9.B. SR 09-02-2008 - Laserfiche WebLink

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REQUEST FOR ACTION To Item Number Ci Council 9.B. Agenda Section Meeting Date Prepared by Worksession Se tember 2, 2008 Lori ohnson, Ci Administrator Item Description Reviewed by 2009 Tax Levy and Budget Discussion Reviewed by Action Requested Consider following resolutions and motion for adoption no later than the September 8 meeting: 1. A resolution authorizing the proposed property tax levy for collection in 2009. 2. A resolution approving the House and Redevelopment Authority 2009 tax levy. 3. A resolution approving the 2009 tax levy for Economic Development purposes for the Elk River Economic Development Authority. 4. A motion to set the Truth in Taxation hearing for Monday, December 1 at 6:30 p.m. with the continuation hearing on Monday, December 8 at 6:30 p.m. Background/Discussion The City's tax levies must be certified to the County Auditor no later than September 15. This includes the levies for the EDA and HRA as well as the proposed maximum tax levy for the City. The Council must also set the date and time for the Truth in Taxation and continuation hearings. The EDA and HRA levies have already been approved by their respective commissions; the levies are consistent with past levies. The levy yet to be set is the proposed maximum tax levy for the City. In previous discussions about the proposed maximum tax levy for 2009, the Council's goal has been to keep the tax rate constant and approve a levy that yields a tax rate of 42.494, identical to the 2008 tax rate. As of the writing of this memo, estimated net tax capacity (NTC) data has not been received from the County. Until an updated estimate is received, it is very difficult to set the levy. However, since the last budget meeting, the Department of Revenue has released data on levy limit calculations so we know that the most the City can levy under levy limits is $9,878,577; when special levies are added the total levy is $11,477,816. By contrast the levy assuming three percent NTC growth and a tax rate of 42.494 generates a tax levy of $11,084,248. The attachment labeled Preliminary Levy and Tax Rate Data indicates the tax revenue generated using the 2008 tax rate assuming various NTC increases and the tax rate resulting from those same NTC increases if the City levies to the levy limit. Fox budgeting purposes, we have assumed a three percent NTC increase and a constant tax rate when estimating the tax revenue available to support General fund activities. Based on this assumption, requested expenditures exceed proposed revenues by $519,850. We have identified $104,750 in budget adjustments leaving a real difference of $415,100. Each additional percent increase in NTC generates $107,500 in tax revenue. Therefore, if the NTC increase is five percent instead of three percent, the S:\Council\Lori\2008\Budget Discussion 09 02 08.doc