SCC Item 1. Truth in Taxation PresentationTruth in Taxation2025 Budgets & Property Tax LevyPRESENTATION & PUBLIC INPUTNOVEMBER 25, 2024
Before We Start•PROPERTY VALUATION •That is not the focus of this meeting.•No changes can be made at this meeting.•LOCAL BOARD APPEAL & EQUALIZATION MEETING•Annual Meeting between April 1 – May 31•Payable 2025 Valuation Meetings were Held:•April 23, 2024
•MINNESOTA DEPARTMENT OF REVENUE•Requirement for cities with a population over 500•NOTIFICATION•County sends a parcel specific notice between November 11-24•PURPOSE OF THIS MEETING•Discussion of 2025 Budgets•Discussion of Levy for Taxes Payable 2025•Discussion of Capital Improvement Plan•Public InputTruth in Taxation
Otsego’s Strategic Vision
Budget Process•CITY COUNCIL OUTLINES 2025 BUDGET GOALS AND OBJECTIVES•STAFF PREPARE PROPOSED BUDGETS•PROPOSED BUDGETS REVIEWED•City Council Meetings from May to November (open to public)•8 Meetings Prior to Tonight•PRELIMINARY TAX LEVY•Certified September 23, 2024•TRUTH IN TAXATION•FINAL BUDGET ADOPTION•Pending December 9, 2024
General Fund
General Fund Summary2024 2025 ($) (%)Budget Budget Change ChangeRevenue SourceTaxes 6,324,793$ 6,992,002$ 667,209$ 10.55%Cable Franchise Fees 132,000 117,000 (15,000) -11.36%Licenses & Permits 1,657,040 1,703,459 46,419 2.80%Intergovernmental 461,984 209,554 (252,430) -54.64%Charges for Services 258,515 244,830 (13,685) -5.29%Special Assessments 3,800 3,500 (300) -7.89%Fines & Forfeitures 30,900 33,600 2,700 8.74%Investment Interest 106,920 142,657 35,737 33.42%Miscellaneous 17,500 15,500 (2,000) -11.43%Interfund Transfers427,000 478,000 51,000 11.94%Total 9,420,452$ 9,940,102$ 519,650$ 5.52%Expenditure FunctionGeneral Government 2,120,045$ 2,196,516$ 76,471$ 3.61%Public Safety 4,029,903 4,263,499 233,596 5.80%Public Works 2,035,838 2,118,872 83,034 4.08%Parks & Recreation 1,129,706 1,250,315 120,609 10.68%Economic Development 104,960 110,900 5,940 5.66%Total 9,420,452$ 9,940,102$ 519,650$ 5.52%
RevenuesTaxes, 67%Cable Franchise FeeLicenses & PermitsIntergovernmentalCharges for ServicesMiscellaneousTransfers In2024Taxes, 70%Cable Franchise FeeLicenses & PermitsIntergovernmentalCharges for ServicesMiscellaneousTransfers In2025
•PROPERTY TAXES•Total Expenditures and Subtract Other Revenue Sources•CABLE FRANCHISE FEES•Fewer Subscribers = Declining Revenue Source•LICENSES & PERMITS•New Residential Construction Permits (277 for 2024 / 280 for 2025)•INTERGOVERNMENTAL•Local Government Aid – Legislative Formula – No Aid in 2025•Public Safety Aid Allocation ($285,686 for 2024 / $90,054 for 2025)•TRANSFERS IN•Administrative Services Reimbursement - $478,000Revenues – Changes from 2024
ExpendituresGeneral Government22%Public Safety43%Public Works22%Parks & Recreation12%Economic Development1%2024General Government22%Public Safety43%Public Works21%Parks & Recreation13%Economic Development1%2025
•CITY COUNCIL; ADMINISTRATION; ELECTIONS; ASSESSING; FINANCE; INFORMATION TECHNOLOGY; LEGAL; HUMAN RESOURCES; COMMUNICATIONS; AND CITY BUILDINGS.•Staffing•Communications: PT Position Hired in Summer 2024, Full Year Budget for 2025•Records Technician: Temporary Position Budgeted for 2025•Cost of Living Adjustments for Wages•Insurance Adjustments for Benefits•Elections – No Scheduled Elections in 2025General Government – Changes from 2024 (3.61%)
