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ARDEN HILLS CITY COUNCIL WORK SESSION — AUGUST 29, 2011 2 Mayor Pro -Tem Holmes asked for clarification on the reference to local tax rate at 24.180% in 2011 and 25.050% in 2012. Director of Finance and Administrative Services Iverson explained those figures refer to the local taxable rate on the local portion of the levy. Mayor Pro -Tem Holmes referred to the chart on Page 3 of the 2012 Preliminary Budget, specifically the table at the top of the page and asked if property taxes will be based on the $45,600 Market Value After Exclusion. Director of Finance and Administrative Services Iverson responded that is correct. Mayor Pro -Tem Holmes then asked if the City would get the Market Value Exclusion reimbursed. Director of Finance and Administrative Services Iverson responded that the City will no longer be reimbursed by the State. That amount is now excluded from the tax. What used to happen, she explained, is that taxes were based on the Home Market Value and the State was supposed to reimburse the cities for the Market Value Credit, but they have not been doing that. So what the State did was lower the taxable value. Mayor Pro -Tem Holmes asked for clarification on the tables on Page 4. Director of Finance and Administrative Services Iverson reviewed the figures in the chart on Page 3 which was calculated based on last year's rates and the chart on Page 4 shows this year's figures. She referred to the chart on the bottom of the page and pointed out that the tax for a $272,800 home would be an annual decrease of $4.06 but the impact from the legislative change is an annual increase of $14.28. She further stated that the total net impact ($14.28 minus the $4.06) is an annual increase of $10.22. Mayor Pro -Tem Holmes questioned the figure of $3,070,525 at the top of the chart on Page 5 but on the other chart that same item is listed as $3,040,964 on Page 3. Director of Finance and Administrative Services Iverson explained that both figures are correct; the $3,070,525 includes delinquent taxes and other miscellaneous tax revenue items. Mayor Pro -Tem Holmes stated that on Page 6 in the chart at the top of the page MHVC is listed for $61,774 and asked if Finance had adjusted too much. Director of Finance and Administrative Services Iverson responded that previously whatever we determined our levy was, we would certify that to the County then the homestead credit would reduce the property taxes paid by the property owner and the City was to have been reimbursed that amount by the State. However, the State only reimbursed the City fully one of the nine years the program was in effect. She stated since the City knew they weren't going to be reimbursed by the State, we artificially set the levy higher. She explained that the chart on Page 6 is for the 2012 budget and reflects the major increases for revenue. The MVHC is an increase as we no longer have to budget for not receiving the monies from the state.