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HomeMy WebLinkAbout2006 Understand Tax Bill-Lakeville Judy Holst From: Eric A. Johnson Sent: Monday, January 23, 2006 9:01 AM To: Judy Holst Subject: FW: MV Credit cuts Attachments: UnderstandingYourTaxBill.pdf; UnderstandingYourTaxBill _CityShare.pdf UnderstandingYour UnderstandingYour TaxBill.pdf (... TaxBill_CityS... Judy, You might find this info interesting eric - - - -- Original Message---- - From: Mielke, Steven [mailto:smielke @ci.lakeville.mn.us] Sent: Thursday, January 12, 2006 7:00 PM To: Bob Derus; whipple56 @yahoo.com; 50lakes @emily.net; administrator @cityofafton.net; alo @wayzata.org; amadsen @ci.maple- grove.mn.us; bheitkamp @ci.champlin.mn.us; birchwoodvillage @ comcast.net; bnelson @ci.spring- lake- park.mn.us; bstock @ci.savage.mn.us; cdawson @ci.shorewood.mn.us; cgridley @ci.woodbury.mn.us; chad.adams @ci.medina.mn.us; chip @ci.forest- lake.mn.us; cityclrk @visi.com; cityofelko @integraonline.com; cityoflo @uslink.net; clerk @emily.net; craig .ebeling @ci.burnsville.mn.us; craig @ci.oakdale.mn.us; ctyegull @scicable.com; ctygarri @frontiernet.net; danay @cityofdeephaven.org; Daniel Buchholtz; debs @ci.cohasset.mn.us; dellwoodcityhall @ comcast.net; dennis.coryell @ci.baxter.mn.us; dlarson @centervillemn.com; dlotter @ci.minnetrista.mn.us; dnivala @ci.ham- lake.mn.us; douglas.sell@ci.east- bethel.mn.us; durbia @ci.victoria.mn.us; Eric A. Johnson; fboyles @cityofpriorlake.com; GemLakeCity @comcast.net; ghughes @ci.edina.mn.us; gordon.heitke @ci.lino- lakes.mn.us; gurban @cityvadnaisheights.com; jamie .verbrugge @ci.rosemount.mn.us; jdickinson @ci.andover.mn.us; jgunyou @eminnetonka.com; jimd @mendota - heights.com; jmarch @cityofnorth - oaks.com; jnorman @ci.ramsey.mn.us; joel.hanson @ci.little - canada.mn.us; joer @ci.becker.mn.us; jteetzel @ci.minnetonka- beach.mn.us; jwillis @ci.inver - grove- heights.mn.us; kay.kuhlmann @ci.red- wing.mn.us; lahrens @ci.plymouth.mn.us; lakelandshores @gmail.com; Larry Kruse; leflay @aol.com; lekand @frontiernet.net; mbernhardson @ci.bloomington.mn.us; mericson @ci.hugo.mn.us; michelle.wolfe @ci.arden- hills.mn.us; miesville.clerk @att.net; mmcneill @ci.shakopee.mn.us; mmornson @ci.saint- anthony.mn.us; mosc @frontiernet.net; neal.beets @ci.rokeville.mn.us; neptune @tds.net; richard .fursman @ci.maplewood.mn.us; rick. wolfsteller @ci.monticello.mn.us; rmoorse @ci.orono.mn.us; rogclerk @mninter.net; rwood @ci.blaine.mn.us; sharon.lumby @lakeelmo.org; shoffman @greenfield.govoffice.com; sirvine @cityoftonkabay.net; sneal @edenprairie.org; sneilson @ci.mahtomedi.mn.us; sorduno @ci.dayton.mn.us; svergin @ci.corcoran.mn.us; tburt @ci.golden- valley.mn.us; tgerhardt @ci.chanhassen.mn.us; thedges @cityofeagan.com; thirsch @ci.independence.mn.us; tlawell @ci.apple- valley.mn.us; tschwerm @ci.shoreview.mn.us; tswenson @crosslake.net; tterry @newmarketcity.com; vavrina @tds.net; vicki @cityofbreezypointmn.us; weitzl @comcast.net; whalenh @mac.com Cc: gcarlson @LMNC.ORG; Joe Hagerty; Joe Marx; Cindy Weston; Dean Eggert; Jerry Zachman Subject: RE: MV Credit cuts Bob, Thank you for the message. I can assure you that my City Council is quite frustrated by the cuts and the inequities of the legislature's and governor's "trickery ". We have created an extensive set of publications and articles explaining the situation to our residents and businesses. We also put notices in the TNT notices encouraging people to visit our web site for more 1 information. The address follows: http: / /www.ci.lakeville .mn.us /taxinformation.htm I agree with your suggestion to attempt to make the legislators know that it is unconscionable to keep the MVHC cuts in place (a state savings of $19 million) while at the same time increasing LGA by $48 million during the last session. Our legislators understand our frustration, but have not yet been able to muster the kind of action we need to fix the problem. We attempted last year to convince legislators that this deception to the public was at best inequitable and bad policy. At it's worst, the state's actions have resulted in a direct hit at affordable housing. We, and