The city of Medina is planning for the future by including in its 2020 property tax levy a capital equipment fund and a municipal park maintenance and replacement fund.
City Finance Director Erin Barnhart described the various parts of the proposed 2020 city property tax levy at a Sept. 3 budget open house and the regular City Council meeting that followed. At the council meeting, City Councilors approved a total preliminary city property tax levy of $4,392,771 for 2020 and a General Fund Budget of $4,736,401 for 2020.
Here are highlights of Medina’s preliminary city property tax levy and General Fund Budget for next year.
PROPERTY TAXES: WHAT THEY DO
City property taxes for 2020 are based upon assessed market values set in spring of this year. Medina property owners had the chance to protest their proposed assessed market values this past spring at the local Board of Appeals and Adjustments.
Local property taxes pay for a major chunk of Medina’s General Fund Budget, maintenance and replacement of city parks and trails, purchases of capital equipment and annual installments for paying off the city’s debt. Medina does not receive Local Government Aid, but it does receive a few other sources of state aid. An example is Minnesota State Highway Aid.
2020 BUDGET, TAX LEVY
State law requires Medina to certify its preliminary General Fund Budget and property tax levy for 2019 to Hennepin County by the end of September and its final General Fund budget and property tax levy to the county by the end of December. The final figures can be equal to or lower than the preliminary figures, but not higher.
In November, Medina property owners will receive from the county an estimate of their 2020 property tax bills for individual properties, based upon preliminary certified levies from the city, county, school districts, watershed districts and other local tax levying jurisdictions.
Medina is divided into four school districts, which get somewhere between 25 and 38% of each tax dollar paid by property owners. Hennepin County’s share is somewhere between 38 and 45%, depending upon the school district and watershed district in which a property owner lives. Medina’s share is between 19 and 23% depending upon the school district in which a property owner lives.
BUDGET, TAX LEVY FIGURES
The Medina City Council certified a 2020 city preliminary General Fund budget of $4,736,401, up by 3.3% from the $4,572,338 General Fund budget for 2019 (an increase of $164,063).
Also, the council certified a city property tax levy of $4,392,771, up by 9.7% from the $4,002,894 total levy for 2019 (increase of $389,877). The city property tax levy will pay for General Fund city operating expenses, installments on the city’s debt, the municipal park and trails maintenance and replacement fund and the capital equipment fund.
Increases in the property tax levy will enable Medina to salt away money in a capital equipment fund so that the city can pay for replacement squad cars, public works equipment and other costly items when needed. Medina set up the capital equipment fund in 2015, with a goal of no longer borrowing money to pay for capital equipment purchases, thus saving taxpayers interest costs, Barnhart said.
The property tax levy increase also will enable the city to build up a fund for maintaining and replacing existing park and trail facilities over the next 40 years. Meanwhile, Medina has been using park dedication funds for new parks.
WHERE WILL THE MONEY GO?
Police and emergency management will account for the largest share of General Fund expenditures, 37.3%. Other major expense items are general administration (18.84%), public works (16.27%), fire service (8.74%), building inspection (6.98%), parks and recreation (4.74%), planning and zoning (4.2%) and facilities (2.92%).
The 2020 General Fund budget includes the salary for a full-time police officer, a 2.5% cost of living increase for Medina employees and the city’s share of health insurance premiums.
Medina will pay for road projects in 2020 via the city’s road fund, bonds and special assessments of benefiting property owners. Deer Hill Road East, Dusty Trail and Tower Drive West will have their top layers of asphalt removed and overlaid with new top layers. Benefiting property owners will be assessed 50% of project costs. The City Council must approve these projects before work can proceed.
Another major expense will be installation of a whistle-less railroad crossing at Arrowhead Trail and County Road 116 ($400,000 and state funding).
TAX IMPACT ON PROPERTY OWNERS
Barnhart estimated that the market value of the average Medina home increased by five percent during the past year. The owner of a $700,000 home with a five percent market value increase would have an estimated 2020 city property tax bill of $1,932 (a 10.4% increase over his or her $1,749 city property tax bill for 2019).