City Council Minutes 12-04-2007 TIT
SpecialCouncilMinule<,12/4/07
MINUTES
SPECIAL MEETING - MONTICELLO CITY COUNCIL
TRUTH IN TAXATION HEARING
Tuesday Dei:emoor 4, 2007 - 5 p.m.
Memberspresenl:
Clint Herbsl, Wayne Mayer, Tom Perrault and Susie Wojchouski
Members Absent:
Brian Stumpf
1. Call to order.
Mayor Herbsl eallcd the meeting 10 order at 5:05 p.m.
2. Truth in Taxation Hellrin2-
Tom Kelly, Finance Director and Paul Mastey, Senior Accountant gave a presentation on the
proposed 2008 budget and tax levy. The total proposed expenditures for the 2008 budget
are S28,707,837 which is lower than the budgeted expenditures for 2007. Bywayof
background, Tom Kelly gave an explanation offund accounting and described the various
fund types the City has. He noted that the proposed expenditures and theproposcd revenues
arc spread fairly cvcnly across the enterprise funds, the general fund,debt sCIVice fund sand
special revenue funds.
Tom Kelly stated that 53% of the revenue for the general fund is property tax. No property
tax levy is used to support the enterprise funds. Enterprise funds are supported by user fees.
He did indicate that it is proposed to increase the sewer and water rates by 15% for 2008.
There is a new enterprise fund for the City which is the fiber optic fund. Current
expenditures for the fiber optic systern are projected at over$t,OOO,OOO an dantieipated
revenue, excluding bond proceeds, is estimated at $705,000. It was addcd that the fiber
optic fund expenditures will not impact the property tax.
The debt service fund receives revenue from special assessments and property taxes. The
City has $47,489,884 in outstanding debt. No property tax levy for debt service is proposed
in 2008 with the funds needed for debt payment to come from sa~ings and reserves.
Special revenue funds include the library, shade tree, OAA,streetreconstruction and the
Monticello Community Center. The proposed levy fur the special revenue funds for 2008
is $1,871 ,071. It was pointed out that the MCC budget increased because they were
budgeting for the debt service cost on the facility and in the past that had been oover edbya
$250,000 transfer from the liquor fund.
Expenditures from the general fund for 2008 are estimated to be $7,521,909 with Public
WorksandPublicSafetyha~ingthehighershareofexpenditures. Expectedrevenuetbrthe
general fund for 2008 is $7,737,147 with the majority coming from property taxes.
The proposed tax levy for 2008 is $7,600,000 which is an increase of16.9%. It Willi
emphasized that in the previous years the City had either kept the same levy or had
decreased it. The City tax capacity increased from $15,256,892 to S15,993,681 even though
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Special Council "illmtes: 12/4107
there was a decrease in the valuation ofXce1 Energy's property in the amoun tof5272,065.
The City's lax rate is e><:pected to be47.519% which is up from 42.601% in 2007.
Tom Kelly showed the impact that the 2008 levy would have on a home valued at 5100,000;
a home valued at $200,000 and one valued at $300,000. He stated thatbasoo on a valuation
of$200,000 the monthly oost for city services would lOlal approximately $79.20. He
oompared this cost with other costs residents incur such as cable television, g as, telephone,
etc. Although there is an increase in the tax levy, the City is still using approximately
$922,724 in savings to fund the operation of the city.
At this point in the hearing it was opened up for questions and comments. Tom Perrault
stated that last year there was a transfer to the City from the EDA and he felt this should be
done again this year and this lransferbe applied to debt service. The exact amount
remaining was thought to be about S81,000. Clint Herbst said the City needs to wean itself
off of laking so much out of savings and reserves. There was some discussion on the
$250,000 that is normally transferred from the liquor fund. Wa)'1le Mayer asked that it be
footnoted that for 2008 $171,000 was taken from the liquor fund and approxima tely$80,OOO
remains. Tom Perrault felt if the $250,000 from the liquor fund was not used for reducing
the tax levy, the City should consider closing the liquor store.
Tom Kelly stated he is working on a fund balance reserve policy which he will be bringing
before the Council in 2008. Clint Herbst suggested rather than taking more money out of
reserves the City should look at making cuts. The final budget and tax levy will be
approved at the December 10'" Council meeting.
The Council asked about levy limits, Tom Kelly briefly explained the levy limit and added
that if the state imposes levy limits the City would have to operate within that limit or use
their reServe8 to make up what the City would have normally levied for. Tom Kelly noted
his concern with all the projects the City has such as the YMCA and the Public Works
Facility,whicharc notbudgetcd.
Tammy Veit, 6439 Mill Trail Drive stated she was ooneerned about the TlF Districts the
City has. She asked if Mills Fleet Farm was in a TlF District. Ollie Koropehak, Economic
Development Dire<::tor noted that in the years that tax increment financing has boon av ailable
the City has established 38 TlF districts and only about half of those aresti 11 active. Ollie
Koropchak stated that the City's dislricts were relatively small in size 8 o the dollar amount is
small. The City used T1F districts primarily for job creation rather than commercial
development. The TlF district that Target is in was set up to pay the City back for the
interchang~improvernents. In all a little over Sl,OOO,OOO is being retained from the TlF
districts.
Tanuny Veit said it is hard for the Monticcllo residents with the increase in the school and
citytaxle~y. Clint Herbst responded that for the last several years thc City had cut back
their levy and increased their use of reserves in deference to the fact that 0 ther entities were
increasing their levy amounts but the City cannot continue to do so. There are infrastructure
needs that the City must fund. Clint Herbst felt the Council has tried to keep the increase as
low as possib1eand yet sti11 fund opcrations and nccdcd improvements.
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SpecialCounciIMinutes:I2J4/07
Mayor Herbst thanked those for attending the Truth in Taxation Hearing. The mooting
closed at 6:50 p.m.
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Recording Secretary \l
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