•POLICE PROTECTION; PUBLIC SAFETY COMMISSION; FIRE PROTECTION; BUILDING SAFETY; EMERGENCY MANAGEMENT; AND ANIMAL CONTROL.•Law Enforcement Contract - $2,013,000•Hourly Rate Increase - $110 per hour, 4.7% Increase•Fire Protection Contracts - $1,380,562•Adjustments for Tax Capacity, Market Value, Call Volumes, 18.07% increase•Emergency Services Department•Operating Equipment, Tools, Fire Code Books, Prevention Materials, Software•Emergency Sirens Supplies & Maintenance, Radios, UtilitiesPublic Safety – Changes from 2024 (5.80%)
Public Works – Changes from 2024 (4.08%)•STREETS MAINTENANCE; ENGINEERING; STREET LIGHTS AND FLEET MANAGEMENT.•Staffing•Cost of Living Adjustments for Wages•Insurance Adjustments for Benefits•Street Maintenance: Gravel, Salt, Sand, Signage•Street Lighting: Electrical Utilities, Signal Light Repairs•Fleet Services:•Fuel, Vehicle & Equipment Maintenance, and Supplies•Contracted Services for Major Repairs
•PARK MAINTENANCE; RECREATION; PARKS AND RECREATION COMMISSION; AND HERITAGE PRESERVATION COMMISSION.•Staffing•Recreation Programmer: FT Position Hired in Summer 2024, Full Year Budget for 2025•Cost of Living Adjustments for Wages•Insurance Adjustments for Benefits•Parks Maintenance: Athletic Fields, Playgrounds, Irrigation, Natural Landscapes•Recreation: Program Supplies & EquipmentCulture and Recreation–Changes from 2024 (10.68%)
Additional Budgets
16Public Utility FundsBudget Budget2024 2025Utility RevenuesOperating 7,679,101$ 8,118,701$ Non-Operating 3,689,713 2,966,469 Availability + Connection Charges 4,115,780 4,696,540 Special Assessments 31,917 32,557 Bond Proceeds 19,600,000 10,098,000 Subtotal35,116,511 25,912,267 ExpendituresPersonal Services 1,175,404 1,488,288 Supplies 1,026,307 1,019,630 Services & Other Charges 1,413,746 1,582,905 Capital Outlay 23,055,807 20,506,400 Depreciation 4,274,943 4,638,841 Debt Service 4,781,299 5,208,236 Interfund Transfers 427,000 478,000 Subtotal36,154,506 34,922,300 Excess (Deficiency) of RevenuesOver (Under) Expenditures(1,037,995)$ (9,010,033)$ Description•DRINKING WATER•SANITARY SEWER•STORM WATER
17Debt Service FundsBudget Budget2024 2025RevenuesTaxes 299,144$ 290,308$ Special Assessments 176,239 168,333 Subtotal475,383 458,641 ExpendituresPrincipal 460,000 480,000 Interest 98,406 81,556 Fiscal Agent Fee's 1,000 1,000 Subtotal559,406 562,556 Excess (Deficiency) of RevenuesOver (Under) Expenditures(84,023)$ (103,915)$ Description
Special Revenue FundsBudget Budget2024 2025RevenuesTax Increments 532,815$ 609,601$ Subtotal532,815 609,601 ExpendituresPersonal Services 3,200 3,200 Services & Other Charges 4,500 4,500 Development Incentives 471,410 510,542 Subtotal479,110 518,242 Excess (Deficiency) of RevenuesOver (Under) Expenditures53,705$ 91,359$ Description•BUDGETED FUNDS•Tax Increment District No. 1•Tax Increment District No. 2•Tax Increment District No. 3•OTHER FUNDS•Insurance Reserve•Vireo Health•Lawful Gambling•Street Light District•Development Revolving
