7.3. SR 10-11-1999 - Laserfiche WebLink

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rll ---\) ( ); till . . Item #7.3. MEMORANDUM RiverTO: Mayor & City Council FROM: Pat Klaers, City Administrator DATE: October 11, 1999 SUBJECT: Budget Public Hearing A new state law was adopted in 1999, which requires municipalities to hold a public hearing and to pass a resolution if their tax levy will result in a tax rate increase. The city's public hearing on the proposed tax rate increase is scheduled for Monday. The attached October 6, 1999, Star Tribune article provides an interesting discussion of the local government tax revenue versus tax rate issue. The tax system is very complex and often uses confusing terms. The state legislature wants accountability at the local government level and, as noted in the attached article, does not want cities to "play games" with technical terms. It is not unusual for a city or county to say "if your property value did not change. . . then you will see no change or only see a modest increase in our share of your tax bill." This type of statement has resulted in some frustrations at the state legislature because, if a municipality or county is experiencing growth, then the municipality or county is usually receiving additional tax revenues for services without this being clearly stated. Additionally, at least in Elk River, the truth is that every other year or so, in order to keep up with the market, the homeowner sees a certain increase in their property value (and, accordingly, their taxes). This public hearing is another requirement by the state legislature for cities to discuss tax revenues. (The other public hearing requirement is the December Truth in Taxation hearing.) Additionally, the state has created another complex tax formula. This formula is discussed in the attachment from the League of Minnesota Cities and the figures for Elk River are shown in the county auditor's attachment dated September 8, 1999. Essentially, the previous year's non-debt levy is applied against the current year's net tax capacity in order to create a new base tax rate. This new rate is applied against the current year's non-debt levy and if more tax revenue is being generated, then the city has to adopt a tax rate resolution after a public hearing and certify this resolution to the county. At the October 11, 1999, City Council meeting the Mayor should open the public hearing on the tax rate. Staff can answer questions on the proposed 13065 Orono Parkway. P.O. Box 490. Elk River, MN 55330. TDD & Phone: (612) 441-7420. Fax: (612) 441-7425