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REQUEST FOR ACTION <br />To <br />Item Number <br />City Council <br />5.1. <br />Agenda Section <br />Meeting Date <br />Prepared by <br />Worksession <br />Se tember 8, 2008 <br />Lori Johnson, City Administrator <br />Item Description <br />Reviewed by <br />Resolution Authorizing the Proposed Property Tax Levy for <br />Reviewed by <br />Collection in 2009 <br />Action Requested <br />Approve Resolution Authorizing the Proposed Property Tax Levy for Collection in 2009 <br />Background/Discussion <br />As you know, we have been waiting for a revised estimated net tax capacity (NTC) from the county <br />assessor before making a decision on the proposed tax levy for 2009. I received an updated estimate on <br />Thursday along with a decision on how to correct a county error in a tax increment financing (TIF) <br />district that will also affect the tax levy and tax rate. <br />Based on an early estimate from the county assessor, we based the tax levy and budget on a NTC increase <br />of three percent. The new estimate is consistent with the earlier estimate. The NTC is now estimated to <br />be 2.8 percent excluding military exemptions and personal property additions. The final NTC will change <br />slightly when these are included; however, the NTC will most likely still be no higher than three percent. <br />The three percent NTC at the same 2008 tax rate of 42.494 leaves a 2009 General Fund budget shortfall <br />of $519,850. Unfortunately, the 2008 TIF error resulted in an artificially low tax rate for 2008 because the <br />TIF value was not subtracted from the taxable NTC. Without the TIF error, the tax rate would have <br />been 42.712. Levying to the levy limit for 2009 would increase the tax rate to 44.077 and reduce the <br />budget shortfall to $126,300. To put this in perspective, below is past levy and tax data: <br />Taxes Payable <br />Year <br />NTC <br />Percent increase <br />Tax Rate <br />Total Levy <br />Percent increase <br />General Fund Levy <br />2009* <br />26,040,206 <br />2.83% <br />42.494 <br />11,084,248 <br />3.00% <br />9,426,524 <br />2008 <br />25,324,612 <br />11.75% <br />42.494 <br />10,761,311 <br />10.29% <br />9,139,350 <br />Percent increase 3.14% 10.61% <br />* Estimated NTC; Levy based on 3% NTC increase <br />2007 <br />22,661,722 <br />12.82% <br />43.056 <br />9,757,057 <br />10.58% <br />8,263,032 <br />14.44% <br />17,421,465 <br />15.29% <br />43.929 <br />8,823,793 <br />15.74% <br />7,220,536 <br />20.39% <br />5:ACouncil\LoaA2008\Budget Discussion 09 08 08.doc <br />