Amt Budget Budget the 3% wage
FUND 101 General provision will
31010 Current Ad Valorem Taxes $1,093,336.87 $1,148,666.86 $621,228.90 $1,262,695.00 $1,273,570.00 reduce the Taxes
31012 Special Levy- City St. Joe $10,868.60 $40,786.22 $19,112.66 $38,835.00 $0.00 by $ 21,515 for a
31320 State Sales Tax $401.91 $236.89 - $169.64 $0.00 $0.00 revised total of $
31820 Gas Franchise $27,326.93 $27,259.13 $21,582.78 $32,000.00 $32,500.00 1,252,055
31830 Electric Franchise $45,712.51 $48,925.28 $37,799.11 $49,000.00 $50,000.00
32111 Beer $656.64 $650.00 $225.00 $600.00 $450.00
32112 Liquor $17,460.00 $16,684.94 $16,540.00 $16,520.00 $19,760.00
32113 Outdoor Liquor Permit $1,800.00 $2,750.00 $1,400.00 $2,500.00 $2,500.00
32114 Gambling Permits $110.00 $60.00 $60.00 $150.00 $100.00 _
32170 Amusement/Hunting Permit $1,200.00 $840.00 $810.00 $1,200.00 $840.00
32182 Excavation Permit $350.00 $200.00 $350.00 $200.00 $200.00
32184 Cigarette License $408.34 $525.00 $375.00 $500.00 $525.00
32186 Cable Franchise Fee $24,330.40 $26,340.86 $21,565.67 $25,000.00 $27,000.00
32210 Building Permits $139,646.14 $32,532.07 $55,444.54 $50,000.00 $40,000.00
32261 Rental Housing Registratio $21,156.50 $21,978.10 $19,752.00 $19,000.00 $19,000.00
33160 Federal Grants - Other $0.00 $4,289.00 $1,402.92 $0.00 $0.00
33400 State Grants and Aids $0.00 $0.00 $0.00 $0.00 $965.00
33401 Local Government Aid $777,183.00 $645,151.00 $322,575.50 $807,470.00 $645,150.00
33404 Market Value Credit $83,994.33 $31,130.45 $15,751.49 $0.00 $0.00
33409 PERA Rate Increase Aid $1,541.00 $1,541.00 $770.50 $1,540.00 $1540.00
34103 Zoning and Subdivision Fe $1,170.00 $900.00 $400.00 $1250.00 $1,000.00
34104 Land Use Deposit Fee $1,298.80 $10,000.00 $0.00 $4,000.00 $4,000.00
34105 Sale of Maps and Publicati $116,05 $92.05 $65.50 $75.00 $75.00
34107 Assessments Search $3,675.00 $2,375.00 $1,945.00 $2,500.00 $2,500.00
34111 Special Hearing $4,960.00 $6,850.00 $4,215.00 $4,500.00 $4,500.00
34118 Administration Reimb $9,860.94 $10,119.27 $0.00 $11,600.00 $11,350.00
36100 Special Assessments $4,735.47 $20,349.32 $529.24 $2,000.00 $2,000.00
36210 Interest Earnings $24,425.14 $15,129.20 $13,044.78 $7,500.00 $13,000.00
36213 Interest Charges - $488.70 $128.36 $381.64 $150.00 $100.00
36215 Co -op Dividend - LMCIT $9,241.24 $11,388.79 $0.00 $8,000.00 $6,000.00
36221 Water Tower Antenna Leas $3,276.47 $3,278.64 $2,770.50 $3,500.00 $3,325.00
36222 Land Rental $16,500.00 $0.00 $0.00 $2,400.00 $0.00
36225 Advertising $0.00 $0.00 $0.00 $0.00 $7,000.00
36230 Contributions - General $500.00 $0.00 $4,714.25 $0.00 $0.00
36260 Surplus Property $0.00 $0.00 $0.00 $0.00 $0.00
36300 Reimbursement $4,986.80 $2,942.51 $804.83 $150.00 $150.00
32240 Animal License $3,270.00 $3,110.00 $3,195.00 $3,000.00 $3,150.00
33160 Federal Grants - Other $9,461.66 $7,221.53 $4,803.05 $3,000.00 $5,000.00
33416 Police Training Reim $3,567.72 $2,867.96 $3,029.81 $3,500.00 $3,500.00
33422 State Police Aid $54,009.00 $51,292.00 $48,065.00 $45,000.00 $50,000.00
33500 Other Governmental Unit $0.00 $0.00 $10,280.00 $10,000.00 $10,000.00
