Public Hearing Truth In Taxation Budget & Property Taxes Proposed Payable 2014

Transcription

1 Public Hearing Truth In Taxation Budget & Property Taxes Proposed Payable 2014 Sibley County Special County Board Meeting Thursday, December 5, :00 p.m. Sibley County Courthouse Commissioners Room 400 Court Avenue PO Box 171 Gaylord, Minnesota Phone: Fax: Sibley County Board of Commissioners Chair Jim Swanson Vice-Chair Joy Cohrs Jim Nytes Harold Pettis Bill Pinske Page 1 of 74

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3 SIBLEY COUNTY BOARD OF COMMISSIONERS Address Phone Term of Office COMMISSIONER DISTRICT #1 Jim Nytes Fort Road, Henderson, MN (507) January 2015 COMMISSIONER DISTRICT #2 William Bill Pinske 409 E. Baker St., Box 527, Arlington, MN (507) January 2017 COMMISSIONER DISTRICT #3 James Jim Swanson 1020 Lakeside Drive, Gaylord, MN (507) January 2017 COMMISSIONER DISTRICT #4 Joy Cohrs State Highway 22, Glencoe, MN (320) January 2015 COMMISSIONER DISTRICT #5 Harold Pettis 249 W. 5th St., Box 72, Gibbon, MN (507) January 2015 SIBLEY COUNTY ELECTED OFFICERS Address Phone Term of Office ATTORNEY David Schauer 307 N Pleasant Ave., Box H, Winthrop, MN (507) David@co.sibley.mn.us January 2015 AUDITOR Lisa Pfarr Box 171, Courthouse, Gaylord, MN (507) pfarrl@co.sibley.mn.us January 2015 RECORDER Kathy Dietz Box 44, Courthouse, Gaylord, MN (507) KathyD@co.sibley.mn.us January 2015 SHERIFF Bruce Ponath Box 102, Jail Bldg, Gaylord, MN (507) Bruce@co.sibley.mn.us January 2015 TREASURER Mary Fisher Box 51, Courthouse, Gaylord, MN (507) MaryF@co.sibley.mn.us January 2015 Page 3 of 74

4 SIBLEY COUNTY APPOINTED DEPARTMENT HEADS Address Phone Term of Office ADMINISTRATOR Matthew Jaunich Box 52, Courthouse, Gaylord, MN (507) Indefinite ASSESSOR Calvin Roberts Box 532, Courthouse, Gaylord, MN (507) December 2016 COURT ADMINISTRATOR (STATE) Karen Messner Box 867, Courthouse, Gaylord, MN (507) Indefinite COURT SERVICES DIRECTOR (STATE) Joely Patten Eskens Box 405, Courthouse, Gaylord, MN (507) Indefinite EMERGENCY MANAGEMENT DIRECTOR Bryan Gorman Box 1054, Courthouse, Gaylord, MN (507) Indefinite ENVIRONMENTAL SERVICES DIRECTOR Jeff Majeski Box 82, Courthouse, Gaylord, MN (507) Indefinite EXTENSION EDUCATOR Julie Sievert Box 207, Sibley Co. Service Center, Gaylord, MN (507) Indefinite HUMAN RESOURCE DIRECTOR Kim Moore Box 256, Courthouse, Gaylord, MN (507) Indefinite INFORMATION SERVICES DIRECTOR Beth Wilson Box 231, Courthouse, Gaylord, MN (507) Indefinite MAINTENANCE SUPERINTENDENT Jim Gronholz Box 897, Courthouse/SCSC, Gaylord, MN (507) Indefinite MEDICAL EXAMINER Dr. A. Quinn Strobl MD Rhinestone St NW, Ramsey, MN (763) January 2015 PUBLIC HEALTH & HUMAN SERVICES DIRECTOR Vicki Stock Box 237, Sibley Co. Service Center, Gaylord, MN (507) Indefinite PUBLIC WORKS DIRECTOR (COUNTY ENGINEER) Tim Becker Box 897, Sibley Co. Service Center, Gaylord, MN (507) April 2017 SURVEYOR Avery Grochow 335 Main Ave, Gaylord, MN (507) January 2015 TRI-COUNTY SOLID WASTE DIRECTOR Al Christensen Box 238, Courthouse, Gaylord, MN (507) Indefinite VETERANS SERVICES OFFICER Lisa Klenk Box 1061, Sibley Co. Service Center, Gaylord, MN (507) August 2016 Page 4 of 74

