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The Elk River Vision <br />A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community <br />engagement that encourages and inspires prosperity <br /> <br /> <br />Request for Action <br /> <br />To <br />City Council <br />Item Number <br />7.1 <br /> <br />Meeting Date <br />December 2, 2024 <br />Prepared By <br />Lori Stich, Finance Manager <br /> <br />Item Description <br />2025 Budget and Tax Levy Resolution 24-73 <br />Reviewed by <br />Lori Stich <br />Joe Stremcha <br />Cal Portner <br />Tina Allard <br /> <br />Action Requested <br />▪ Approve, by motion, the 2025 General, Special Revenue, and Enterprise Fund budgets. <br />▪ Adopt, by motion, Resolution 24-73 authorizing the property tax levy for collection in 2025. <br /> <br /> <br />Background/Discussion <br />In May, staff began the budgeting process by developing their 2025 department goals and budget requests. <br />Over numerous work sessions, the City Council and staff reviewed in detail each department’s operating <br />budget and the property tax levy. In September, the Council approved the preliminary tax levy that was used <br />to calculate the proposed property tax notice that was mailed to each property owner. <br /> <br />General Fund Budget <br />The 2025 General Fund budget is $22,210,100, compared to $21,570,600 in 2024. The largest portion of the <br />city’s General Fund operating budget is dedicated to public safety programs and services, with general <br />government, public works, and parks and recreation making up the balance. Because city government is <br />primarily a service industry, 77% of the operating budget is for personal service expenditures. <br /> <br />Tax Levy <br />On September 16, the City Council adopted the preliminary tax levy of $17,232,183. Since then, additional <br />reductions of $388,000 have been made for a proposed tax levy of $16,844,183 for 2025. <br /> <br />The county estimates the city’s Net Tax Capacity (NTC) will increase by about 1.7%, attributable to new <br />growth and market value increases. The final NTC may change slightly as the county continues to update <br />property values before calculating property taxes in early 2025. Based on the current NTC values, the <br />proposed tax rate is 38.903%, an increase from last year’s rate of 37.895%. The Minnesota legislature <br />increased the Homestead Market Value Exclusion limit for 2025 from $413,800 to $517,200. Excluding over <br />$100,000 of NTC from many residential properties increases the tax rate required for the levy. <br /> <br />The city accounts for about 38% of a homeowner’s total property tax bill. The remainder is attributed to the <br />Page 178 of 211