Champlin approves 2013 budget, levy
• City officials estimate 90 percent of homeowners will see a decrease in their taxes
• General fund increases 7.39 percent
• Personnel gains 3.2 percent cost of living
Champlin homeowners experiencing an 8.1 percent decline or more in property values will see a slight decrease in the 2013 city portion of their property taxes. According to city officials that could include approximately 90 percent of homeowners.
Preliminary information provided by Hennepin County indicates the tax capacity for the City of Champlin will decrease by approximately 7.2 percent for payable 2013. This is in conflict with the city’s 2011 Financial Management Plan projections that the city’s property values would stabilize for 2013. In order to maintain city services at current levels and to provide funding for infrastructure replacement, the Champlin City Council approved an 8.75 percent increase in Champlin’s tax rate for 2013.
“Unfortunately, the economy has not yet stabilized and the city is experiencing yet another year of decreasing property values,” said Finance Director June Johnston.
While the decertification of the tax increment financing (TIF) District No. 1 at the end of 2012 should expand the city’s tax capacity for 2013, Johnston said it will not be as much as projected due to the decline in overall property values.
As required by state law, the council approved a preliminary levy in September, which became the maximum amount the city could levy. Staff and council continued to meet to finalize a 2013 budget.
After months of budget presentations and discussion, the city council approved the final budget and levy following the state-required Truth in Taxation hearing Dec. 10.
The city’s total 2013 property tax levy is $8,323,329. That’s up about $1.08 million, or 14.9 percent, compared to 2012.
The increase is considered necessary by city officials in order to maintain current levels of city services and to provide funding for infrastructure replacement.
Johnston estimated the average homeowner whose value dropped 8.1 percent — for example, from $181,00 in 2011 to $166,000 in 2012 — would experience a decrease in city property taxes. Johnston also detailed that home experiencing a greater property value decrease would experience a greater decrease in city taxes while homes that held their value or dropped less than 8 percent could experience an increase in city taxes.
These estimates only include the city portion of property taxes — school district and county levies are calculated separately but still affect overall tax statements.
The general fund is the city’s largest fund and pays for most of the day-to-day operations of the city. The 2013 general fund budget is $10,141,072. That’s up about $697,760, or 7.39 percent, compared to 2012.
Since 2007, there has been a significant shift in revenue sources from intergovernmental — state aids — to property taxes.
Projections for 2013 include a slight increase of $1,846 or .67 percent increase in permit revenue. An additional $99,000 in revenue will come from charges for service, miscellaneous revenues, intergovernmental revenues and other financing sources. The city is also experiencing a decline in revenue from building permits. The remaining revenue stream will be the dollars generated from property taxes.
More than 38.5 percent of the general fund expenditures go towards public safety with the police department taking the lion’s share of that. The top five departmental expenditures for the general fund include:
1. Police — $3.43 million (33.8 percent)
2. Public Works and Maintenance — $1.65 million (16.2 percent)
3. Park and Recreation — $560,230 (5.5 percent)
4. Fire — $477,165 (4.7 percent)
5. Government Services, which includes personnel such as the receptionist and city clerk, office supplies and services for general government departments and supplies and services to operate and maintain city hall — $393,538 (3.8 percent)
Additionally, there is more than $1.945 million of expenditures that the city identifies in the category of “Other.” Johnston said this category includes operating transfers to infrastructure funds of $1,7 million, property and liability insurance, and council contingency.
In addition to the general fund the city has several additional funds including:
• Enterprise Fund: Pays for water, sewer, refuse and recycling ($7.76 million)
• Capital Projects Fund: Pays for street lighting, storm sewer, municipal state aid, park reserve fund and capital equipment fund ($4 million)
• Special Revenue Funds: Pays for DARE education, technology, Economic Development Authority, EDA, Real Estate Mill Pond Gables and the Ice Forum ($1.3 million)
• Internal Service Fund: Pays for insurance management ($293,960)
This brings the city’s overall budget to $23,577,775 for 2013.
Nearly 42 percent of the general fund expenditure increase is due personnel costs as well as the creation of a new staffing position for 2013. This position is for an information technology support specialist. Additionally, the budget includes a 3.2 percent ocst of living adjustment for personnel and a $25 increase in the city’s contribution to health insurance.
The overall increased personnel costs for 2013 is $295,467.
The council also approved a $306,399 levy for the Economic Development Authority, which is a 1.94 percent increase over 2012. The EDA is classified as a special taxing district; therefore, has a separately approved tax levy.