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I I I Council Meeting Minutes December 7, 1998 Page 3 Truth in Taxation Hearing. continued The four principles which guide the development of the budget finances are: · The budget should be fully funded . Customer charges should be used where individuals receive special benefit · Taxes should be minimized · Interest and principle of the reserves should provide a supplement to reduce the tax need for the budget Customer charges represent the greatest challenge in financing the General Fund where a lack of growth has created a shift toward property taxes. A greater reliance on property taxes is expected to be permanent as building activity and street work decline. The 1999 customer charges will be $40,000 less than in 1998. Revenue allocation for the general fund involves: Customer Charges - $2,400,000 or 26%; State Aids- $1,867,000 or 20%; Taxes - $3,097,000 or 33%; and other - $1,886,000 or 21 %. The City's tax levy for 1999 will be $3,097,000, which is $137,000 above last year. The change is the result of increases in costs and decreases in customer charges. The municipal tax rate is a measure of the total levy against the total value of properties to be taxed. The tax rate makes for reliable comparisons of taxes between communities. New Brighton's tax rate is 20.256% which is competitive with neighboring cities. Samuelson asked for further clarification of the budget and levy increases. Egan explained that the General Fund portion will increase 3.24%, and as customer charges provide a smaller portion this will create a push on property taxes. Also, class rates are decreasing for higher valued properties which then shifts taxes to lower valued properties. Significant decreases in that portion of school district taxes can be attributed to increased State Aid funding. Market values for 74 % of New Brighton homes have seen increases, and the median valued home is $115,000. The following is a sampling of tax changes to residential property values: $75,000 - $6 increase, $115,000 - $10 increase, $165,000 - $10 decrease, and $310,000 - $34 decrease. Samuelson commented that if 74 % of New Brighton homes have seen increased market values, would that also mean increased taxes. Egan explained that homes valued over $300,000 have seen valuation increases, however, class rates have decreased resulting in decreased taxes. Egan will perform additional research to determine the percentage of properties which will see an overall increase in property taxes. Benke said initial budget needs identified in April equated to an 18 % increase over the 1998 Budget. Through much effort, that amount was reduced by 7 % when the maximum levy was established in September. The current proposal reduces that amount to 4.62 %. He is hopeful additional reductions will be identified before December 22. Council praised staff for their work in maintaining a realistic vision while continuing to keep taxes down. Budget information is available for public review at City Hall. There were no comments from the audience. Motion by Gunderman, seconded by Samuelson, to CLOSE THE TRUTH IN TAXATION HEARING. 4 Ayes - 0 Nayes, Motion Carried. Public Hearing Truth in Taxation Hearing Report 98-230