34950 Kennel Fees $712.00 $237.00 $677.00 $500.00 $500.00
35101 County Fines $29,774.92 $23,479.41 $21,563.59 $30,000.00 $30,000.00
35102 Policy Fines $34,620.50 $50,731.00 $31,226.76 $35,000.00 $35,000.00
35105 Accident Report Fee $674.30 $823.50 $890.00 $1,000.00 $1,000.00
35106 Seized Property $3,663.10 $0.00 $8,205.00 $500.00 $500.00
36230 Contributions - General $0.00 $0.00 $100.00 $0.00 $0.00
36300 Reimbursement $3,450.00 $7,575.00 $4,217.50 $3,000.00 $3,500.00
33421 State Municipal Funds Aid $6,180.00 $6,180.00 $22,908.05 $6,200.00 $6,200.00
33430 Other Grants/Aids $240.00 $0.00 $0.00 $0.00 $0.00
33611 County Grants - Road Main $7,745.22 $7,745.22 $0.00 $7,750.00 $7,750.00
36230 Contributions - General $0.00 $0.00 $1,500.00 $0.00 $1,500.00
36300 Reimbursement $21,151.63 $26,424.05 $1,286.20 $750.00 $19,450.00
37300 Street Access Fee $0.00 $0.00 $44,540.18 $0.00 $0.00
36233 Contributions- Holiday Light $3,000.00 $1,000.00 $2,000.00 $0.00 $1,000.00
34782 Winter Recreation Donation $0.00 $0.00 $0.00 $0.00 $0.00
31320 State Sales Tax $7.61 -$0.07 -$3.60 $0.00 $0.00
34407 Weed Cutting $5,023.27 $621.73 $1,800.00 $1 ,000.00 $1,000.00
I CITY OF ST JOSEPH 11/21/11 4:07 PM
'"`'fi ��--.- '71\14\-' r General Revenue Budget Page 2
2012 Preliminary G
Adopted
September 15, 2011
2011 2011 2012
SOURCE SOURCE Descr 2009 Amt 2010 Amt YTD Amt Budget Budget
34780 Park Fees $4,600.00 $5,300.00 $5,450.00 $4,500.00 $4,750.00
36236 Contributions - Parks $869.07 $912.52 $1,858.92 $600.00 $800.00
36300 Reimbursement $0.00 $0.00 $175.00 $0.00 $0.00
36231 Contribution - Health Ins Di $0.00 $328.85 $0.00 $0.00 $0.00
36260 Surplus Property $0.00 $0.00 $0.00 $250.00 $0.00
39201 Transfers from Other Fund $227,851.68 $25,741.00 $0.00 $14,000.00 $0.00
FUND 101 General $2,751,612.06 $2,355,690.64 $1,403,214.63 $2,524,385.00 $2,353,700.00
FUND 150 Economic Development
31010 Current Ad Valorem Taxes $0.00 $0.00 $0.00 $0.00 $87,000.00
34150 TIF /MIF Deposit $7,500.00 $0.00 $0.00 $0.00 $0.00
34200 DEED Housing Reimburse $0.00 $0.00 $16,368.57 $0.00 $0.00
36210 Interest Earnings $719.98 $116.04 $181.94 $150.00 $225.00
39201 Transfers from Other Fund $28,820.60 $51,136.79 $56,000.00 $83,840.00 $0.00
...... ...............................
FUND 150 Economic Development 337,040.58 $51,252.83 $72,550.51 $83,990.00 $87,225.00
$2,788,652.64 $2,406,943.47 $1,475,765.14 $2,608,375.00 $2,440,925.00
Note: Removing the
3% wage provision will
reduce the revenues
to a total of $
2,419,410
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Impact of Market Value Credit Conversion
According to a property tax simulation by Minnesota House Research —the nonpartisan research department of
the MN House of Representatives, statewide in 2011, property taxes would be higher by $272 million or 3.4%
exclusively by applying the conversion of the Market Value Homestead Credit to a value exclusion program. A
Si million taxable market value business in Sartell and Stearns County would have seen an estimated 4.4%
increase or s1,48o as a result of this State Policy change alone.
