WORKSHOP ITEM - Joe Huss, Finance Director
Title
2021 TAX LEVY SCENARIOS
Background
As a follow up to the tax levy discussions that took place at the fall retreat, Staff has developed additional levy scenarios for Council to consider.
Preliminary Tax Levy
The Preliminary Levies were adopted Monday, September 21. Per Council direction, the total of all preliminary levies were set such that the combined tax rate equaled the combined tax rate for 2020 (36.802%). Under estimates based on the best property value information available from Anoka County at that time, staff estimates indicated that levies with a combined rate of 36.802% would allow for a total increase in all levies of $2,335,000. The preliminary allocation was:
General Fund - Up $2,435,000 to $28,335,000
Pavement Management - No change: $100,000
Debt Service - Up $25,000 to $4,900,000
Parks & Trails - No change: $350,000
EDA - Decrease of $125,000 to $700,000
The latest information from Anoka County indicates the Preliminary Levies would produce a tax rate of 35.892% - almost a full percentage point lower than the target rate. At the Council Retreat held on October 3, the budget review presented that the General Fund levy could be reduced by $600,000 and the fund would still maintain the City Charter required safe margin of revenue over expenditures. Council discussed various final levy scenarios or options and the consensus at the retreat was to revisit the discussion at an upcoming Workshop and provide direction on a recommended final levy.
Those scenarios to be discussed are as follows:
1. Reduce the levy by $600,000. This would reduce the tax rate by about 1.6% to 35.18%. The impact on a home valued at $250,000 would be a reduction in Blaine taxes of $38. There did not appear to be Council consensus on this option.
2. Levy the full amount as adopted in the preliminary levy and reallocate the $600,000 to other uses. Council discussed an allocation of $75,000 of the levy to set aside for the construction of a band shell at Aquatore Park. This would represent a partial match of the $150,000 that was donated by the Blaine Festival Committee for this purpose. From the discussion, there seemed to be general support on the Council for this appropriation. As for the remaining $525,000 Council has had discussions of setting aside a portion of the levy for needs that might arise in the future - strategic priorities that are not yet fully developed; an economic downturn reserve to be used as a funding source to maintain service levels without putting undue pressure on increasing the tax levy; or a funding source for future capital equipment purchases and building maintenance/improvement needs.
3. The third option is would be a hybrid of the first two, where the levy is reduced by an amount less than $600,000 with the remainder allocated to certain programs as the Council directs. There was general consensus among the Council at the retreat to bring this scenario forward for more discussion.
Recommendation
Staff is requesting Council discuss the above and provide direction as to the Final Levy that would be incorporated into the 2021 Budget and discussed at the Truth-In-Taxation public hearing in December.