5.0. SR 12-08-2003 - Laserfiche WebLink

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In reality, the City Council budget "worksessions" have been going on throughout the entire year. Everyone started rethinking the 2003 budget and planning for 2004 from the time Governor-Elect Pawlenty asked Governor Ventura to unallot the December 2002 state aid payments to municipalities. Since that dme in late 2002 up through the legislative special session that ended in late May 2003, cities were uncertain as to how much the state was going to cut promised 2003 aids, and what restrictions the state was going to place upon municipalities for 2004. In the end, Elk River state aids were reduced in 2003 by $644,138. In June, the city amended its 2003 budget by $447,000 to help address this budget reduction. The State Legislature has dominated the city budget process for 2004. The end result of the 2003 legislative session is that levy limits are again in place for municipalities with no increases being allowed for growth or inflation factors. In Elk River, the cut in 2004 state aids is $644,138 (matching the 2003 reduction) but for 2004 the state is allowing cities to make up 60% of the state aid cuts by way of a tax increase. Overall, the financial restrictions for Elk River in 2004 are difficult, but it certainly could have been much worse based on what the Governor originally proposed and based on some of the early proposals that were being debated at the State Legislature last winter. ~'oxes On September 8, 2003, the City Council adopted a resolution establishing the proposed maximum 2004 tax levy for the city. This resolution is attached for your reference. The maximum 2004 tax levy is set at $6,564,803. This is a $584,642 or 9.8% increase in the tax levy. Most of this increase is for general fund purposes. City taxes are about one-third of the total tax bill. The city tax rate in 2004 is proposed to decrease from 44.614 to 43.731. This is a 2% decrease. This 2% decrease is what property owners will see for their city taxes i_f their property value did not increase. On the other hand, if their property value did increase then it is likely that the city portion of the tax bill will increase. Based on recent history, it is likely that most property values in the city did increase for taxes payable in 2004. According to Sherburne County information that ',vas provided to the city in September 2003, the city net tax capacity (NTC) is increasing by 12%. This citywide increase in the NTC is the reason why the city tax revenue can increase substantially and yet the city tax rate decreases. 2004 Revenues and Expenditures This past summer staff meetings were held on the 2004 budget proposal and the first City Council worksession was held on August 25, 2003. On September 8, 2003, the City Council adopted the proposed maximum tax levy for 2004 but the proposed operating budget was not balanced. At the November 10, 2003 City Council worksession the budget proposal for 2004 was balanced by way of adding revenues. Since the November 10, 2003 meeting, an additional $12,000 has been added to both the revenues and expenditures making the 2004 budget proposal $7,875,400. This is an 8.65% or $627,000 increase from the amended 2003 general fund expenditure budget. The 2004 proposal is 9.15% more than the 2002 adopted budget and this percentage is below the increase that the city has seen due to inflation and growth factors. Of the $7,875,400 proposed budget for 2004, just over 65% (or $5,182,250) of the revenues come from taxes. This is significantly more than the 2003 budget when taxes made up 59% of the total. On the other hand, last year the intergovernmental revenues category made up 14.7% of the total