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<br /> <br />City of Elk River <br />REQUEST FOR COUNCIL ACTION <br />Agenda Section Meeting Date <br />\\1 arksessian Se tember 11, 2006 <br />Item Description <br />2007 Bud et and Tax Lev"v <br /> <br />Item Number <br />5.2. & 5.3. <br /> <br />Prepared by <br />Lori ollnson, City Administrator <br />Reviewed by <br /> <br />Introduction <br />Tile proposed tax lev-y for tlle city and tlle le\Ties for tlle ED.l\ and HRi\ must be c;~rti.fied to the county <br />no later tllan September 15. TIle resolutions adopting tllese levies are before tlle Council for <br />consideration. The Council must also set tlle date and time for tlle Trutll-in-Taxation and continuation <br />l1earings. <br /> <br />Discussion <br />J.\t tlle last t\va Council meetings, tlle Council revie\ved the General Fund budget and 2007 tax lev.y. The <br />Council pro\Tided input on ne\v elnployee requests, capital outlay, tax rev"enue, transfers to other funds, <br />and tlle ov"erall budget. <br /> <br />TIle proposed budget assulned tax rev"enue based on a net tax capacity (NTC) increase of eigllt percent. <br />TIle County ..t\ssessor's prelimina117 estllnate \vas for an increase of bet\veen eigllt and nine percent. No\v <br />tllat tlle actual calculations Ilave been made to apply class rates to lnarket \ralue, tlle re\Tised NTC increase <br />is 12.9 percent. .L\s al\\lays, tlle NTC \villlikely drop sligIlrly before tlle final tax rate is calculated due to <br />abatements, tax forfeitures, late llo1nesteads, and clerical corrections. Historical information on property <br />\ralue, le\)" and tax rate data is attacIled. Last year's NTC increase \.vas 14.85 percent. Ne\v constluction <br />accounted for 8.77 percent of tlle NTC increase for taxes payable in 2007. Ne\v consttuction market <br />v"alue decreased 17.43 percent from 2006. <br /> <br />Tile proposed General Fund budget \vas $11,342,050. TillS is an increase of sev"en percent o'ver tlle 2006 <br />budget. Ho\ve\'er, as \ve discussed, it did not include se\Teral expenditure requests. i\fter rev"ie\Vmg the <br />General Fund budget and tlle expenditure requests not included in the proposed budget, tlle Council <br />lnade tlle follo\v.ing cllanges: <br />. Fund RS\Tp request <br />. Reduce Council Contingency <br />. Pay Plan Implementation (estimate) <br />. Police Sofnvare (estitnate for first year) <br />Net Cllange <br /> <br />+ 5,000 <br />- 27,600 <br />+ 75,000 <br />+60.000 <br />$112,400 <br /> <br />Tile tax re\Tenue \vas not adjusted during budget discussions because tile Council had not determined the <br />proposed tax le"v"y. The proposed budget \"vill be adjusted accordingly after tile tax levy is determined. If <br />dle levy is based on an eigllt or nine percent increase, a combination of revenue increases and expenditure <br />cuts \~vill need to be made to fund tlle changes noted above. If tlle le\TY is based on a ten percent increase, <br />some additional capital ouday may be funded d1Iough tlle General Fund. Tile current proposal calls for <br /> <br />S:\Council\Lori\2006\Levy t\temo Sept l1.doc <br />