January 28, 2020- 2020 Budget
Mayor’s Blog January 28, 2020
At our last meeting in December the Council approved a budget and levy for 2020.
So what is the difference between a budget and levy?
The budget consists of all our revenues AND expenses.
The budget is the document that determines how much the city will be spending on road projects, snow plowing, salaries, office supplies etc. and has all of our revenue streams included.
The levy is only the revenue amount that is spread out over all the properties in our city.
When considering our budget we have to make sure we cover all of our obligations such as union contracts, employee salaries and benefits, debt payments, costs to police our city, fire contracts, snow plowing, etc.
The levy is always less than the budget. The reason is that the city has other income/revenue sources besides property taxes. Although property taxes are the city’s largest revenue source, the city receives income from a number of other entities, such as dollars from the State (called Fiscal disparities), money from the County (reimbursement for a portion of our recycling), building permit fees, interest on our fund balances, utility billing, contract revenue for providing Police services to St. Bonifacius, to name a few.
Every year the Council starts discussions on the budget and levy around the beginning of August. The city is by law required to certify the preliminary levy no later than September 30 each year. The preliminary levy cannot go up after that, but it can go down.
When determining our levy one of the things we look at is growth. The County Assessor estimated that we saw a 2.0% - 2.5% overall new home growth. If you subtract that from the final levy increase (over 2019) of 5.66% it leaves an increase of approximately 3.2%-3.7%.
The Council also determined to use about $165,000 from our fund balance to offset the levy increase. By doing this we will still maintain a healthy fund balance and decrease the amount of property taxes our residents have to pay.
One of the primary considerations is the impact to our homeowners. If your home had an average increase in valuation, on a $350,000 home you would see about a $25 annual increase; a $500,000 home valuation would realize a $50 annual increase.
Many of you may see a smaller increase or no increase at all. Mind you, these are averages, and are only for the city portion of your taxes. The city portion makes up between 20-25% of your total tax bill. The city has no control over other taxing authorities such as School Districts, the County, and Watershed Districts, etc.