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Home My WebLink About08.18.99 Work Session Packet '\ City of Farmington 325 Oak Street, Farmington, MN 55024 (651) 463-7111 Fax (651) 463-2591 www.ci.farmington.mn.us CITY COUNCIL WORKSHOP PROPOSED 2000 BUDGET City Hall Council Chambers Wednesday, August 18, 1999 - 7:00 p.m. TENTATIVE AGENDA 1. CALL TO ORDER 2. ADOPT WORKSHOP AGENDA 3. PROPOSED 2000 TAX LEVY/TAX RATE 4. REVIEW OF GENERAL FUND REVENUES 5. 2000 PROPERTY TAX IMPACT REVIEW 6. PROPOSED 2000 BUDGET PRESENTATION 7. CITIZENS JURY ON PROPERTY TAX REFORM 8. COUNCIL REVIEW AND DISCUSSION 9. ACTION ITEMS 10. ADJOURN City of Farmington. Minnesota Property Tax Levy General Fund Levy Certified 1998 1,153,616 Certified 1999 1,141,465 2000 Proposed 1,116,068 Debt Service Funds Supplemental Levy 42,608 105,509 154,605 Against City Property 361,239 349,491 244,845 Equipment Certificates 146,153 915,000 150,550 *Total Debt Service 507,392 550,000 550,000 Capital Project Levy 100,000 Fire Levy 45,000 50,000 50,000 Total City Levy 1,706,008 1,741,465 1,816,068 1,706,008 1,741,465 1,816,068 TOTALLEW Tax Capacity Rate 33.640% 33.066% 32.000% **Adjusted Tax Capacity Value . $ 5,071,397 $ 5,266,619 $ 5,675,213 *2000 Debt Service Levy is based on City's Debt Management Study. ** Adjusted Value determined by deducting Fiscal Disparities and Tax Increment estimates. Determination of Proposed 2000 Tax Capacity Rate Fiscal Disparities Dist. (1) $ 1,273,717 X 1999 Tax Capacity Rate of equals $ 421,168 in Fiscal Disparities Distribution the City of Farmington will recieve in 2000 33,066% Farmington requested levy for 2000 is 2000 2,641,645 1999 2,529,924 1998 2,496,208 Minus Fiscal Disparties Distribution 421,168 393,478 395,272 Minus HACA\LPA Credit 404,409 394,981 394,928 Minus Equalization Aid Equals Levy to Collect (2) $ 1,816,068 $ 1,741,465 $ 1,706,008 (3) 6,981,613 6,376,496 6,073,948 (4) 412,590 364,356 359,203 (5) 893,810 745,521 643,348 $ 5,675,213 $ 5,266,619 $ 5,071,397 1,816,068 (adj, Levy) divided by $ 5,675,213 $ 5,266,619 $ 5,071,397 ..32.0000% 33.066% 33.640% 2000 NetTax Capacity Value Less Local contribution to Fiscal Disparities Less Amount to Tax Increment Amount used to determine Tax Capacity Rate 2000 Tax Capacity Rate will then be (adj, tax capacity value) equals: (1)According to County Properly Tax Division, (2)State mandated Levy Limit 2000 = $ 2,452.246 (3) Estimated 2000 GTCV as of Dakota County 7/1/99 @ 99% , (4) Dakota County 8/10/99 (5) Estimated as of Dakota County 7/1/99 REVISED8118/99 co 0 0 0'> 0 0 0 LO I C") 0 LO 0 0 0 0 0'> N N N_ '<t_ LO 0 LO 0 0 t-- CO t-- CO '<t ..0 .... ci 0 CO .... 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A commitment to maintain the 2000 Local Tax Capacity Rate at the same level as in 1999 . The Proposed 2000 Budget reduces the local tax capacity rate from 33.1 to 32 percent. . A fiscal goal that works toward establishing the General Fund Bah.nce at no less than 25% . The Proposed 2000 Budget continues to move the general fund balance upwardsfrom 19.38% to 22.35%. . A commitment to maintain the 1999 Debt Service Levy at no more than 25% . The Proposed 2000 Budget maintains the debt service levy at 20.9% of the total City Levy. 2000 Council Budget Guidelines (continued) . A comprehensive review of the condition of capital equipment to ensure the most cost-effective and consistent replacement schedule . The Proposed 2000 Budget recommends approximately $1,031,292 in new and replacement capital equipment spending to ensure the City can meet expanding service delivery challenges. . A team approach that encourages strategic planning to meet immediate and long-term operational, infrastructure and facility needs . The Proposed 2000 Budget is the product of a team approach by all departments to meet service goals and operational needs. . A management philosophy that actively supports the implementation of Council policies and goals and recognizes the need to be responsive to changing community conditions/concerns. . The Proposed 2000 Budget is a reflection of conservative. yet reality-basf'd budgeting in response to a rapidly growing community. City Growth 1990 thru Mid-I999 1990 Mid-1999 % Change Population 5,940 11,468 93 Streets (miles) 31. 