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2006-12-04PLEASE TURN OFF ALL CELL PHONES & PAGERS IN COUNCIL CHAMBERS. AGENDA MOUND CITY COUNCIL SPECIAL MEETING MONDAY, DECEMBER 4, 2006 — 7:00 PM MOUND CITY COUNCIL CHAMBERS Open meeting — Call meeting to order 2. Truth in Taxation presentation and public hearing Adjourn * **In addition to these materials, Council Members may wish to bring the packet materials from earlier budget meetings. NOTICE OF PROPOSED TOTAL BUDGET AND PROPERTY TAXES The Mound city council will hold a public hearing on its budget and on the amount of property taxes it is proposing to collect to pay for the costs of services the city will provide in 2007. SPENDING: The total budget amounts below compare the city's 2006 total actual budget with the amount the city proposes to spend in 2007. 2006 Total Actual Budcet $6,859,280 Proposed 2007 Budget $7,309,133 Change from 2006 -2007 6.56% TAXES: The property tax amounts below compare that portion of the current budget levied in property taxes in the city of Mound for 2006 with the property taxes the city proposes to collect in 2007. 2006 Property Taxes $4,216,905 Proposed 2007 Property Taxes $4,684,770 Change from 2006 -2007 11.10% LOCAL TAX RATE COMPARISON: The following compares the city's current local tax rate, the city's tax rate for 2007 if no tax levy increase is adopted, and the city's proposed tax rate for 2007. 2006 2007 Tax Rate if 2007 Proposed Tax Rate NO Levy Increase Tax Rate 37.252% 32.741% 36.655% Attend the Public Hearing All Mound City residents are invited to attend the public hearing of the city council to express their opinions on the budget and on the proposed amount of 2007 property taxes. The hearing will be held on: Monday, December 4, 2006, at 7:00 p.m. Mound City Hall 5341 Maywood Road Mound, MN If the discussion of the budget cannot be completed, a time and place for continuing the discussion will be announced at the hearing. You are also invited to send your written comments to: City of Mound, City Manager 5341 Maywood Road Mound, MN 55364 -1- tD 0 to O 00 O O O� O O O O r T- O n' tr0 N O O cn O O N ti M c0 d O c0 U O O r O O c0 ti CD N N N c0 L i� 00 o O O W t0 c0 M O w r Cn r r N � LL Q M ~ r r 000 co d E L. o N ,� 0 G = ii d0 > m N N N vr O) r 00 O O et O N O C) w � O M O O co N W v 19 Oro OMOL d N r N M LO M W N r ... Lm I > M ... r .. Oco � N 07 r M r iC r' _ i5 M m r c0 O 1- O r co O c0 O 0) N M m I- c0 M c0 w w et O r N IV c0 1- eF LO r O r O w O O N W) N r ti ti N ti ti cO0 cOo dM d c0 r� 1� r CO) O M r r et' N N r r x W ti O O N L d C E O N o a, CV m -2- 0 M 00 Q� r r W r r i+A �O t0 O 01 O M r N O M 00 O r 44 N .O C LL a O U H W O) N 7 O 2 O. O) E > O o a L O) 'a O V � O C O) m v R O L. U � d O) N C C O O C r m v r i N O C E v %- O) O O M L r _ N •� N V O) '0 O O = Q.._ O 3 J2 O W � C O Lj m 'O N C 0 N LL O �a o cn Z to O f- O O O O O O O N T- o) m f- O O O O O N CA r c0 O c0 O O O O O c0 O O N er c0 L i� 00 o O O W t0 r M O N ti r N � LL Q r ~ r 0 O J 000 co d E L. o N ,� 0 G = ii d0 > N N vr O) w co M co ti W C O d N r N M Oco � N 07 r M r iC r' m r -2- 0 M 00 Q� r r W r r i+A �O t0 O 01 O M r N O M 00 O r 44 N .O C LL a O U H W O) N 7 O 2 O. O) E > O o a L O) 'a O V � O C O) m v R O L. U � d O) N C C O O C r m v r i N O C E v %- O) O O M L r _ N •� N V O) '0 O O = Q.._ O 3 J2 O W � C O Lj m 'O N C 0 N LL O �a o cn Z C 0 O C7 LL Q O N D `O CL *� U cm .O 0 O J ca d co d E L. o N ,� 0 G = ii C O 2 -2- 0 M 00 Q� r r W r r i+A �O t0 O 01 O M r N O M 00 O r 44 N .O C LL a O