I suspect most cities have raised their levies to offset the necessary cuts in services due to the loss in MVHC. Thus, we have increased the cost of both rental and owner occupied housing through artificially higher property taxes, and have caused Lakeville to reconsider it's commitment to adding affordable housing due to the double taxation required to provide services to the lower valued homes. I would volunteer to work with you on a campaign to try an rectify this situation. Perhaps the League would be willing to host a meeting of the MVHC "robbed" communities so we can quickly decide a course of action. Steve Mielke Lakeville City Administrator - - - -- Original Message---- - From: Bob Derus [mailto:bderus @ci.st- michael.mn.us] Sent: Thursday, January 12, 2006 4:39 PM To: whipple56 @yahoo.com; 501akes @emily.net; administrator @cityofafton.net; alo @wayzata.org; amadsen @ci.maple - grove.mn.us; bheitkamp @ci.champlin.mn.us; birchwoodvillage @comcast.net; bnelson @ci.spring - lake - park.mn.us; bstock @ci.savage.mn.us; cdawson @ci.shorewood.mn.us; cgridley @ci.woodbury.mn.us; chad.adams @ci.medina.mn.us; chip @ci.forest- lake.mn.us; cityclrk @visi.com; cityofelko @integraonline.com; cityoflo @uslink.net; clerk @emily.net; craig .ebeling @ci.burnsville.mn.us; craig @ci.oakdale.mn.us; ctyegull @scicable.com; ctygarri @frontiernet.net; danay @cityofdeephaven.org; Daniel Buchholtz; debs @ci.cohasset.mn.us; dellwoodcityhall @comcast.net; dennis.coryell @ci.baxter.mn.us; dlarson @centervillemn.com; dlotter @ci.minnetrista.mn.us; dnivala @ci.ham- lake.mn.us; douglas .sell @ci.east- bethel.mn.us; durbia @ci.victoria.mn.us; eajohnson @cityofoakparkheights.com; fboyles @cityofpriorlake.com; GemLakeCity @comcast.net; ghughes @ci.edina.mn.us; gordon.heitke @ci.lino- lakes.mn.us; gurban @cityvadnaisheights.com; jamie .verbrugge @ci.rosemount.mn.us; jdickinson @ci.andover.mn.us; jgunyou @eminnetonka.com; jimd @mendota- heights.com; jmarch @cityofnorth- oaks.com; jnorman @ci.ramsey.mn.us; joel.hanson @ci.little- canada.mn.us; joer @ci.becker.mn.us; jteetzel @ci.minnetonka- beach.mn.us; jwillis @ci.inver- grove- heights.mn.us; kay.kuhlmann @ci.red- wing.mn.us; lahrens @ci.plymouth.mn.us; lakelandshores @gmail.com; Larry Kruse; leflay @aol.com; lekand @frontiernet.net; mbernhardson @ci.bloomington.mn.us; mericson @ci.hugo.mn.us; michelle.wolfe @ci.arden- hills.mn.us; miesville.clerk @att.net; mmcneill @ci.shakopee.mn.us; mmornson @ci.saint- anthony.mn.us; mosc @frontiernet.net; neal.beets @ci.roseville.mn.us; neptune @tds.net; richard .fursman @ci.maplewood.mn.us; rick. wolfsteller @ci.monticello.mn.us; rmoorse @ci.orono.mn.us; rogclerk @mninter.net; rwood @ci.blaine.mn.us; sharon.lumby @lakeelmo.org; shoffman @greenfield.govoffice.com; sirvine @cityoftonkabay.net; Mielke, Steven; sneal @edenprairie.org; sneilson @ci.mahtomedi.mn.us; sorduno @ci.dayton.mn.us; svergin @ci.corcoran.mn.us; tburt @ci.golden- valley.mn.us; tgerhardt @ci.chanhassen.mn.us; thedges @cityofeagan.com; thirsch @ci.independence.mn.us; tlawell @ci.apple- valley.mn.us; tschwerm @ci.shoreview.mn.us; tswenson @crosslake.net; tterry @newmarketcity.com; vavrina @tds.net; vicki @cityofbreezypointmn.us; weitzl @comcast.net; whalenh @mac.com Cc: gcarlson @LMNC.ORG; Joe Hagerty; Joe Marx; Cindy Weston; Dean Eggert; Jerry Zachman Subject: FW: MV Credit cuts Dear City Clerk, City Manager, or Administrator: 2 I have written this because I am frustrated with the legislature and Governor. When you realize (if you have not already) what they have done to your city you may be as frustrated as I am. This time the legislature's /Governor's methods are a little more dubious (untruthful taxation is perhaps the best description) than normal. First a bit of background: The 2003 Legislature passed a bill (subsequently signed by the Governor) that in essence cut Market Value Homestead Credit (MVHC) for many cities. I assumed this was like other cuts; it simply meant the City would have to levy more to make up the loss. The problem is, once your City no longer receives LGA, this cut doesn't work like other cuts. Once LGA is gone the MVHC cut works something like this. 1. City sets the tax levy 2. The County reports to individuals on their Tax statement the amount of proposed taxes. 