89 62 94.4 Cul-de-sacs 21 64 204.8 Storm Sewer(miles) to.58 28 164.7 Water Main (miles) 35.06 61 74 Sanitary Sewer (miles) 25.91 55 112.3 Parks -Developed acres 91.62 135.5 47.9 Parks- Undeveloped acres 0 200.6 200 Trails - miles 1.0 6.3 630 Police Accidents 158 202 28 Crimes Reported 832 1,250 50.2 Calls for Service 5,235 6,158 17.6 Fire/Medical Runs 264 430 62.9 Housing Units 2,064 3,974 93 19:99 Net T'ax Ciapacity C:omposition City Tax Base by Property Group Commercial 8.7% . Residential . Commercial . Industrial . Utility . Agricultural . Apartments . Other Proposed 2000 vs 1999 Adopted Tax Levy Comparison levies By Percentage and Use Debt Service 30.0% 1999 Adopted Debt service 31.6% Gen.a-ral Fund 6&.5% General Fund 61.8% Total: $1,831,503 Total: $1,741,465 Total City Revenues - All Funds, 2000 Proposed Revenues By Fund Enterprise 31.9% General Fund 35.9% Total: $11,813,022 General Fund Revenues 2000 Proposed Other 12.1% rges for Services 6.5% Fines & Forfeit 1.1% 1999 Adopted Intergovt 26.6% Charges for Services 5.5% Fines & Forfeit Property Tax 1.2% 37.2% Intergovt 26.4% Property Tax 39.9% Total: $4,236,467 Lie & Permits 17.8% Total: $3,849,424 General Fund Expenditure T'rend 5 4 3 2 o 1990 1991A 1992A 1993A 199AA 1995A 1996A 1997A 1998A 19998 2000P Propiosed 2000 General Fund Elxpeoditures By Category of Expenditure Charges for Services 30.5% ,....".ISer.1ces 63.9% P'200011999 Comparison of Department Expienditures 2000 Proposed 1999 Adopted Public Works 16.7% Finance 7.3% Port<. & Roc 20.0% Finance 7.3% Port<. & Rec 17.1% Total: $4,197,128 Fire 6.1% Total: $3,806,460 1999 T'otal Tax Cap,acity Rate School Dis!. 52.4% 1999 Tax Capacity by Jurisidiction Special Dis!. 1.9% J EFFERSON CENTER For New Democratic Processes FOUNDED 1974 Tel 612.926.3292. Fax 612.926.3199 3100 West Lake Street. Suite 405. Minneapolis. Minnesota 55416. USA mail@jefferson-center.org . www.jefferson-cenler.org Citizens Jury@ on Minnesota Property Tax Reform Minnesota State Capitol & Minnesota Department of Revenue August 2-6, 1999 The Citizens Jury on Minnesota Property Tax Reform is being conducted by the Jefferson Center, and is sponsored by the Minnesota Department of Revenue, with the support of Governor Jesse Ventura. The Project Eighteen citizens from across Minnesota have been chosen from a randomly - identified jury pool to serve as a representative microcosm of the state. During five consecutive days in August, the jury will hear expert witness presen~ations on a range of issues and perspectives related to the property tax system. The jury will then deliberate together to develop recommendations about property tax reform. The Objective In addition to providing the Governor, the Department of Revenue, legislators, and the public with thoughtful recommendations about property tax issues, the work of the Citizens Jury will serve as a catalyst for tax reform discussions with citizens in comm~rities across the state. The Citizens Jury Process The Citizens Jury is a unique process that allows decision-makers and the public to hear from citizens who are both informed .and representative. Sufficient time is allowed for discussion and deliberation by the jurors