HomeMy WebLinkAboutTNT Insert LetterCity of Oak Park Heights
9/15/11
Dear City of Oak Park Heights Taxpayer:
The purpose of this letter is to provide you a briefing on the City's proposed 2012 Budget and anticipated Tax Levy. The
City's 2012 Proposed Tax Levy offers a significant increase in the total amount levied as compared to 2011. This is
primarily due to a proposal to levy taxes to offset the water and sanitary sewer user charges. This tax increase would
provide funds to the utilities and would result in a decrease in the amount needed from utility billings. While this
proposal would raise your property tax, it would reduce all utility users' quarterly utility bills and for most residents
will result in an overall savings of S100 or more The following is an explanation of the proposed plan.
TAX LEVY FOR UTILITY MINIMUM BILLING
For 2012, the planned minimum utility bill for water and sewer services is $364.84, ($29.11 /quarter for water and
$62.10 /quarter for sanitary sewer). This is the minimum billing for up to 15,000 gallons of usage and is charged to all
consumers. A unique proposal in the 2012 Budget is shifting this minimum billing to the tax statement which increases
taxes but results in an estimated net savings (combining property taxes and utility bills) as follows:
(Please be aware that this is to shift only the minimum amount of your utility bill. You will continue to be billed for all
usage above 15,000 gallons /quarter along with the storm water charge and state water connection charge.)
The spreadsheet below outlines the totality of the anticipated changes and the anticipated savings. For example, a
homeowner with home value of $150,000 would realize a total savings of $218.69 in 2012 compared to 2011 when
property taxes and utility billings are combined. Similarly, a home with a value of $250,000, would realize a total
savings of $97.56 per year, compared to 2011.
Estimated Increase In
No Longer Charged -
Market Value of Home
Taxes to Cover Utility Shift
Minimum Utility Bill
Net Savinas
$100,000
$ 41.92
$364.84
$ 322.92
$150,000
$ 73.76
$364.84
$ 291.08
$250,000
$ 137.45
$364.84
$ 227.39
$300,000
$ 169.29
$364.84
$ 195.55
$450,000
$ 262.90
$364.84
$ 101.94
(Please be aware that this is to shift only the minimum amount of your utility bill. You will continue to be billed for all
usage above 15,000 gallons /quarter along with the storm water charge and state water connection charge.)
The spreadsheet below outlines the totality of the anticipated changes and the anticipated savings. For example, a
homeowner with home value of $150,000 would realize a total savings of $218.69 in 2012 compared to 2011 when
property taxes and utility billings are combined. Similarly, a home with a value of $250,000, would realize a total
savings of $97.56 per year, compared to 2011.
TURN OVER FOR MORE INFORMATION ON BACK
RESIDENTIAL MARKET VALUE
MARKET VALUES
$
100,000
$
150
$
250,000
$
300,000
$
450,000
2011 SERVICE CHARGES
2011 PROPERTY TAXES
$
337.79
$
591.21
$
1,098.07
$
1,351.00
$
2,091.10
MINIMUM UTILITY BILLS - 2011 RATES
$
354.92
$
354.92
$
354.92
$
354.92
$
354.92
TOTAL 2011
$
692.71
$
946.13
$
1,452.99
$
1,705.92
$
2,446.02
2012 SERVICE CHARGES
2012 PROPERTY TAXES
$
413.44
$
727.44
$
1,355.43
$
1,669.43
$
2,592.63
2012 MINIMUM UTILITY BILLING - 2012 RATES
$
0.00
$
0.00
$
0.00
$
0.00
$
0.00
TOTAL 2012
$
413.44
$
727.44
$
1,355.43
$
1,669.43
$
2,592.63
V:'.
COMPONENTS OF 2012 PROPERTY TAXES
2011 PROPERTY TAXES
$
337.79
$
591.21
$
1,098.07
$
1,351.50
$
2,091.10
2012 CHANGES IN MVHC/TAX VALUATIONS
$
9.54
$
19.90
$
40.62
$
50.98
$
86.96
2012 INCREASE IN OPERATIONS BUDGET
$
24.19
$
42.57
$
79.29
$
97.66
$
151.67
2012 INCREASE TAXES FOR UTILITY CHANGE
$ 41.92
$ 73.76
$ 137.45
5 169.29
5 262.90
TOTAL PROPERTY TAXES
$
413.44
$
727.44
$
1,355.43
$
1,669.43
$
2,592.63
TURN OVER FOR MORE INFORMATION ON BACK
WHILE THIS MINIMUM UTILITY BILLING SHIFT IS UNIQUE THERE ARE TWO ADDITIONAL THINGS OCCURRING IN THE
2012 BUDGET.
TAX LEVY FOR OPERATIONS BUDGET
The 2012 Operational Expenditure Budget for the City has a proposed increase of 2.7% or $92,000. This increase
consists of various additions and deductions as compared to 2011. Changes include $5,000 for Parks Programs, $7,000
for Waste Removal, $8,800 in Street Maintenance /Snow Plowing, $48,000 in Public Safety due to a retirement and
replacement hiring of an officer, $8,000 in insurance, and other contractual and supply expenditures. Along with the
above increases the City is experiencing a reduction of revenues in the following amounts: a $100,000 decrease in the
use of Fund Balance, $65,000 reduction in Administrative Charges and a loss of $30,000 in State and County
Revenues /Grants. This results in an increase in the property tax levy of $263,000, or 6 %. For a detailed explanation of
the operations budget see the City's website at www.cityofoakparkheights.com
MARKET VALUE HOMESTEAD CREDIT VERSUS MARKET VALUE HOMESTEAD EXCLUSION
For 2012 the State of Minnesota repealed the Market Value Homestead Credit (MVHC) program and created a new
Market Value Exclusion for qualifying homes. These changes are effective for taxes payable in 2012. In place of the
MVHC program, homeowners will receive an exclusion of a portion of the market value of their house from property
taxes. The exclusion is computed in a manner similar to the market value homestead credit. However, the impact of
the change varies from community to community, depending on a number of factors, including tax base of the
community and the local tax rate. For the taxpayers of Oak Park Heights this will result in a 3 -4% increase in your
property taxes due to the State of Minnesota changing the MVHC program and shifts the State's former tax burden
onto the local property tax.
SUMMARY
The 2012 Proposed Tax Levy is $4,684,562 as compared to $3,964,704 for 2011. This is an increase of $719,858 or
18 %. This increase is a combination of $263,358 for operations and $456,500 for supplementing the utility charges.
These proposed levy increases along with the state change in the MVHC to the Market Value Exclusion are the
calculations that were utilized in the preparation of the Truth In Taxation Notices.
The City is working hard so that most homeowners will see a total cost reduction between their utility bills and their
general property taxes when compared with 2011.
Final Budgets have not been adopted. The Truth In Taxation Hearing is scheduled for November 29, 2011, 7:00 pm,
City Hall, 14168 Oak Park Blvd. N. where the City Council will further discuss the 2012 Budget and its concepts and will
take public input.
As more information becomes available and the budget process develops between now and December, the City will
provide further outreach and information. In the interim, please feel free to call City Finance Director Betty Caruso or
City Administrator Eric Johnson @651 - 439 -4439 for questions
FINAL NOTE: At this time the City has not yet been provided many of the final valuation numbers from Washington
County upon which to craft a final budget proposal as this data is not yet available. As in previous years and because
of this incomplete data, the City typically sets a HIGH number for its tax levy as it may only be reduced in the final
levy which is set in December.
For further information please refer to our website at www.citvofoakoarkheiahts corn