9. SR 08-28-1995 - Laserfiche WebLink

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the total) and, more importantly, are the major source of additional revenues . for the General Fund. Typically the tax revenue increase mirrors the total increase in the General Fund. This again is the situation for 1996. In putting together the 1996 proposed budget, staff assumed a 15 percent increase in the net tax capacity (NTC). In a telephone conversation with the county auditor, this increase has been verified as being an accurate assumption. Accordingly, if the tax rate remains the same, the city will see a General Fund tax revenue increase of approximately $334,000. However, this is sill $54,7501ess than what is in the proposed budget. Tax revenues increase without a tax rate increase due to additional tax base being added to the community through new development and the reassessment of existing properties to reflect the current market. The reassessment of the value of existing property is a state law requirement and the county provides our assessment services. If the total tax rate for the city, county, and school district does not change in 1996, property owners would see no change in their taxes only if their valuation also did not change. On the other hand, if the tax rate for the city, county, and school district did not change and property owners saw a 5 percent increase in their property valuation, then they would see an increase in their taxes. • It should be noted that the city share of the total tax burden is about 23 percent (23.985 out of a total of 104.247). Accordingly, if the city tax rate changed from approximately 24 to 24.5, then this is a 2 percent change and, if the county and school districts had no tax rate change, then the total impact on the tax rate would be less than a 1/2 percent increase. Again, this is in reference to the tax rate and does not take into consideration any increase in valuation that an individual may see in the property that they own. The city is facing the same General Fund budget issue in 1996 that it has had to deal with for the past few years. This issue is how to have the increases in annual operating expenditures equal available increases in annual operating revenues. The city must not become dependent on reserves as the city reserves are finite in nature and are limited. This is not our 1996 situation, but the City Council should consider the following scenario... Personal Services amount to 66 percent of the total General Fund expenditures. Personal Services in the General Fund are approaching $2.8 million. If Personal Services go up 8 percent due to cost of living adjustments, increases in benefits and wage step increases, then the $4.1 million budget goes up $224,000 or about 5.5 percent. • Additionally, if the NTC increases by 10 percent and no tax rate