U H W O) N 7 O 2 O. O) E > O o a L O) 'a O V � O C O) m v R O L. U � d O) N C C O O C r m v r i N O C E v %- O) O O M L r _ N •� N V O) '0 O O = Q.._ O 3 J2 O W � C O Lj m 'O N C 0 N LL O �a o cn Z l 1 GENERAL FUND SUMMARY OF REVENUES AND EXPENDITURES 2004 2005 2006 2007 2007 REVENUE GENERAL PROPERTY TAXES 2,294,529 2,888,834 2,805,435 3,275,636 3,275,636 16.76% INTERGOVERNMENTAL REVENUE 380,357 346,706 342,060 318,060 318,060 - 7.02% LICENSES 21,645 19,220 19,550 19,600 19,600 0.26% NON- BUSINESS LICENSES & PERMITS 278,237 226,283 285,300 243,300 243,300 - 14.72% GENERAL GOVT. CHARGES 481,179 499,988 483,000 498,000 498,000 3.11% OTHER REVENUE 338,870 365,135 310,500 362,500 362,500 16.75% INTERFUND TRANSFERS/ BONDS 423,716 293,545 297.000 177,404 177.000 - 40.40% TOTAL REVENUE 4.288.533 4,639.811 4,542.845 4.894.096 4.894.096 7.73% EXPENDITURES CITY COUNCIL 74,466 77,172 82,450 88,445 84,590 2.60% PROMOTIONS 3,750 3,750 5,250 11,000 5,500 4.76% CABLE T.V. 41,976 42,141 45,000 43,000 43,000 - 4.44% CITY MANAGER/CLERK 275,725 290,935 309,510 337,650 336,445 8.70% ELECTIONS & REGISTRATION 12,135 435 20,600 2,850 2,850 ASSESSING 78,759 84,359 86,250 87,350 86,950 0.81% FINANCE 225,064 244,696 296,970 361,934 361,930 21.87% COMPUTER 24,584 18,647 13,950 15,050 13,950 0.00% LEGAL 141,743 130,772 163,440 135,462 135,460 - 17.12% POLICE 1,452,018 1,581,701 1,468,550 1,562,791 1,546,418 5.30% EMERGENCY PREPAREDNESS 6,851 6,071 7,100 7,100 7,100 0.00% PLANNING & INSPECTION 304,558 381,398 432,780 436,519 431,051 -0.40% STREET 1,020,902 937,728 911,920 954,400 889,269 - 2.48% CITY HALL BLDG & SRVS 128,260 98,193 118,070 112,369 106,770 -9.57% JANITORIAL SERVICES 0 0 0 47,020 0 PARKS 445,955 384,392 491,870 475,396 465,399 - 5.38% CEMETERY 9,210 7,641 10,170 13,247 10,447 2.73% RECREATION 0 3,000 0 10,000 5,000 CONTINGENCIES 14,501 28,773 30,000 26,700 16,700 -04.33% TRANSFERS 415,768 475,216 272,890 306.790 304.610 11.62% TOTAL EXPENDITURES 4, 676,225 4.,797.020 4.766.770 6,035 073 4,853,438 1.82% INCREASE (DECREASE) (387,692) (157,209) (223,925) (140,977) 40,658 - 118.16% FUND BALANCE, JANUARY 1 1,422,542 1,340,889 1,164,760 922,709 929,956 - 20.16% ADJUSTMENT TO AUDIT 305,039 (37,446) FUND BALANCE, DECEMBER 31 1,340.889 1.146.634 940.835 781.732 974.514 3.17% FUND BALANCE AS A PERCENTAGE OF EXPENDITURES: 28.67% 23.90% 19.74% 15.53% 20.00% NOTE: UNDESIGNATED ONLY IS PART OF FUND BALANCE. -3- Revised 11/28/2006 City of Mound 2007 Truth in Taxation General Fund Revenues Graph Property Tax Intergovernmental Revenue Licenses Charges for Services Proceed from Sale of Bonds Other Revenue iL 5.4% 6.5°i 3,275,636 318,060 262,900 498,000 177,000 362,500 4.894.096 2007 GENERAL FUND REVENUES 7.4% in City of Mound 2007 Truth in Taxation Expenditures Graph Debt Service 1,088,943 Police Services 1,546,418 Planning and Inspections 431,051 Fire Services 538,794 Streets 889,269 Parks 465,399 Others 1,521,301 7.2% 6,481,175 2007 Expenditures for Selected Services 8.3% 1 v.r io Debt Service Police Services Planning and Inspections Fire Services 23.9% Streets Parks Others -5- CITY OF MOUND TAX LEVY RECAP TAX LEVIES " REVENUE - GENERAL PURPOSES REVENUE - LEASE PAYMENTS 2001A JUDGMENT BOND FIRE RELIEF G.O. IMPROVEMENT 2001C G.O. IMPROVEMENT 2003A G.O. TAX INCREMENT 2003C G.O. IMPROVEMENT 2004A G.O. EQUIP. CERTIFICATES 2004C G.O. IMPROVEMENT 2005A G.O. EQUIP. CERTIFICATES 2005C G.O. IMPROVEMENT 2006A G.O. EQUIP. CERTIFICATES 2006C LEASE EQUIPMENT LOAN TOTAL LEVY SPECIAL TAXING DISTRICT HOUSING & REDEVELOPMENT AUTHORITY (SPECIAL TAXING DISTRICT) TOTAL LEVY CERTIFIED LEVY FISCAL DISPARITY NET LEVY CITY PROPERTY TAX RATE Property Value: 150,000 Property Value: 200,000 Property Value: 250,000 Property Value: 300,000 116.506 136.124 136.124 2005 200¢ 44_7 PROPOSED 2004 2005 2006 2007 2,528,050 2,717,660 3,126,774 3,524,817 389,140 368,440 364,060 368,250 22,200 21,800 21,400 20,900. 