3A, 2012 Proposed Preliminary Budget and Tax Levy

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_ .. . Memo City Council 20 � 2 Proposed Preliminary Budget and Tax Levy 2 RESIDENT�AL PROPERTY VALUES According to in�o�naiio� provided by Rarnsey County in March of this year, th� �nedian hozr�e value in Arden Hills wiii decreas� from $276,00� for 2011 taxes, to $272,800 for 2412 taxes which is a i.16% drop in value compared to fihe couniy a�erage decrease of 4.01%. The MVHC program was replaced with the new Market Value Exclusion {MVE) program, which reduces the local taxable val�e of homestead �raperties under $413,800 at which point the credit is phased out. This affects the City's � rate as it red�ces the overall taxable va1u� of the City. AlI jurisdic�ions will see an increase in tax rates in 2012 as a resuit of th'rs change. • Old MVHC Program Under fihe old MVHC program, hpme property taxes were reduced by a State credit. The pragra.�r� was designed to hoid locai gover�ents har�nless by a reim�ursement from the �tate of M�nnesota for the sum of alt crediis provided. As the City Council is aware, this credit has been reduced or elirninated altogether in most years due to State budget cuts. (It was only fully fiinded one year out of the nine that it was in effect.) Another camplicating component of the ald MVHC progxazn was that the estirnated amount of credits needed to be inciuded in the Czty's ievy, even though no reimburse�er�t frorn ihe State would occur. This caused a nnismatch between the adopted levy and the acivallevy coilections. • New MVE Pra�ram Under the new MVE program, a portion of the home's rr�arket value is excluded for tax purposes. This cxeates a new Taxable MariCet Value (which is lower than the estimated Market Value), as well as a reduc�d value for t� coinputations {iaxable value). One big advaz�tage of this program is that th� state cr�dits are eliminated, which �eans there is no need to add estimated MVHC credits ta the overall levy ari�ount. The fallawing �able provides an example of how the new program will work for five different ho�e values. Hornes valued at $76,000 receive the maxirnurn value reduction, and hon.aes valued at $413,800 (value at which �he exc�usion is p�ased oui) and abo�e receive no walue reduction. �