3. Then, and this is where it gets a sneaky, the amount of the state MVHC credit paid to the city is reduced by the amount of the state cut. Thus, the credit is not the amount reported to the tax payer; it is something less. And the loser is the city, and ultimately the taxpayer. The winner, of course, is the state because they are making us pay for their popular "market value credit" property tax relief program that they did not want to reduce, but were unwilling to fund. Moreover, it is bitter irony that the state is being untruthful on the Property Tax Statement. I have discussed this with LMC Staff. Both Gary Carlson and Eric Willette are very knowledgeable on the subject, and have offered their support to get this changed. LMC did try to get it changed in 2005 but were unsuccessful. What can you do? If we band together and let our respective legislators know how troublesome this is, we can get this changed; and who knows, maybe some back pay. There are 103 out of 853 total Minnesota Cities impacted and approximately 15% to 20 % of all legislative districts represented. What are the realistic goals of this effort? 1. The cuts are scheduled to be restored in 2007 - at a minimum we have to make sure the planned sunset of the law takes place. 2. Try to prevent this type of policy trickery for the future. 3. Call for the restoration of the funding reduction made in 2006, 2005, 2004 and 2003. Please let me know by email if you are interested in helping get this changed, which at a minimum means communicating it to your legislators. We are particularly interested in your assistance if you are represented by any of the leaders on either side of the house or members of tax committees. Also, we will be putting together a letter to the editor for publication in the major Twin City Papers, as well as your local paper, with your approval. This letter would have the greatest impact if a significant number of the impacted Cities sign on. When the letter to the editor is drafted, we will again contact you to proof read and hopefully sign it. Finally, for your reference I attached the following applicable documents: - Market Value Credit Paid to Cities 2005 (Column F show which cities are the losers) - Sample letter from the Department of Revenue explaining the cut - Copy of the bill introduced last year to eliminate this Thank you for your consideration and your assistance. I look forward to your response. 3 Bob Derus, City Administrator City of St. Michel (763) 497 -2041 (ext 112) bderus @ci.st - michael.mn.us Gary Carlson's email: gcarlson @LMNC.ORG ###################################################### # # # # # # # # # # # # # # # # # # # # # # # # # # # # # ## This email has been scanned by MailMarshal, an email content filter. ###################################################### # # # # # # # # # # # # # # # # # # # # # # # # # # # # # ## 4 Understanding Your Tax Bill Lakeville residents' Truth in Taxation Notice, which should be arriving soon, will include the estimated 2006 tax amounts for city, county, school, and special tax districts. The City taxes represent about 30 percent of your total property tax bill. The City property taxes fund about 65 percent of the City's General Fund budget. The City of Lakeville wants to provide you with information regarding taxes and the City budget. Below is the first in a series of articles providing you with that information. For additional information and links, please check the Tax Information section of the City's Web site at httn: / /www.ci.lakeville.mn.us. State actions affecting the City budget Decisions made by the state legislature will have a significant impact on local property taxes. For Lakeville, the most noteworthy of these actions is the loss of Market Value Homestead Credit reimbursement. The City budget is also impacted through unfunded state mandates, as well as loss of Local Government Aid. Here are answers to some of the questions you may have about state actions that will affect your property taxes: