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79-65 " . e CITY OF CHANHASSEN CARVER AND HENNEPIN COUNTIES, MINNESOTA RESOLUTION DATE: October 15, 1979 RESOLUTION NO: 7 9- 6 5 MOTION BY: Mayor Hobbs SECONDED BY COUNCILMAN: Matthews A RESOLUTION REQUESTING RECONSIDERATION OF CARVER COUNTY'S 1980 PROPERTY TAX LEVY WHEREAS, The Carver County Board has set its 1980 levy certifications at the level of 44% higher than 1979; and WHEREAS, Such increase shall pose a significant financial hardship on all citizens of the County; and WHEREAS, Such levy appears to have exceeded the authority given to the County by voters within the County as a part of the referendum presented by the County in 1979 in regards to gravel road resurfacing; and e WHEREAS, Various other operational expenses have significantly increased; NOW, THEREFORE, The City of Chanhassen hereby requests that the Carver County Board reconsider their previous action in setting their 1980 levy in light of the above points and as further outlined in the attached Exhibit A. Passed and adopted by the City Council of the City of Chanhassen, this 15th day of October, 1979. ATTE~/2 OfL~ Don Ashworth, City Manager YES NO Mayor Hobbs None Councilman Pearson Councilman Matthews . Councilman Geving Councilman Neveaux Exhibit A e 1980 Carver County Budget CETA FUNDING: Reimbursements to the County through the Federal Comprehensive and Training Act for 1979 is estimated to be $460,000. This represents receipts for approximately 3/4 of the year as a majority of funding reimbursements ceased in September. In the work- sheets used for adopting the 1980 levy, no estimated receipts were shown for this category; although current estimates are now estimated at $70,000. In either case, the loss in revenues from federal resources places the total burden of continuing funding of the approximate 50 to 60 positions totally back on the property tax payer. As long as there were only minor costs to the Count~ make- shift work could be found or employees hired in positions for which there was no money. However, now that the federal monies have effectively ceased, can we expect the tax payer to pay the additional 20% needed to continue these positions? WELFARE: No information was avai'1abl:~ on how or why the levy was increased from $800,000 to $900,000. However, this increase appears questionable in light of the 1979 legislation which increased the State share of welfare costs from 60% in 1979 to 70% for 1980. e PERA: How an error could occur in this account is unknown (typically a large increase or decrease is readily visible) as is the case in 1980 where the levy increased from $121,900 to $299,351. However, assuming a goof was made in the levy for 1979, the pension costs had to be paid. This means that the additional levy is primarily to rebuild a "fund balance". This is not questioned; however, the necessity to repay this (all at one time) places additional burden on the 1980 tax payer. e BUILDING: The levy adopted for 1980 is $129,500. This is an amount sufficient to retire construction in excess of $1,500,000. However, there is no debt which currently needs to be retired. Therefore, it is assumed that the County is using an operational levy limit to set aside monies for a future construction program. Three significant fallacies appear to exist with this philosophy - 1) if the construction were necessary, voters should have a right to make this decision, as is currently being proposed in Chanhassen. If this were approved by voters, construction could begin immediately, at fixed prices, at no more of a cost than is presently being paid by the taxpayer without his approval; 2) that taxpayers today are being forced to pay for a possible new building which they in all likelihood, will never benefit from; and 3) that historical trends will reflect that the increased cost of construction and interest over;a ten year period will equal or exceed monies saved during that period. In essence property tax payers will be paying taxes for the next 10, 15 or 20 year period (assuming that such would pay the -2- e cost of a certain sized building at a future date) ,only to find the costs have doubled, tripled, or quadrupled. The current tax payer loses, but also the future tax payer loses as he has gained nothing from the taxes paid by those before him. In light of overall increases proposed by the County, the necessity of making this type of levy should be reviewed. ROAD AND BRIDGE: Less than one year ago the County proposed a $3.8 mill10n dollar bond issue for "gravel road surfacing" throughout the County. The rationale presented in that referendum was the fact that of the $900,000+currently being spen~ approximately $400,000+ was being spent for gravel road surfacing. If this amount were pledged to paying debt, the County could immediately construct the roads ($3.8 million) at