33,350 33,350 67,890 71,010 5,700 71,200 75,000 73,300 116,440 136,860 139,067 141,167 139,830 143,340 141,494 144,179 0 28,500 30,600 26,900 65,460 142,450 114,500 111,700 0 0 66,700 68,600 0 35,000 31,000 64,200 0 0 0 32,234 0 0 35,000 37,513 21.790 14.320 3.420 Q 3,321,960 3 71 24. 16.904 64. 84.769 116.506 136.124 136.124 2005 200¢ 44_7 3,712,920 4,216,904 4,684,769 3,712,920 4,216,904 4,684,769 (278,460) (285.0701 (303.4261 3.434.460 3,931,834 4 3. 81.343 37.295 37.259 36.655 Tax Tax Tax 559.43 558.89 549.83 745.90 745.18 733.11 932.38 931.48 916.39 1,118.85 1,117.77 1,099.66 -6- 173.281 Revised 11/28/2006 I How Your City and County Property Taxes Are Determined Box 1 Total Proposed Local Budget - minus Box Z All Non- Property Tax Revenue, eg: State Aid Fees, etc. = equals Box 3 Property Tax Revenue Needed (Levy) divided by = equals Box 4 Assessor's Market Value Box 5 BI ox 6 Box 7 Property Tax Rate ( "Tax Capacity" Rate) X times State Mandated Class Rates = equals Total "Tax Capacity" (Formerly Assessed Value) YOUR PROPERTY TAX EQUALS: Your Property's Market Value X -Class Rae() X "Tax Ca aA city" Rate -- Ed. Homestead Credit (83% of K -12 genT educ. tax up to $390 in '00) See Appendix D on page 21 for an example. -7- 7 Tax Capacity Year 2006 1,723.00 Year 2007 1,878.00 Homestead Property Value 172,300 187,800 9.00% State Tax 1 0.001 0.001 0.00 County Tax 706.71 734.84 28.14 3.98% City Tax 641.97 688.46 46.48 7.240/6 School Tax 404.99 384.48 (20.51 ) -5.06% Metro Transit 26.57 24.34 (2.23 ) -8.39% Watershed 3 18.47 21.62 3.15 17.03% Mound HRA 20.52 25.80 5.28 25.74% Mosquito Control 8.77 9.43 0.66 7.50% Metro Council 15.04 17.11 2.07 13.74% Park Museum 11.80 13.15 1.34 11.38% HC Reg Railroad 9.63 16.51 6.88 71.39% Solid Waste 27.57 30.05 2.48 9.00% Hennepin Parks 48.76 58.48 9.72 19.93% Total 1.940.80 2.024.26 83.45 4.30°0 Less MVHC* 217.33 Net Total 1,723.47 *Market Value Homestead Credit 203.38 1,820.88 97.40 5.65% I:Z I-- Tax Capacity Year 2006 4,500.00 Year 2007 4,950.00 Percent Increase in Taxable Market Value: Homestead Property Value 450,000 495,000 10.00% State Tax 1 0.001 0.001 0.00 County Tax 1,845.72 1,936.89 91.17 4.94% City Tax 1,676.66 1,814.62 137.97 8.23% School Tax 1,057.73 1,013.41 (44.31 ) -4.19% Metro Transit 69.39 64.15 (5.24 ) -7.55% Watershed 3 48.24 56.97 8.73 18.11% Mound HRA 53.60 68.01 14.42 26.90% Mosquito Control 22.91 24.85 1.94 8.49% Metro Council 39.29 45.09 5.81 14.79% Park Museum 30.83 34.65 3.82 12.41% HC Reg Railroad 25.16 43.51 18.36 72.97% Solid Waste 72.00 79.20 7.20 10.00% Hennepin Parks 127.35 154.14 26.79 21.04% Total 5.068.85 5.335.51 266.66 5.26° Less MVHC* 0.00 Net Total 5,068.85 0.00 5,335.51 266.661 5.26° 0 *Market Value Homestead Credit (applies to properties under $413,779) m Tax Capacity Value Year 2006 3,150.00 315,000 Year 2007 3,150.00 315,000 Percent Increase in Taxable Market Value: 0.00% Homestead Property State Tax 1 0001 0.001 0.00 County Tax 1,292.00 1,232.56 (59.44 ) -4.60% City Tax 1,173.66 1,154.76 (18.90 ) - 1.61% School Tax 740.41 644.90 (95.51 ) - 12.90% Metro Transit 48.57 40.82 (7.75 ) - 15.95% Watershed 3 33.77 36.26 2.49 7.37% Mound HRA 37.52 43.28 