This same simulation demonstrates that with the replacement of the state - paid credit program with a
homestead market valuation exclusion that Greater MN businesses are impacted more than twice as much as
their metropolitan counter parts (+5.3% versus 2.3 %).
MVHC convers Estimated Impact on Property
Taxes if Conversion Occured in 2011
11%
w
4
a 7%
KV
Vff
C.
Ia
Sartell (Stearns Sauk Rapids St. Augusta St. Cloud St. Joseph Waite Park
only) (Stearns only)
Residential Homestead ta Apartments C/I over $150,000
3
The simulation is based on if the conversion occurred in 2011; therefore it isolates the impacts of the conversion
so it will not be confused with other moving parts in the property tax system (i.e. changes in levies, aids, and
other market value changes). To see more information on the MVHC conversion, visit the MN House Research
page at http: / /www.house.Ieg. state .mn.us /hrd /topics.asp ?topic =21.
Market Value Homestead Credit History
When the State last revamped the property tax system in 2001, they compressed tax classifications but wanted
to cushion the impact on lower valued homes so they created the MVHC program. After local units of
government adopted their annual levy to fund the services they provide for the following year, the State
reduced the amount certain homestead properties would actually be required to pay toward the adopted levies.
The State essentially was buying down the cost of local government for certain homestead properties but then
reimbursing the local units of government to keep them whole. At least that was the case in most communities
until 2008 when the State's budget woes resulted in the State reneging on its commitment and only partially
reimbursing the buy down they had provided to homesteads. Since 2008, the State continued to provide the
credit to homeowners but also continued to renege on reimbursing local units of government.
In order to help balance the state's budget, the state converted the MVHC from a state —paid credit to a
exclusion of market value. Homeowners that previously received the credit would now have part of their home
value excluded from taxation, thus simulating the impact of the credit to that homeowner.
Why are business property taxes impacted by a change in a residential credit?
Unlike a state -paid credit that actually reduced property taxes paid, a market value exclusion merely shifts
where the local property tax levy is collected from — and it shifts it over to business, industry, apartments,
agriculture and higher valued homes. Without any increase in the local property tax levy, some homesteads will
see little difference in their property tax bill but all other property tax payers certainly will.
The increase in property taxes comes from an increase in property tax rates. A property tax rate, for example
for a city, is determined by dividing the city levy by the total tax capacity of the city. When the state created the
market value exclusion, all homes under $414,000 in value will see their tax capacity drop. This has the
cumulative effect of reducing the city's total tax capacity. If a city total tax capacity is reduced and the levy
remains the same, the tax rate must go up. When tax rates go up, so do taxes for properties without a value
exclusion, even if the levy was not increased.
Sartell Example 2012 Proposed Levy
Old System New System
Levy = $4,804,764 Levy = $4,804,764
TTC =$13,978,381 TTC 413,273,322
4,804,764 _ 4,804,764
13,978,381 _ 34A% 13,273,32 — 36.2%
Tax Rate = 34.4% Tax Rate = 36.2%
In the Stearns County portion of Sartell, this policy change alone will increase the City property tax rate by 5.3%
according to the Stearns County Auditor's Office
� r %.,:t. Cr1�'L °� 1'1:'1' �l1L \' 1'I1'�5 "()1:r1
4.1 CITIES '
..i- + . 11.s . n».
1,, t` 'i fu ( .,,'1,:1,; 0] T;E':, t .11,P.T,1 ,,R s,<,,
October 25, 2011
Market Value Cred Symptom of Larger Problem
Much has been made by the media, local
governments and legislators over the Declining LGA, has lead to Higher City Levies I
conversion of the Market Value Homestead ssoo
..... _ .....................
