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City Council Minutes 12-09-1998 SpecialMINUTES SPECIAL MEETING - MONTICELLO CITY COUNCIL Wednesday, Dccernber 9, 1998 - 5 p.m. Members Present: Bill Fair, Clint Herbst, Roger Carlson, Bruce '1 hielen Members Ahscnt: Brian Stumpf A special meeting of the City Council was held for the purpose of allowing public comment on the proposed 1999 City budget and resulting tax levy. City Administrator Rick Wolfsteller reported that at the first budget workshop, Council adopted a preliminary tax levy at the maximum allowed totaling $4,802,470; however, staff was directed to reduce the $353,000 non-debt portion of the levy increase by approximately one-third. After further workshops, the proposed tax levy was reduced to $4,617,725, which amounts to a total levy increase of 18.5%, 1 S% of which is due to debt, and 4.3% related to non-debt portions of the budget. The City Administrator reviewed residential homestead and commercial tax information for 1998 vs. 1999 and noted that, when considering the proposed City levy and proposed maximum levies of the County, School, and Hospital Districts, almost all homestead and commercial properties would see a reduction in their 1999 taxes. Councilrnember Clint Herbst stated that the proposed taxes he received for his property showed the City's portion of taxes increasing $2S0 and noted his concern regarding statements that taxes will decrease. The City Administrator responded that according to information received from the County Auditor, a home valued at $175,000 and using the maximum levy amounts would result in a $7S increase; however, when the City's levy amount was lowered from the maximum amount, the total tax calculated to a $2S decrease. Councilrnember Bruce Thielen added that property tax calculations also depend on shifting of the tax burden by the State. Mayor Fair opened the public hearing. Mr. Mark Haider of 1230 West River Street stated that he felt the City was missing out on possible state aid since Monticello receives only 3.S% and the average for other cities is approximately 3S%. Mayor Fair responded that Monticello's state aid is much less due to its large tax capacity. Mr. Craig Wcbcr of 1440 Uak Ridge Circle stated that the valuation for his house increased 6.1 %, and the City's portion of taxes increased 37.7%. l le also noted that Buffalo has a budget that is about half of Monticello's and felt that Monticello should begin saving money for the future. Mayor Fair and staff noted that the City had a no-growth budget far many years and is now in the process of catching up. In addition, the City's tax capacity was decreased by $1.2 million due to legislation changes, which lowered taxes for commercial and industrial properties and shifted more of the burden to residential properties. Page 1 Special Council Minutes - 12/9/98 Mr. Dick VanAllen, Chairman of the Industrial Development Committee, noted that the amount to be set aside for purchase of industrial property was reduced from $75,000 to $25,000, and he requested that Council consider increasing the amount back to $75,000. He noted that the City needs industrial development to replace future decreases in the NSP tax base. Council members noted that industrial development had been discussed at the budget workshops and that reserve fiends could be used for industrial projects if necessary. Mr. Scott Douglas stated that he hasn't seen a decrease in taxes for his commercial property resulting from the legislation changes. Economic Development Director Ollie Koropchak also requested that Council consider increasing the industrial property budget amount from $25,000 to $75,000, not necessarily for a specific project but more for firture development. Mr. Pat Brennan of 2328 Eastwood Circle stated that the City needs to control spending and asked why his taxes increased $84 due to spending. Mayor Fair responded that when the taxes were calculated initially, the maximum levy amount was used; however, the levy amount was reduced during the Council budget workshops. The City Administrator added that the tax amount increases when a structure is built on the lot. City Administrator Rick Wolfsteller explained that a portion of the City's increase is due to tax rate changes in industrial and commercial, which shifted additional tax burden to residential properties. Because 70% of Monticello's tax base is commercial/industrial, the tax burden shift is very noticeable. There being no further public comment, Mayor Fair closed the public hearing. Mayor Fair noted that Council would be considering adoption of the final budget at their regular meeting on December 14, 1998. A MOTION WAS MADE BY BRUCE THIELEN AND SECONDED BY CUNT HERBST TO ADJOURN. Motion carried unanimously. Kare Doty Deputy City Clerk Page 2