Property Tax Levy
20•MARKET VALUE•Wright County Assessor sets valuations•Board of Appeal and Equalization (4-23-2024)•2024 ASSESSMENT – PAYABLE 2025•Residential: 0.41%•Median Value (2023): $402,700•Median Value (2024): $386,400 or 4% Decrease•Multi-Family: 22.55%•Commercial: 9.21%•Industrial: 8.92%•Agricultural: 0.43%2025 Tax Capacity - Factors
MarketValueClass RateTax CapacityTax Capacity
ADD THEM ALL UP = TAX BASETax Capacity - Continued $- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000Residential Commercial &IndustrialAgricultural Personal Property2021202220232024202581%15%2%2%2025ResidentialCommercial & IndustrialAgriculturalPersonal Property
Tax RateTax Levy• $9,392,870Tax Capacity• $38,640,913Tax Rate• 24.308School District County City School Total RMVElk River Area - 728 35.347 24.308 25.204 84.859 25.316 STMA - 885 35.347 24.308 35.586 95.241 16.294 Monticello - 882 35.347 24.308 13.615 73.270 17.182 2025
2025 Wright County Tax Rates - PreliminaryOtsego(Prelim)Otsego(Final)St.Michael(*)DaytonMonticello (*)Hanover(*)Rockford AlbertvilleAnnandaleWaverly Delano Buffalo (*)ClearwaterMapleLakeMontrose CokatoHowardLakeSouthHavenTax Rate25.190 24.308 26.768 37.266 37.684 38.22342.018 42.812 43.250 44.241 44.360 51.94254.653 59.315 62.034 64.100 67.288 76.154 - 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000
2025 Tax Levy Summary2021 2022 2023 2024 2025General Operations$4,671,000 $5,009,000 $5,366,000 $6,336,000 $7,000,000Capital Projects2,362,000 2,988,590 3,344,939 2,265,393 2,015,126Debt Service749,551 547,187 544,416 299,144 290,308Tax Abatements45,874 40,228 74,668 88,224 87,436 $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000Per CapitaCity of Otsego 432$ 430$ 438$ 396$ 406$
262025 Taxes - CalculationPayable Payable (%)2024 2025 Change CommentsResidentialMedian Appraised Value 402,700$ 386,400$ -4.05% Source - Wright CountyLess: Market Value Exclusion (997) (11,774) Max Benefit = $30,400 / Phase Out = $517,200Taxable Market Value 401,703 374,626 Subtract MV Exclusion from Estimated MVClass Rate 1.00% 1.00% Set by Legislature (Over $500k is 1.25%)Tax Capacity 4,017 3,746 Taxable MV Multiplied by Class RateCity of Otsego - Tax Rate 23.109 24.308 5.19% Tax Levy Divided by Tax Capacity * 100City of Otsego - Estimated Taxes 928$ 911$ -1.90% Tax Capacity Multiplied by Tax Rate
Capital Improvement Plan
28•10-YEAR PLAN (2025 – 2034)•THE CIP DOES NOT PROVIDE FINAL AUTHORITY•City Council approves each item specifically before expenditures incurred.•SNAPSHOT OF SOME 2025 PROJECTS•Pavement Management: $2,281,082•Parks and Trails: $877,500•Vehicles and Equipment: $331,338•City Facilities & Property: $2,460,825•Fire & Emergency Services: $19,433,685•Water Utility: $13,064,750•Sanitary Sewer Utility: $6,996,250Capital Improvement Plan (CIP)
Public InputCITY COUNCIL ACTION – PENDING DECEMBER 9, 2024-ADOPT 2025 OPERATING BUDGETS-SET FINAL TAX LEVY FOR PAYABLE 2025-ADOPT THE 2025-2034 CIP
Questions:CITY ADMINISTRATOR/FINANCE DIRECTOR – ADAM FLAHERTYAFLAHERTY@OTSEGOMN.GOV(763) 441-4414