December 1, 2009. Presentation Outline Budget Purpose and Process Proposed 2010 General Fund Budget Expenditures Revenues Proposed 2010 Tax Levy Basics.

December 1, 2009

Presentation OutlineBudget Purpose and ProcessProposed 2010 General Fund Budget

ExpendituresRevenues

Proposed 2010 Tax LevyBasics of Property TaxesCity of Delano Tax LevyCalculation of Property TaxesComparisons

Summary

Budget Purpose and ProcessThe Budget is a tool utilized by the City to

allocate resources towards goals and priorities for the City.

The Budget is the catalyst that drives the City’s actions for the following year.

The Budget is a tool to reach an end – providing the highest quality services in a fiscally responsible manner.

Budget Purpose and ProcessNeeds and priorities determinedGoals establishedCapital improvement plan updatedDetail budgets preparedPreliminary budget and tax levy approvedRevisions to the preliminary budget and tax

levyFinal budget and tax levy presented and

approved

Proposed 2010 General Fund Budget - ExpendituresTotal General Fund Expenditures - $2,506,782

Proposed 2010 General Fund Budget - Expenditures 2008 - $2,473,875 2009 - $2,564,436 2010 -

$2,506,782

Proposed 2010 General Fund Budget - Expenditures General Fund Total Expenditure Budget for the Past Five Years

Proposed 2010 General Fund Budget - ExpendituresItems Impacting Expenditures

EconomyRevenue Restrictions

Property Tax Levy Limit Local Government Aid Unallotment

Needs to Fund Matching Grant/Project Awards Barb King Inspiration Park Old City Hall / Community Room Rehabilitation

Grant

Proposed 2010 General Fund Budget - RevenuesTotal General Fund Revenues - $2,506,782

Proposed 2010 General Fund Budget - Revenues 2008 - $2,473,875 2009 - $2,564,436 2010 -

$2,489,747

Proposed 2010 General Fund Budget - RevenuesItems Impacting Revenues

EconomyRevenue Restrictions

Property Tax Levy Limit Local Government Aid Unallotment

Needs to Fund Matching Grant/Project Awards Barb King Inspiration Park Old City Hall / Community Room Rehabilitation

GrantDecrease in Licenses and Permit Revenues

Proposed 2010 General Fund BudgetSummary

Balanced General Fund Budget2.3% Decrease in budgeted General Fund

Expenditures from 2009 Original Budget15.55% Increase in General Fund Tax Levy

Proposed 2010 Tax Levy – Basics of Property TaxesHow are property taxes calculated?

How can the property taxes I pay go up when my assessed valuation goes down?

Property taxes support three levels of government – City, County, and School District

State establishes a formula for how taxes are divided amongst properties

Proposed 2010 Tax Levy – Basics of Property TaxesFactors that influence the Tax Levy

Market ValueTax CapacityClass RatesState AidsCity Budget and Debt LeviesCounty BudgetSchool District Operating and Debt Levies

Proposed 2010 Tax Levy – City of Delano Tax LevyProposed 2010 Tax Rate – 42.432%Actual 2009 Tax Rate – 35.040%The City establishes a levy amount based on

three factors:General Fund (general operations of the City)Debt ServiceTax Abatement

Proposed 2010 Tax Levy – City of Delano Tax LevyThe general operations levy is $1,915,101

The levy increase for 2010 is $257,784 or 15.55%

This compares to a levy increase of $42,622 for 2009

$160,631 of the 2010 increase is for 2008 and 2009 Local Government Aid (LGA) Unallotments

Another $52,220 is for the decrease in LGA from the State from 2009 to 2010

Proposed 2010 Tax Levy – City of Delano Tax LevyThe debt levy is $373,000

2001 debt service - $50,000Fire station debt service - $92,0002006 street reconstruction debt service -

$159,0002009 street reconstruction debt service -

$72,000Tax abatement levy is $100,000

Projected taxes paid by Delano Crossings exceed $100,000 in 2010

Proposed 2010 Tax Levy – City of Delano Tax LevyTotal levy for 2010 is $2,388,101Levy increase of 16.53% from 2009Result: Tax rate increase of 7.392% from

2009. Why?EconomyStatewide funding problem

Proposed 2010 Tax Levy – Calculation of Property TaxesEach property has an assessed market valueClassification rate is applied to market value

to determine the taxable value of the propertyEach type of property has a different classification rate

(homestead - 1.0%, commercial - 1.5%, etc.)Example: $200,000 x 1.0% = $2,000

Taxable value of the property is then applied to the tax rate to determine the taxes due

Each taxing entity (City, County, School) establishes a rate, and the sum equals the total tax rate

Proposed 2010 Tax Levy – Calculation of Property TaxesPreliminary tax rates for 2010

City 42.432% (35.040% in 2009)County 36.049% (32.567% in 2009)School 26.869% (25.089% in 2009)Total preliminary tax rate 105.350% (92.696% in

2009)

An example for a $200,000 homesteaded property with a decrease in assessed valuation of 5% from 2009 is shown on the next slide.

Proposed 2010 Tax Levy – Calculation of Property TaxesTaxable value x tax rate = property tax

($1,900 x 105.350% = $2,001.65)

2009 2010 2010*City of Delano 700.80$ 848.64$ 806.21$ Delano School District 501.78$ 537.38$ 510.51$ Wright County 651.34$ 720.98$ 684.93$ Total Property Tax 1,853.92$ 2,107.00$ 2,001.65$ Change from 2009 to 2010 13.65% 7.97%* - 2010 taxes with a 5.0% decrease, from 2009, in market value ($190,000 homestead)

Proposed 2010 Tax Levy – ComparisonsOf the 17 Cities in Wright County, Delano has

the sixth lowest proposed City tax rate

Proposed 2010 Tax Levy – ComparisonsOf the 17 Cities in Wright County, Delano has

the third lowest proposed total tax rate

Proposed 2010 Tax Levy – ComparisonsCity Tax Rates for the past 10 years

SummaryBalanced General Fund Budget

General Fund Budgeted expenditures are lower in 2010 then where they were in 2007

The overarching goal is to provide the highest quality services in a fiscally responsible manner