fixed dollars and the tax payer would not pay any more than he is currently paying. As a part of of the information presented was the fact that the "new" debt payments would then be reduced from the current levy amounts, i.e. $900,000 minus $400,000 supposedly equalling $500,000. Excerpts of news releases printed in the Carver County Herald include: "It is estimated that a $3.8 million bond issue payable over a 15 year perIDod would require annual bond repayment for principal and interest of approximately $380,000. While this may vary slightly based on actual bond sales, it is reasonable to conclude that it will be substantially less than $440,000 per year spent on the average during recent years." e "It is estimated that the average annual bond payment will require a 3.31 mill levy." "This 3.31 mill requirement however does not increase taxes because it would be accompanied by an equivalent reduction in the county road and bridge levy." "Approval of this bond issue should result in a no increase of taxes in Carver County." "Cttrrent legislation does place a limit on local governments in regard to the amount of tax dollars they can raise through the local property tax. This limitation is based on the per capital expenditures of the local government during the preceeding year and is basically limited to a six percent increase in per capita expenditures. Carver County is ~lose to its limit in terms of the amount of taxes it can levy." "The law however does not apply to bonded indebtedness." "It is the expressed intention of the current County Board to reduce the road and bridge property tax levy by an amount equal to that necessary to make the annual bond payments." e The above information appears to clearly state that the 1980 levy would be approximately $380,000 for bond redemption (gravel road surfacing) and approximately $500,000 for road and bridge (the old $900,000+ minus $400,000+). The actual levy was $380,000 for debt retirement, but instead of $500,000 for road and bridge, the actual levy was set at $1,427,560. -3- . e The cause of the increase is obvious - inflation. However, to place this increase on the property tax rolls should be strongly reconsidered as: 1). Such is contrary to what was told the voters regardless of the validity of the reasons. If the reasons are valid, the issue should be presented to confirm voter desires. 2). The County was supposedly at its levy limits. To use the authority given by the voters to increase the levy of the County, without voter approval cannot be supported. 3). A major problem appears to be the constant or declining dollars received from shared gasoline taxes. However, to adopt a policy of paying this declining dollar difference through local property taxes lessens support for dhangingthe state gasoline tax. If, as a result of public pressure, gasoline taxes are increased, the State share of the construction would increase to its' proper level and spread road construction costs over a wider basis (state) rather than totally on the local tax payer. e 4). The previous construction program was on a pay-as-you-go basis. With the voter approval, construction, hypothetically, would be completed over a three year period and repaid by future tax payers. As inflation exceeded the ability of the County to complete the work, additional monies were found necessary, i.e. the necessity of increasing the levy from the planned $500,000 to $1,427,560. This decision combines the two methods of financing and places the greatest burden on the current taxpayer. For example, if the total projected deficits were to be presented again to the voters, this deficit could potentially be paid through an additional levy of $100,000 per year for the next 15 years. The alternative would be to use available monies for as many priorities as such would fund and switch to the pay-as-you-go method for remaining costs. Hypothetically, this would also be $100,000 per year (there is no way to get away from a new $500,000 - $600,000 allocation). Naturally, this later option has the same pit falls that were incurred when this issue was first considered in 1978. However, in either case, current property tax payers would not receive the full brunt of the costs. e . . e -4- ~ . Probable Effects on property Taxes: It is the estimate of the City that the tax increase approval by the County Board will have the following probably effects on 1980 taxes. These estimates do not include an additional $225 homestead tax credit given by the State. However, without the increase approval by the County, the full amount of this reduction would have reverted to property tax payers. If Your Total 1979 Taxes Were: Included in Your Total Taxes are Taxes to the County, Which for 1979 Were: The Increase Voted by the County Would Raise this by an Additional: $ 900 1,100 1,300 1,500 $317 368 420 472 $139 162 185 208