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ARDEN HILLS REGULAR CITY COUNCIL MEETNG—DECEMBER 12, 2011 8 Director Iverson reviewed how property tax bills vary from year-to-year. She also explained that the State Legislative change for 2012 replaced the Market Value Homestead Credit Program (MVHC) with a Market Value Exclusion (MVE) Program. The MVE program reduces the property's market value for tax purposes thus creating a new Taxable Market Value. The advantage is that State credits are eliminated and local governments collect their full levy. The disadvantage is that it lowers the local government's taxable market value,thus raising taxes. Director Iverson explained that market values are established in the spring by the County Assessor and approved at the Board of Appeal and Equalization in April or May. The median market value on a single family home in Arden Hills went down by 1.16 percent from Pay 2011 to Pay 2012. The total residential values (including townhomes, condos, etc.) fell by 1.97 percent. Commercial/industrial values fell by 0.64 percent. Director Iverson then reviewed the effect of adding a 2.15 percent City levy increase which would result in an addition $5.00 a year to the median value home's tax bill. She also explained how property tax dollars are distributed; for each dollar, Ramsey County receives 44 cents, the School District receives 35 cents, Arden Hills receives 17 cents and Other Agencies receive 4 cents of every dollar. The proposed 2.15 per cent levy increase is primarily made up of: Public Safety Cost increases — 1.50 percent; Elections — 0.50 percent; Salary; benefits and other costs 0.15 percent. Director Iverson stated the 2012 key budget elements are: • Revenues are expected to remain about the same. This has been conservatively estimated as the City is primarily "built-out" and has some redevelopment and expansion, but cannot be estimated. • General Fund revenues are estimated to be $4,053,626 or a 4.01 percent increase over 2011, mainly due to the increase in the tax levy. • Utility revenues will increase 12.97 percent for Water, decrease 7.32 percent for Sewer, and increase 3.28 percent for Surface Water Management. These changes reflect the increases of rates of 7 percent for Water, 2 percent for Sewer, and 3 percent for Surface Water Management. • The levy increase is proposed at 2.15 percent. • Salary adjustments as part of COLA/steps are budgeted at 1.5 percent. • The proposed budget for Fire Protection has increased by 3.55 percent. • The proposed budget for Police Protection and Animal Control has increased by 4.07 percent. • The proposed budget for 911 Dispatch services has increased by 16.73 percent. • The proposed budget has kept operating costs relatively flat unless there have been contract services which have increased. • The proposed budget includes the same amount of transfers as last year: o $200,000 for capital reserves to be used for road improvements o $40,000 for capital reserves to be used for equipment replacement • This proposal does not contain a contingency amount nor does it use reserves to balance the budget as has been done the last two years. • Overall, the City's total proposed budget has decreased by 5.88 percent mainly due to the fewer construction projects; General Fund budget is increased by 3.48 percent as compared to 2011.