5 HOW YOUR PROPERTY TAXES ARE DETERMINED FINANCE PROPERTY Taxing Authorities Proposed Expenditure Budget (activity/function/program/service) Assessor's Market Value (-) Subtract (x) Multiplied By Non-Property Tax Revenue (aids/fees/grants/interest/fines/misc.) (=) Results Proposed Property Tax Revenue (Tax Levy) State Mandated Class Rates (=) Results Total "Tax Capacity" (f.k.a. assessed value) Proposed Property Tax Revenue (Tax Levy) (/) Divided By Total "Tax Capacity" (f.k.a. assessed value) (=) Results Property Tax Rate (a.k.a "Tax Capacity" Rate) YOUR PROPERTY TAX = Your Property's Market Value X Class Rate(s) X "Tax Capacity" Rate S:\AUD\SHARED\Finance Administration\Budget\2014\TNT\TNT Packet\T&T Pages\4 TNT 20 How Your Property Taxes Are Determined... Page 5 of 74

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7 County of Sibley COUNTY BOARD MEETING 6:00 p.m., Thursday, December 5, 2013 Proposed 2014 Budget/Levy Adopted Adopted Adopted Proposed Percent Sibley County Budget/Levy Change Change Other Taxes 130, , , ,500 (58,800) % Special Assessments 130, , , , % Licenses & Permits 33,500 23,780 28,380 23,380 (5,000) % Federal Grants 1,540,707 1,122,927 1,393,838 2,418,615 1,024, % Local Grants 4,009,374 4,408,492 4,318,057 3,398,050 (920,007) % State Categorical Aid 2,277,551 1,735,777 2,259,398 2,379, , % Charges for Services 1,449,119 1,431,047 1,243,052 1,413, , % Fines & Forfeits 35,370 35,400 35,900 36, % Interest on Investments 332, , , ,250 (36,389) % Miscellaneous Revenue 474, , , ,533 (67,205) % Other Financing Sources 138,500 91,000 32,500 37,500 5, % Transfers from Other Funds 5, , ,908 1,286,801 1,073, % Use of Fund Balance 855,078 1,820, ,064 2,090,907 1,183, % NON-TAX REVENUES: 11,411,379 12,682,921 11,587,774 14,079,239 2,491, % Personal Services 9,159,314 9,087,147 9,273,316 9,648, , % Other Services & Charges 9,470,412 9,610,258 10,029,472 11,469,753 1,440, % Supplies & Non-Capitalized Equipment 1,165,967 1,325,611 1,400,736 1,379,583 (21,153) % Capital Expenses 947, , , , , % Appropriations & Pass Through Funding 1,182,318 1,489,491 1,561,784 2,407, , % Debt Service 258, , , ,023 (22,530) % Other Financing Uses 203, ,589 66, ,000 34, % EXPENDITURES: 22,386,905 23,633,676 23,207,862 26,134,070 2,926, % PROPERTY TAX LEVY: 10,975,526 10,950,755 11,620,088 12,054, , % COUNTY PROGRAM AID: 420, , , ,693 4, % NET PROPERTY TAX LEVY: 10,554,818 10,677,729 11,258,427 11,689, , % 2008 December County Program Aid Unallotment July/December County Program Aid Unallotment July/December County Program Aid Unallotment 270, July/December County Program Aid Unallotment - 147, July/December County Program Aid Unallotment (Not Applicable) COUNTY PROGRAM AID UNALLOTMENT: 270, , #DIV/0! ADJUSTED NET PROPERTY TAX LEVY: 10,825,411 10,825,411 11,258,427 11,689, , % Prepared by the Office of the Sibley County Auditor 12/4/ :03 PM lkp paper color: white Page 7 of 74

8 This page has been left blank intentionally. Note to the Packet: Comparing the adopted ,207,862 to the proposed ,134,070 one may formulate the following: 36,389 Decrease in Interest Income 2,926,208 Increase in Spending 2,962,597 Reconciled/Balanced by 229,136 Increase in Federal and State Aids 430,711 Increase in Local Taxes 170,799 Increase in Fees for Service 1,183,843 Increase in Budgeted Reserves 948,108 Increase in Other Revenue Sources 2,962,597 Page 8 of 74

