5.3. SR 07-12-2010 - Laserfiche WebLink

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Tax Levy Perhaps the most significant part of the budget process is determining how much the tax levy will be. This in turn dictates the funding available to operate the general fund activities of the City. Setting the levy amount is based on several factors including levy limits, required debt and maintenance of effort levies, the tax revenue necessary to fund general fund activities, changes in the net tax capacity (NTC), and the impact on taxpayers. The 2010 levy and the 2011 levy distribution assuming no change in the total levy are shown below: 2010 2011 Difference General Fund $9,688,950 $9,755,913 $66,963 Library 58,850 65,700 6,850 Surface Water Management 50,000 50,000 - City Special Assessments 16,427 17,767 1,340 Improvement Bonds 207,432 204,616 (2,816) Certificates of Indebtedness 89,061 - (89,061) Public Safety Lease Rev. Bond 606,341 591,142 (15,199) Economic Development Tax Abatement 395,330 427,253 31,923 $11,112,391 $11,112,391 - As you can see, an additional $66,963 of tax revenue is available in the general fund because of decreases in some of the debt levies. The other item of note is that the levy for tax abatements increases $31,923. Of course, the modest increase in the general fund tax revenue doesn’t go far to cover the increased operating costs of providing the same services that were provided in 2010. Change in Net Tax Capacity After a very long trend of increasing market values and NTC, the recent trend of decreasing values may be stabilizing. Last year the taxable market value decreased five percent and the NTC decreased 3.5 percent. It is too early in the year to get a firm estimate of the payable 2011 values from the County; although, I did speak with County staff to get a very rough estimate. This estimate will change, nevertheless, it gives us some indication of what to expect. A conservative estimate is that the NTC could decrease up to three percent. There is a possibility that it may be less and the NTC will be relatively unchanged from last year. As is the case each year, more accurate estimates will be available later in the year before the final levy is adopted. The one thing we know for sure is that if the NTC decreases and the tax levy stays the same, the tax rate will increase. In this atypical environment of decreasing property values, using the tax rate as a measure of the real tax impact to a property is not the best measure. The actual tax impact to each property will depend upon whether its value decreased more or less than other properties or if it increased while most others decreased. Proposed 2011 General Fund Budget Highlights and Discussion Items ? Pay and benefits: The proposed budget does not include any cost of living adjustment (COLA). The last COLA employees received was 1.5 percent in January, 2009. Step increases are included in the budget. The cafeteria contribution includes a five percent increase consistent with the 2010 increase. As you may be aware, \\tsclient\S\Public Bodies\Council\Lori\2010\Budget Memo 7 12 10.doc