5.76 15.37% Mosquito Control 16.03 15.81 (0.22 ) -1.38% Metro Council 27.50 28.70 1.20 4.35% Park Museum 21.58 22.05 0.47 2.19% HC Reg Railroad 17.61 27.69 10.08 57.25% Solid Waste 50.40 50.40 0.00 0.00% Hennepin Parks 89.15 98.09 8.95 10.04% Total 3.548.19 3.395.32 t LS 2.87 A.3106 Less MVHC* 88.90 Net Total 3,459.29 88.90 3,306.42 (152.87 -4.42% *Market Value Homestead Credit (applies to properties under $413,779) -10- City School Other 37.259 10.522 9.407 36.659 10.659 10.041 Year 2007 Metro Transit 1.296 Watershed 3 1.151 H RA 1.374 Mosquito 0.502 Metro Council 0.911 Mkt Val Rt Schl 0.098 HC Reg Railroad Auth 0.879 Park Museum 0.700 Mkt Val Rt Sid Waste 0.016 Henn. Pk 3.114 Total 10.04114 Education Credit T27M 390.00 -11- State 54.000 TaxHenn2007- 2006Final 54.000 11/30/2006 Year 2006 1.542 1.072 1.191 0.509 0.873 0.130 0.559 0.685 0.016 2.830 9.40683 390.00 ASSESSOR • Locates the property to be taxed, estimates its market value (how much the property would sell for in today's market), and assigns it to a class according to its use. • Sends out notices in the spring to "all property owners." - - - - Multiplies the estimated market value of each piece of property by the tax capacity percentage set by law for its class. The result is the tax capacity. • Adds together the tax capacities for all the property in the taxing district and gives the total to: Property owners who disagree with the assessor may appeal to: BOARDS OF APPEAL AND EQUALIZATION CITY OR TOWNSHIP BOARD OF APPEAL AND EQUALIZATION: • The city council or township board. • Meets between April 1 and May 31. COUNTY BOARD OF EQUALIZATION: • County board of commissioners. • Meets for two weeks in June. STATE BOARD OF EQUALIZATION: • Commissioner of Revenue.. • Meets between April 15 and June 30. • The review board may change the estimate of the market value of the classification. MINNESOTA TAX COURT: • Small claims or regular division. TAXING DISTRICTS (YOUR SCHOOL DISTRICT, CITY OR TOWNSHIP, COUNTY, ETC.) • Determine the services (such as street maintenance, fire and police protection) to be provided in the coming year. Estimate the costs of those services and determine what portion will come from property taxes. • Prepare proposed budget/levy amounts • Send final levy amounts to: . . . . . e . . . . . . . . . . . . . • . . E Hold Truth -in- Taxation (TnT) hearings on budgets (if required by state law). Send final levy amounts to: • • • • • • ! • • • • • • • • 0 • • • • • • • • FINANCE DEPARTMENT AUDITORITREASURER ; • Determines the tax capacity rates and also uses the state general tax rate by • dividing the proposed levy by the proposed total amount of tax capacity in the • taxing district. ' • Auditor uses state generaltax rate to computetaxes (certified by the Commissioner of MN Dept. of Revenue). • Calculates the amount of each property owne'r's proposed state paid credits and net tax amount. • Prepares TnT notice and.mails to each taxpayer. • Recalculates the amount of each property owner's tax based upon the final levy amounts. • Prepares a listing of the tax on all property owners in the county and gives the list to:• • • • • • • • • •• • • • • • • • • • • • • • . • • • • • • • • - • Creates the property tax statements from the county tax lists. • Mails the statements by March 31 of the following year. • Property owners mail in their payments (due in two installments on May 15 and October 15; except that the second installment of taxes on agricultural property is due on November 15). -12- A 4 THE DIAGRAM BELOW SHOWS THE STEPS IN CONTESTING YOUR PROPERTY VALUATION: VISIT YOUR LOCAL ASSESSOR'S OFFICE • Check the facts. • Compare neighboring property values. • Seek an adjustment. 