to develop thoughtful and useful recommendations. The Need Property tax reform is a key area of interest for the Ventura Administration. Governor Ventura and the Minnesota Department of Revenue want to hear from citizens about what the residents of Minnesota truly want done regarding property tax reform in Minnesota. The Jefferson Center is a nonprofit, nonpartisan organization committed to generating thoughtful citizen input on matters of public significance. Please call the Jefferson Center at 612-926-3292 with any questions about this Citizens Jury project or the Citizens Jury process, or visit the Jefferson Center website at www.jefferson-center.org. .~> Juror Recommendation Contents I. QUESTION #1: What role should the property tax play in financing local governments? Recommendation Contents: 1. Chart of local government revenue options 2. Recommendation statements 3. Prioritized principles for financing local governments - . II. QUESTION #2: What should be done to improve the property tax system? (Le. how can the property tax be a "better tax?") Recommendation Contents: 1. Principles,prioritized 2. Evaluation of current system on principles 3. Reform proposals: Evaluation on principles Strel1gths and weaknesses 4. Recommended improvements to the current system III. Definition of Tax Principles :::> fJ) (1) (J ~ ~ o UJ (1) ~ ~ (1) > (1) ~ - m (J o -J ~ o · ---.a m ~ -- _ "'0 C'-J .r:::. C") (U a3 C") .2> N s:: E ::S o E .- 0 0')(.) Q)~ 0:: --- 0- '- c ....~ Q) L- ~8 -- -g C'-J -5 C") ~C")~N E - 0 o (.) O~ J: (.) tJ)- c 0) L- L- :J U -- -- O)N 3: 0 N 0 0 0 0 ~ > ~ 0 ~ (0 ~ '=- + ~ o (j) . L{) N + ~ o o . o I ~ o o . o - -- 0)0 3: 0 _ 0 '0 > ~ 0 ~ ... ~ '=- + ~ o N . en N + ~ o o . o -- -- -g L() -5 en >0, 0 3: 0 0) ~ .- C") C") 0 ~ E ::S ~ '=- ~~ ~(.) s:: 0) ~o::: o U"E 0) L- L- :J U -+ ~ o en ~ ~ 00 I ~ o o . o ~oooo + I cF. cf2. o 0 . . o 0 "'0 2" '"""':'- coO) 0 0) C'-J 3: ~ 0) ~ .- ,..,.... > N 0 ~ E .r:::. ....,/ ro - ......... .................. E o (.) 0) 0::: s:: ~ o I- -- ~ .... - .- c U~ L- :J U -+ ~ o N . C") C") ~ t:: Cl> >< o.~ 0.... ~ 0. C'f)o 000 . . cF. cf2. en 0 . . N 0 >< - ~ ~t- o (J) o Cl> ..J- ~ U) _(1) ~ E >< o 0 ~ Oot- ..Jc: L() 0 r-- L() L() N + ~ o L() . M L() ~L() + ~ o I'- . N o CO 0 0 C") N N ~ + ~ o I'- . <0 N en ~"L() ~ ~ N + ~ o o . o ~ ~~ (J)Cl Cl> ~ (1) ~ u..s::. (.) ~ 0 N T""" I ~ o CD . o N. o 0 N 0 CO I'- CO + ~ o ~. . ex:> <0 C'f)L() MN + ~ o ~ ~ M 0'> <0 L() C") N T""" + ~ o en . M N "C .- <( Cl> +'" ~ +'" U) CJ) CJ) ~ 0) o .20) o ro.r:::. o >- .='0 ~ 0) .r:::..E - :J oC/) 0) 0) o O).r:::. (;' ro..... L- o 0)::. o > 3: ro 0 ~ 0);- .r:::.C/) .....ctl . "C "'00) - 0)- .......- - CJ) . 0..... ro = 0) o "S C/) .f: O (.).- "'0 -roC/)c ~ (.) 0) :J .... :J 0 ... ctl L- ~>"C _L-C 0)"0:; ro .......0 L...r:::. ~ 0-"'" 0) - C' o 3: '0 "51 o C/) 0) ro 0) :J ~ ~ :J_> -rororo > > .r:::.3:B "2>.Q 0) ~ .r:::. 0) :J o "'O.r:::. "0 o c- 0 o ro"O~ .co ~ 3: ro 0 0:: T""" --~>. 0) 0):0=- O):C ~ - ~:: X :::::::; 0) CJ) 0) 00 >ctl_ ro"C co o O)O):J .r:::. - 0- ~ ..... "~ 0) - C/) 0 00'- c -roC/)>. :J ~ ro ~"2roE o >>_ o -0 L- C o c'- 0) - ~ E ~ CJ) _ C ro _ L.. tOO) ro 0) > .r:::.:Jo " _ 0) o ..., ctl - e;::::: 0) > 0 O .r:::..r:::. ,,, - 0) '" O "'0"- > O).r:::.~ ~ CD O).r:::. -.r:::.(.) 0.- ro E :: . 0) o 0) L.. (.) > 0 ..J en.ctl- <( L- - CJ) o C/) 0) I- ::; CO 0) O - "'0 CO 0) 0) L- .... - 0) l-""'-C/)> r-.....