Market Value Homestead Credit 1. What is Market Value Homestead Credit? Market Value Homestead Credit (MVHC) is a state program designed to provide property tax relief directly to taxpayers. Through MVHC, homeowners receive a reduction in their property tax bill. The state then reimburses local government units, including cities, counties, and school districts, for the amount of tax credit given to homeowners, using state sales tax proceeds. The maximum credit is $304 for a home with a value of $76,000. The credit is reduced by $9 for each $10,000 increase in value over $76,000. There is no credit for homes valued in excess of $414,000. Individuals receive a reduction in their property tax bill according to the MVHC formula. Homeowners will not see the credit itemized on their property tax statements because it is a formula embedded in the tax calculation. 2. Is Lakeville getting reimbursed by the state for its share of MVHC? No. Lakeville lost MVHC reimbursements in 2003 and 2004, and will now continue to lose them in 2005 -2006. The state legislature, in an effort to balance the state budget, reduced the MVHC reimbursement to some cities in 2003 and 2004. Rather than reimburse these cities and counties, the state used the funds to balance its own budget. The struggle to balance that state's budget continued in 2005. During its July special session, the legislature imposed a two -year extension to cuts for certain cities. MVHC reimbursement cuts will reduce the state -paid credit by $17 million. Lakeville will lose $656,000 of MVHC in both 2005 and 2006. 3. What's the bottom line for me as a taxpayer? In an effort to preserve services to residents, the proposed tax levy includes $656,000 to compensate for the loss of MVHC reimbursement from the state. The net impact will be a 5 -7 percent increase in the City's portion of property taxes for Lakeville residents. This amounts to about $37 on a $260,000 home (the median price in Lakeville). 4. Is reimbursement of MVHC being reduced uniformly statewide? No, the reduction in MVHC was not applied uniformly statewide. About 100 cities, including Lakeville, lost all or nearly all of their MVHC, while over 700 cities in Minnesota lost nothing. The state's actions to reduce MVHC were focused on cities with high -value tax bases. Local Government Aid 5. Have we lost any other state property tax aid? Yes, Local Government Aid (LGA) is another state property tax relief program that Lakeville lost. LGA tax relief funds go directly to cities and, like MVHC, are financed by state sales tax revenue. These funds provide property tax relief based on a city's property tax wealth. LGA was originally cut in 2003 and 2004 in order to balance the state budget. Lakeville lost all of its nearly $500,000 in LGA in both those years. Ironically, in 2005, the Legislature increased funding by $48 million for the cities that receive LGA, but, due to 2005 changes in the distribution formula, Lakeville will no longer receive any LGA revenue. State Mandates 6. Are there other state actions that will affect the City budget? Mandates are decisions, not made by local governments, that local governments must finance. State and federal governments impose a variety of mandates, most of which are taken for granted on a daily basis. Whether the City agrees with them or not, unfunded mandates increase the cost of local government. For example, cities must pay state sales tax, meaning that local property tax dollars are used to pay the 6.5 percent sales tax on goods and services purchased. Mandates continue to increase every year. Some of the 2005 mandates include increased costs for water testing, contributions to the public pension fund, and new election equipment as a result of the Help America Vote Act. Paying for these state requirements increases costs for the City budget. The proposed 2006 City budget will be discussed in next week's Messages. Additional tax information can be found on the City Web site at hun : /hvtivtiv.ci.lakeville.nin.us, click on Tax Information, or call 952- 985 -4481. Understanding Your Tax Bill The City of Lakeville wants to provide you with information