3 -STEP APPEAL gy _ .... ....__. _ � ':- .:�s"- -Sri ,t'S:__ �i'� •.._+}. Y �. _.. a Y �""'t Nq ci _.- # ._ - ..--- .__..____..- __.. -.. —_— �� f `zl. 'T`�:l�n -.. `�EkwS j� ..<tS � '��.r • p , ma k A popm ITY OR TOWNSHIP "BOARD OF REVIEW" ;' ; • ie. ' Meets in Apr 1 r Maya 1 -STEP APPEAL Appea 'n erse�n or by letter t k >1 { ' Call city or township clek f'orxappointmente` '.M Sint { • kzw " OPE b COUNTY BOARD OF EQUALIZATION Meesor iyv eks in June. ., t i �p ell iFa PW b or by letter. "< i pCall c'our ty," r or assessor for appointment. • • APPEAL TO MINNESOTA TAX COURT • Appeal by April 30 of year following assessment. • ............. REGULAR DIVISION • Attorney recommended. • Decisions appealable to Supreme Court. • Can be used for any property. • Must be used for property assessed over $100,000. -13- SMALL CLAIMS DIVISION • Attorney not necessary. • Decisions are final. • Use for your home, or any property assessed under $100,000. r I � ` �tj j r �f. e WHAT THEY ARE, HOW THEY WORK The classification rates on selected properties for taxes payable are shown below: PROPERTY TYPE '06 CLASS RATE Disabled homestead up to $32,000 0.045% Residential Homestead Up to $ 500,000 1.00 Over $500,000 1.25 Residential Nonhomestead2 Single unit Up to $500,000 1.00 Over $500,000 1.25 2 73 unit and undeveloped land - —A-25 � � yXpM Apartments Seasonal Recreational Residential Regular 1.25 Af, y 1.00 Over $500,000 GommerGlal Jndustrial Public 11t ty Agricultural Land &Buildings m Homestead 3 Over $150,000 2 00 Up to $600,000 Electric generation machinery 2.00 Over $600,000 1.00 Nonhomestead 1.00 Seasonal Recreational Commercial S,. Homestead resorts 1.00, Seasonal resorts Up to $500,000 1.00 Over $500,000 1.25 PROPERTY TYPE '06 CLASS RATE Seasonal Recreational Residential Up to $500,000 1.00 Over $500,000 1.25 Agricultural Land &Buildings Homestead 3 Up to $600,000 0.55 Over $600,000 1.00 Nonhomestead 1.00 Miscellaous Properties Nonprofit servic g '-ations Fraternity /sorority houses :Manufactured home parkland IAetro indoor rec. facilities Y 1.5 ;r 1.00 1.25 1.25 r 'J M `�s "' � -Mpg `� Ilh ., ' School operating referendum levies. (sometimes called. "excess levy" referenda) and all county, city, and township referendum levies are levied on referendum market value. School debt levies are levied against all property based on net tax capacity. z Includes dwellings located on agricultural nonhomestead property. 3 House, garage, and one acre have same class rates and are generally treated the same as residential homestead. 44" z. Example: Suppose your home is valued at $90,000 and your local tax rate is 1.35 (135% of tax capacity) Then: Your Home's Tax Capacity = $90,000 times .01 =$900 Your Property Tax = $900 times 1.35 = $1,215 -14- MENi EGORICAL AID: Aid given to a local unit of government to be used only for a specific purpose. CIRCUIT BREAKER: See "Property Tax Refund." CLASS RATES: The percent of market value set by state law that establishes the property's tax capacity subject to the property tax. COUNTY PROGRAM AID: State property tax relief aid to counties, distributed with a formula based on needs (households on foodstamps, age of the population, number of serious crimes) and tax base equalization for counties with smaller tax bases. EDUCATION AID: The total amount of state dollars paid for K -12 education. This aid is paid to