=co I ~( Recommendation Statements; In response to charge question number' one, we recommend: . less reliance on property tax across the board. . minimal changes in the use of local sales taxes. . NOt to create a new tax in the form of a local income tax. . state aid should 'play a greater role in funding schools. . more reliance on fees & charges across the board. . an increase in state aid due to increasing state mandates. . a direct connection between fees & charges and the services. Through this process, there has been a realization that by reducing property tax, . there is a shift to other taxes (local sales, fees & charges, and state aid) but we are hesitant to add any new taxes. . After the education that we have received, we understand the importance of educating the public about property taxes and the related issues. I' .Prioritized Principles for Financing Local Governments: The jurors were given an 9Pportunity to prioritize the principles for each level of local government. They were asked which principles are most important when determining the distribution of revenue sources for financing local government. Each juror was permitted to Iist.as many principles as he/she felt were most important for each level of government. Their prioritized principles for financing local governments are below. CitylT own: 1. Fair (12) 2. Accountable (9) 3. Reliable (5) 4. Administrative Efficiency (4) T-5. Simple & Understandable (3) T-5. Visible (3) 7. Competitive (1) County: 1. Accountable (12) 2. Fair(11) 3. Reliable (6) 4. Visible (4) 5. Simple & Understandable (2) ~.', Schools: 1. Fair(11) 2. Accountable (10) 3. Reliable (8) 4. Visible (4) 5. Simple & Understandable (3) T-6. Administrative Efficiency (1) T-6. Competitive (1) Metro/Regional: 1. Fair (14) 2. Accountable (7) 3. Administrative Efficiency (4) 4. Visible (3) T-5. Reliable (2) T-5. Simple & Understandable (2) T-5. Competitive (2) ! ......... Evaluation of Reform Ideas: The jurors evaluated each of the major reform ideas that were presented to them. They evaluated each proposal on their top four principles, as prioritized on the previous page. The jurors were asked, for each principle, whether implementing the reform proposal would improve,deteriorate, or have no effect on that prin_ciple. (1.) .Q 0) co ::c -0 ~(1.) c co ~co 0)..... ..... ..... _co c (1.) ~ .Q::J ::J coO" 0 -(1.) L... :=(1.) (,) Q.-c E co (1.)-0 (,) ._ c LL ~<( <( 00:) 1~ 4~ 12 ~ 13 ~ Unified System 2 - 10 - 4- 4- 14 ~ 3~ 1~ O~ 7~ 12 ~ 10 ~ 10 ~ Limited Market 7- 0- 6- 5- Value " 3~ 5~ 1~ 2~ - 2~ 5~ 12 ~ 16 ~ Acquisition Value 8- 6- "'3- 0- 7~ 6~ 2~ 1~ .j.:- Strengths and Weaknesses of Reform Proposals Unified System: . Strengths . Simple & understandable . Prevents classification tinkering . Administratively efficient . More visible . Eliminate huge discrepancies . Could have positive impact on business Limited Market Value: Strengths . Dependable - you know your rate , i ~ . Long-term planning for homeowners 'c. . Will protect elderly or others who may be affected by increased property value . Relief on the appeal process - not as dependent on the assessment process . Eliminates volatility . Holds local officials accountable for raising local tax rates . May encourage homeowner improvements Weaknesses . May be harmful to low-income people . Less fair to some groups . May shift property tax to homeowners, farmers . Does not discriminate between types of income-earning properties . Viewed as regressive - not tied to ability to pay . Might influence cities near MN state borders> . Would take time to change over to it Weaknesses . Money would need to come from somewhere . May be legitimate reasons to raise the market value more than the limit . Could shift property tax burden from one part of the state to another . Could shift burden of taxes from fast-growing properties to slower- growing properties . Regressive -? \ Acquisition Value: Strengths · You know the value of your house · Does not tax appreciation . Simple " . Eliminates administrative costs . Easier to administer (fewer