Credit (MVHC) to a value exclusion Aid amounts included City
siso program. Outcries from across the state HACA for years 1990 -2001
have called for fixing or reinstating the
MVHC to alleviate the problems the s3so ......... i
conversion has created, not the least of 1
$300 .__.__ ..... __... _ ..._,..,.._. _ . .,..___.. . _._...._,..... _..._. . _ ... • . • a... a • !! _•
which are property tax increases on g •. .
homeowners, agricultural, apartments and & $250 ; ...ea*
•
business. Unfortunately, fixing the MVHC s2oo ____... .••••••• . * « •... I
would just treat only one symptom of a .........
silo ..__._
larger property tax problem that has been
growing years. s,«, ......__._...__....._.._...._......._...........__......._._ .......__..........__.._.__.... ___.._.. ......._........_.._......
sso
In 1991, cities levied $168 per person, while
receiving $131 in LGA per person, for total
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
revenue of levy plus LGA of $299 per •mil
y troy •1•rw1.0A' • * • 1991 City Levy ad} for irdlaNOn • • • 1991 Aid 4d} for Infl•iton
person. If you adjusted the city revenue
from 1991 to today by the rate of inflation Chart Sources: MN Department of Revenue, MN State Demographer
for state and local governments, the $299 per LGA has decreased as a Percentage of Levy + LGA
person would equal $552. In 2011, cities 100f6 I _ $
levy $430 per person and receive $98 per
person in LGA. Interestingly, today's levy 90,< Aid amounts included City
plus aid revenue is $528 per person, $23 less tl°' HACA for years 1990 -2001
than the inflation adjusted revenue from 70 „
1991. The big difference is that in 1991,
44% of the revenue came from LGA and 60%
today its only 19 %. Knowing this it is not
surprising that property taxes are higher. 406 ,' —
If the legislature is to fix the MVHC there O9
are several uestions that should be asked.
q 20% ° � �, � - � � E � � � f � � � *
First and foremost, how does the state pay
`
10% z
for the fix? If the state was flush with cash, ��
the conversion would have never happened. �� �r ;'
1991 1992 1993 1994 1995 1996 7997 1998 1999 2000 2001 2002 7003 2004 2005 2006 2007 2008 2009 2010 2011
The state needed, however, the $260 million 14 LEA ,.r.ry1.M,
to balance the budget and any fix would
require further spending reductions or revenue not currently in the budget. Second, if we are pushing more funds into property tax
relief is the HVMC the best choice, or should the state look to its celebrated past and reinvest in aids to local governments?
r, 'i' ' t 1 ? it i7r , hies ;ivy, roll 1 0:;17 rota f 1dt r Ji€? it ",?< 1
As State Retreats from MVHC and LGA,
Greater Minnesota Hit Hardest
The graph below summarizes a House Research Simulation Report on the property tax impacts of the state budget passed
during the special session to end the state government shutdown. The analysis clearly shows that as a result of the Market Value
Homestead Credit elimination and conversion to a market value exclusion program, permanent reductions in LGA, and other
reductions in property tax programs property taxes will go up. Of note, however, is not only that property taxes are projected to
increase statewide, but that the impacts will be most keenly felt by greater Minnesota homeowners, businesses, and renters.
Especially concerning to greater Minnesota cities looking to attract and retain businesses is the projected differences between
greater Minnesota and the Metro area when it comes to commercial /industrial property. The increases are more than double in
greater Minnesota than in the Metro.
Overall Property Tax Increases due to last Session
4
10% } 9.4%
8% 7.4%
0
7% - ' 6.3% 6.2% 6 6.5%
6%
.196 4.9°
4.1
4% 3.•
g
3%
3.0* .2 _...__ z.s�� , .0%
2% —
0%
Total Residential Apt C/I low C/I High
Homes
Metro Ni Greater MN Cities u Greater MN Towns
Source: House Research Simulation Report: Property Tax, #11E7, July 18, 2011
Prepared by Flaherty & Hood, P.A. on behalf of the Coalition of Greater MN Cities
sF OWES {
tiff "ly
The C' �aiition of Greater 1ti�ti�esota C'tits
` 525 Park St. Suite 470
7
rs St_ Pau[, vIN 5510.3
w NA w greatem tcit es org
cgmcitiJ s ,S . herty 13ao,,.couz
liter con] gleatennnemes
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