the school districts. FISCAL DISPARITIES: A program in the Twin Cities metropolitan area and on the iron range in which a portion of the commercial and industrial property value of each city and township is contributed to a tax base sharing pool. Each city and township then receives a distribution of property value from the pool based on market value and population in each city. GENERAL PURPOSE AID: Aid given to units of government to be used at their own discretion. Examples are Local Government -I and County Program Aid. HIGHWAY AID: Motor fuels tax and license tab money the state distributes to counties, cities and townships for highways and bridges. HOMESTEAD: A residence occupied by the owner INDIVIDUAL INCOME TAX: A state tax on the income of residents and non- residents with Minnesota sources of income that is deposited into the state general fund. LEVY: The imposition of a tax, associated with the property tax. LEVY LIMIT: The amount a local unit of government is permitted to levy for specific services under state law. LIMITED MARKET VALUE: A state imposed limit on property value increases for the purpose of calculating property taxes. LOCAL GOVERNMENT AID (LGA): A state government revenue sharing program for cities with low property wealth or high service burdens that is intended to provide an alternative to the property tax. LOCAL SALES TAX: A local tax, authorized by the state, levied on the sale of goods and services to be used for specific purposes by the local government. LOCALTAX RATE: The tax rate usually expressed as a percentage of tax capacity, used to determine the property tax due on a property. MARKETVALUE: An assessor's estimate of what property would be worth if it were sold. MARKET VALUE AGRICULTURE CREDIT: A state credit to reduce the property tax paid by agricultural homesteads to the local taxi n.g.jurlsdiction MARKET VALUE HOMESTEAD CREDIT: A state credit to reduce the property tax paid by a residential homestead to the Iota taxing jurisdiction. PROPERTY TAX: A tax levied on any kind of property. PROPERTYTAX REFUND: A partial property tax refund program for those who have property taxes out of proportion with their income. This program is available to homeowners and renters. SALES RATIO STUDY: A study conducted .by the Department of Revenue of open market property sales, which is then compared to local assessments to ensure that local assessments adequately reflect the market. STATE GENERAL PROPERTY TAX: A state - imposed property tax on commercial, industrial, and seasonal recreational properties. STATE SALES TAX: A state tax (6.5 %) levied on the sale of goods and services that is deposited into the state general fund. TAX CAPACITY: The valuation of property based on market value and class rates, on which property taxes are determined. ASSOCIATION OF � .r': -r *P m ® 0 0 atN N , 7. j MINNESOTA COUNTIES www.mncounfiies.org www.mnmsba.org -15- November 2006 LMC League of Minnesota Cities Cities promoting excellence www.imnc.org ASSOCIATION OF CIC MINNESOTA COUNTIES C1,Z$" PMm0,nB n r .7 �1� f9� ^F, f. 7' 'k, , LIP, THE MARKET VALUE OF A PROPERTY MAY CHANGE. • Each parcel of .property is assessed at_ least once every five years and a sales ratio study is done to determine if the' property is assess similarly to like properties. If not, the Commissioner of Revenue may issue an 'order' that would affect th:e taxable value of a parcel. • Additions and improvement made to a property generally increases its market value. THE MARKET VALUE OF OTHER PROPERTIES IN ' YOUR TAXING DISTRICT MAY CHANGE, SHIFTING TAXES FROM ONE PROPERTY TO ANOTHER. • If the market value of a property increases more or less than the average increase or decrease in a taxing district, the taxes on that property will also change. • New construction in a taxing district increases the tax base and will affect the district's tax rate. THE STATE GENERAL PROPERTY TAX MAY CHANGE. • The state legislature directly applies a State General Property Tax to commercial /industrial and season /recreational property classes. -16- J ? 7 THE CITY BUDGET AND LEVY MAY CHANGE. - Each year, cities review the needs and wants of their citizens and how to meet those needs and wants. This is called 'discretionary spending' in the city budget. Also included in the budget is non- discretionary spending which is required by state and federal mandates and court decisions and orders. • Each March, townships set the levy and budget for the next year. THE COUNTY BUDGET AND LEVY MAY CHANGE* In nts of their citizens and how to meet those also included in the county budget is non - iteandfederalrrmandafesand "cour�tdecisions ,ercent of the county expenditures are used tt,, µ �U ®CiET _ AAD BLEW MAY r • Th Le islature determines basic fundin% evels for K -12 education and mandates services �: e {'* � � � �� ,i h o(is must perk ©rm z On average proximately seventy percent of school costs '- = Cocaf- 'chool -'d'i µ nets set- Tevie-s-Tor purposes including safe school and community education, etc. A SPECIAL DISTRICT'S BUDGET AND LEVY MAY CHANGE49 Special districts such as the Metropolitan Council, hospital districts, watershed districts, drainage districts, etc. set levies to balance their budgets. �. SPECIAL ASSESSMENTS MAY RE ADDED TO YOUR PROPERTY TAX RILL. Water lines, curb and gutter, and street improvements that directly benefit your property may be funded, in whole or in part, through a special assessment that is added to your tax bill. -17- VOTERS. MAY HAVE APPROVED k. SCHOOL, CITY/ TOWNSHIP, COUNTY, OR SPECIAL DISTRICT REFERENDUM. • Local referendums may beheld for local government construction projects, excess operating levies for schools or many other purposes. • Referendum levies may, be spread on the market value or the tax capacity of a property depending on process and type of referendum levy. FEDERAL CHANGED. • Both the state and federal.governrm and follow certain rules. These mai reriiii o Aninfmni - -.- ----------- MANDATES @mom 1 governments to provide certain services ten req,w crease in the cost and level of AID AND REVENUE Ti,'MpSTA #`titi.� .� OVNTS MAY HA� . E C r NEED: „ '1 a# Z Ell L ry•1C ?\ ' 71 �v � ffi4 • Each year the state legislature reviews d adltq�the wje�el �f fundin Fo 4� etalr aids r+ „ provided to local governments includinglEocal Governrn'enn and ounty Program Aid. p g The formulas for how aid is determined aril disi a ° v t ve changed. • While direct aid and revenue from the feder I government ocal go e ments as declined R,, greatly in recent years, federal revenue coritr'nu"�°s owe a ke o i n of the local government revenue stream and that revenue stream may have changed. STATE THE LEGISLATURE j BASE .AwTORTION OF THE TA HAVE CHANGED TH PAID BY DIFFERENJ • A change in class rates will require a change in the tax rate to raise the same amount of money. ii OTHER STATE LAW CHANGES MAY BASES • Fiscal disparities, personal property taxes on utility properties, limited market value, and tax increment financing are example of laws that affect-property taxes. 