assessors) . Accountable to building permits vs. assessors . New owners know value at purchase Weaknesses · Does not allow for depreciation · Two equal value homes can be subject to different tax burdens · Burden shifted to new buyers · Unbalanced tax · Does not tie to benefits Site Value Taxation: We feel that we do not have enough information to make educated recommendations regarding site-value taxation. Consumption Based Taxation: We feel that we do not have enough information to make educated recommendations regarding consumption-based taxation. ;) ;) RecommendedJmprovements to the Current Property Tax System . Note: The number in parentheses indicates the number of jurors who voted in favor of the statement. . Decrease and simplify the number of classes and subclasses, without the intent of going to a unified system. (17) Reasoning: simplification, understandability, keeping some classes helps keep it more fair, fits the criteria for a "good tax" . Re-evaluate current credits. Eliminate credits that are no longer valid. Establish a regular & planned review. Require any new credits to have an automatic sunset provision (17) _ Reasoning: economies are subject to change, considers ability-to-pay . The state should provide funding (through state sales and income taxes) for state mandates to local governments. (Le. No unfunded mandates) (17) . Public Education: - Local governments should send out educational fliers with property tax statements. (17) - Educate public of all classifications, credits and circuit breakers. (17) - After assessment, mail out a copy of the assessor's evaluation to the property owner. (17) - Require disclosure to tenants of amount of rent going to property taxes. (17) Reasoning: accountability, understandability, visibility. . Re-evaluate the current exemptions. Establish sunset provisions for new exemptions. Establish a planned and regular review of current exemptions. (17) Reasoning: the ability to and property usage may change. . Examine the possibility of counties setting their own classifications and rates for all properties within their counties (17). [For example, counties may examine the potential for a bottom tier that is exempted from property tax (Le. the first X dollars of a property's value aren't exposed at all). Also, counties may consider changing the tier "break-point" of homestead classification from $76,000 to something else.] Reasoning: accountability, more administrative efficiency, more reliable & accurate, county would look at property and know value . Proceed with the study to determine the cost to collect one dollar of property tax. (cost-benefit & administrative effi?iency study). (17) . Pursue further examination of: site-value taxation (16) land consumption-based taxation (16) -.) ') . Address the problem with tenants' disproportionate property tax burden. (16) Reasoning: fairer, ability-to-pay, visibility, educate public about tax that tenants pay . Make the appeals process simpler and more understandable. (16) . Establish a process to hold assessors accountable. [For example. the use of priv~te assessors and an appeals process to -an arbitration board.] (16) Reasoning: This will help keep assessments closer to market value. . Eliminate penalties for home improvements (15) Reasoning: fairer, sustain property value, competitive. . Impose a reasonable cap on property valuation. Use the Consumer Price Index or a max of 5% for this cap. (9) Reasoning: Eliminates volatility, simplifies the appeals process. . Create property tax incentives to promote the construction of new apartment at the county or regional level. (7) Reasoning: responds to ne~ds for more apartments in some areas & regions of the state. . . . .-:1 ,