regarding taxes and the City budget. Below is the second in a series of articles providing that information. For additional background material and links, please check the Tax Information section of the City's Web site at www.ci.lakeville.mn.us. About the City share of your property taxes The tax levy is the amount of money that is proposed to be collected from property taxes to operate the City each year. The City of Lakeville property tax levy for 2006 is $17,741,065. The County and School District in which you live will also have tax levies on your tax bill. The combination of these levies will be your total property tax. The 2006 City tax levy includes the following items: General Fund Operations $ 12,482,229 Street Improvement Bonds 1,441,386 Certificates of Indebtedness (equipment) 1,423,220 Central Maintenance Facility Bonds 735,494 Street Pavement Maintenance 590,000 Park Bonds 412,506 subtotal City operations $ 17,084,835 Loss of MVHC (see below) 656,230 Total 2006 City tax levy $17,741,065 The largest portion of the tax levy ($12,482,229) is for General Fund services such as police, fire, streets, parks, and other services. The City finances equipment purchases for these services with the issuance of Certificates of Indebtedness, which is short -term debt repaid with tax levies. The City has a long -term plan for the maintenance of more than 230 miles of streets. The street pavement maintenance tax levy provides adequate funds for crack sealing, sealcoating, and patching of streets. The tax levy for street improvement bonds provides funds for the City share of costs related to interchange and street improvements. The levy for Street Improvement Bonds is proposed to increase by $450,390 as a result of 2003 Street Improvement Bonds issued to finance the County Road 50 and County Road 60 interchange improvements, as well as bonds to finance the 185th St. /Dodd Blvd. improvements. The levy also includes 5656,230 for the state imposed loss of Market Value Homestead Credit. For additional information on loss of Market Value Homestead Credit (MVHC), please visit the City Web site at ivww.chlakeville.mmus, click on Tax Information and select the Nov. 5 article: State actions affectim the Citv ht dget. Growth in the City increases the city tax levy, as more money is needed to supply services to more residents and businesses. However, this growth will pay for itself as the number of taxpayers also increases. The 2006 tax levy for City operations takes into consideration a 7.4 percent increase for new residential, commercial, and industrial growth, as well as a 3.1 percent increase for inflation based on the consumer price index. For more i o n the C ite budget, check our W eb site at www.ei.lakeville. inn.us, click on Tax Information and se lect the Nov. 12 article: The 2006 Cifv BudAet. Each dollar of City taxes goes to the following: Operations & Cert. of Ind. $ 0.78 Street Improvement Bonds $ 0.09 Central Maint. Facility Bonds $ 0.04 Street Pavement Maintenance $ 0.03 Park Bonds $ 0.02 Loss of MVHC $0.04 $ 1.00 The average Lakeville home will see about a 12.6 percent increase in City taxes. Of that increase, the largest share, 6.1 percent, is due to the state reduction in MVI-IC to Lakeville residents The balance of the increase is due to inflation (3.1 percent) and payment of the park bond debt, and street improvement (3.4 percent). Comparison to other cities For more than a decade, Lakeville has had one of the lowest tax rates in Dakota County. The City's low tax rate is attributable to a conservative fiscal policy combined with a strong tax base. The strong tax base results from continued commercial /industrial development, the increased value of new residential housing construction, and the continued strength of real estate market valuation. 0 .5000 �.......... _ ... __.... - ..�.._...... ,......_.... _..... ............� 0.4500 0.4000 -' 0,3500'' 0.3000-' 0.2500— E _ ` - - - 1,.2000 -- - - - " 0.1500 m __ E j9 0.1000— 0.0500-" 0.0000 Additional tax information can be found on the City Web site at wwiv. ci. lakeville. mn. us. click on Tax Information, or call 952- 985 -4481.