1 , J -18- CATEGORICAL AID: Aid given to a local unit of government to be used only for a specific purpose. CIRCUIT BREAKER: See "Property Tax Refund." CLASS RATES: The percent of market value set by state law that establishes the property's tax capacity subject to the property tax. COUNTY PROGRAMAID: State property tax relief aid to counties, distributed with a formula based on needs (households on food stamps, age of the population, number of serious crimes) and tax base equalization for counties with smaller tax bases. EDUCATION AID: The total amount of state dollars paid for K- 12 education. This aid is paid to the,school districts, � f LOCAL GOVERNMENT AID (LGA): A state government revenue sharing program for cities with low property wealth or high service burdens that is intended to provide an alternative to the property tax. LOCAL SALESTAX: A local tax, authorized by the state, levied on the sale of goods and services to be used for specific purposes by the local government. LOCAL TAX RATE: The tax rate usually expressed as a percentage of tax capacity, used to determine the property tax due on a property. MARKET VALUE: An assessor's estimate of what property would be worth if it were sold. MARKET VALUE AGRICULTURE CREDIT: A state credit to reduce FISCALDISPARITIES: A program in theTwin Cities metropolitan the property tax paid by agricultural homesteads to the local area - andontherror-range -n which-a- portion -of the commercial— taxin j urisdiction - - -- - _ _. and industrial property value °f ool Each city o and township contributed to a tax base sharing pool. value from the pool then receives a distribution of property based on market value and population in each citya GENERAL PURPOSE AID: Aid given to units ofgovernmentto be �- at their own discretion. Exampies are Locai Government ind County Program Aida HIGHWAY AID: Motor fuels tax and license tab money the state distributes to counties, cities and townships for highways and bridges. HOMESTEAD: A. residence occupied by the owner. INDIVIDUAL INCOME. I TAX :. A state tax on the income of residents and non- residents with Minnesota sources of income that is deposited into the state general fund: LEVY: The imposition of a tax, as with the property tax. LEVY LIMIT: The amount a local unit of govern mentis permitted to levy forspecificservices under state law. LIMITED MARKET VALUE: A state imposed limit on property value increases for the purpose of calculating property taxes. MARKET VALUE HOMESTEAD CREDIT: A state credit to reduce the property tax paid by a residential homestead to the local taxing jurisdiction. PROPERTY TAX:, A tax levied on any kind of property. PROPERTYTAX REFUND: A partial propertytaxrefund program for those who have property taxes out of,proportion with their income. This program is available to homeowners and renters. SALES RATIO STUDY: A study conducted by the Department of Revenue of open market property sales, which is then compared to local assessments to ensure that local assessments adequately reflect the market. STATE GENERAL - PROPERTY -TAX: A "state - imposed property tax on commercial, industrial, and seasonal recreational properties. STATE SALES TAX: A state tax (6.5 %) levied on the sale of goods and services that is deposited into the state general fund. TAX CAPACITY: The valuation of property based, on market value and class rates, on which property taxes are determined. www. mncounties.org www mnmsba.Orq -19- November 2006 L.M__ Leagu¢.'of Minnesota Cities Citiea'prorrtotirig excel once www.imnc.orcl