9 County of Sibley Estimated Market Value By Class of Property Source: County Assessor's Report to the Sibley County Board of Appeal and Equalization Pay Assessment 2011 Assessment 2012 Assessment 2013 Assessment vs for for for for Pay 13 Payable 2011 Payable 2012 Payable 2013 Payable 2014 % of Inc/(Dec) Residential Homestead 510,866, ,573, ,972, ,726, % Res NHS, MHP & Apartments 73,999,800 72,704,700 60,161,294 60,395, % Mobile Home Park 332, , , , % Apartments 13,855,500 13,791,800 13,599,200 13,833, % Commercial 37,413,600 37,098,400 36,928,400 37,242, % Industrial 25,217,200 31,013,600 29,706,300 28,606, % Agricultural - Productive 1,627,534,800 1,693,186,100 1,946,176,449 2,465,145, % Agricultural - Non Productive 44,763,600 54,707,900 53,679,401 48,879, % Seasonal Recreation 8,603,200 1,953,400 1,444, , % EMV* 2,342,586,400 2,392,361,800 2,554,998,300 3,060,112, % amount of inc./(dec.) from prior year 49,991,200 49,775, ,636, ,114,600 % inc./(dec.) from prior year 2.18% 2.12% 6.80% 19.77% *Data from County Assessor's Reports Sibley County Board of Appeal & Equalization - REAL ESTATE ONLY *Does Include New Construction *Does Not Include market values for personal property or utilities NEW CONSTRUCTION Source: County Assessor's Report to the Sibley County Board of Appeal and Equalization Residential Homestead 8,273,800 3,268,300 3,114,900 2,946,600 Res NHS, MHP & Apartments Mobile Home Park Apartments Commercial 3,383, , , ,400 Industrial 0 460, ,100 Agricultural 3,846,800 3,108,100 4,447,500 3,248,600 Seasonal Recreation NEW CONSTRUCTION 15,504,400 7,236,500 7,713,400 6,646,700 % of Amount of Inc./(Dec.) in Total EMV 31.01% 14.54% 4.74% 1.32% Sibley County Estimated Market Value (EMV) By Class of Property EMV Millions Payable 2011 Payable 2012 Payable 2013 Payable ,500 2,000 1,500 1, Residential Homestead Res NHS, MHP & Apartments Mobile Home Park Apartments Commercial Industrial Agricultural - Productive Class of Property Agricultural - Non Productive Seasonal Recreation Payable 2011 Payable 2012 Payable 2013 Payable 2014 vs TAX CAPACITY: FINAL FINAL FINAL Proposed Pay 13 *Values from Abstract Dated: 2/25/2011 INITIAL TAX CAPACITY RATE *Values from Abstract Dated: 3/12/2012 *Values from Abstract Dated: 3/19/2013 Pay 14 *Values from Abstract Dated: 11/05/2013 % of Inc/(Dec) Real Estate (830): AG (265) 12,488,085 12,824,266 14,945,483 19,517, % NON-AG (820) 7,224,638 6,135,191 5,231,560 5,169, % Sub-Total 19,712,723 18,959,457 20,177,043 24,686, % Personal Property (1020) 606, , , , % TOTAL TAX CAPACITY 20,319,233 19,538,848 20,781,659 25,332, % TIF Capt. Tax Capacity (1040) (141,338) (150,786) (146,164) (149,155) 2.05% TOTAL NET TAX CAPACITY 20,177,895 19,388,062 20,635,495 25,183, % % of NTC inc./(dec.) 1.83% -3.91% 6.43% 22.04% Certified Levy 10,825,411 10,825,411 11,258,427 11,689, % % of levy inc./(dec.) -0.54% 0.00% 4.00% 3.83% Initial Tax Capacity Rate % % % % % % of initial tax rate inc./(dec.) -2.33% 4.07% -2.29% % Disclaimers: The above two page report represents "county-wide" averages. Increases/(Decreases) to Estimated Market Value by Class of Property relative to a specific Taxing District and/or a specific Parcel may vary +/- from the "county-wide" average. Prepared by the Office of the Sibley County Auditor 12/3/2013 7:55 PM lkp S:\AUD\SHARED\Finance Administration\Budget\2014\Budget 2014 paper color: white Page 9 of 74

10 Truth-In-Taxation Tax Capacity Rates Comparison County of Sibley (Authority 12) Final Taxes Proposed Taxes 2014 Proposed Tax Rate If NO Payable 2013 Levy Increase Payable 2014 % of Inc./(Dec.) Tax Tax Tax Capacity Capacity Capacity Real Est: (830) Ag (290/265) 14,945,483 19,517, % Non-Ag (820) 5,231,560 5,169, % Sub-Total 20,177,043 24,686, % Pers. Prop. (1020) 604, , % TOTAL TAX CAP 20,781,659 25,332, % TIF Capt. TC (1040) (146,164) (149,155) 2.05% TOTAL NET TAX CAP 20,635,495 25,183, % Certified Percent of Proposed Percent of Fund Levy Total Levy Levy Total Levy Levy General Revenue 5,240, % 5,391, % 2.89% Public Works 4,032, % 4,093, % 1.51% Health & Human Services 2,075, % 2,320, % 11.85% Sub-Total 11,347,588 11,805, % Debt Service 272, , % TOTAL 11,620, % 12,054, % 3.74% CPA CPA Fund Distribution Distribution Aid General Revenue 167, , % Public Works 128, , % Health & Human Services 66,136 71, % Sub-Total 361, , % Debt Service - - TOTAL 361, , % CPA CPA Fund Unallotment Unallotment Aid General Revenue - - #DIV/0! Public Works - - #DIV/0! Health & Human Services - - #DIV/0! Sub-Total - - #DIV/0! Debt Service - - TOTAL - - #DIV/0! HRA Special Benefits Tax Levy (Authority 14) Certified Initial Tax Initial Tax Proposed Initial Tax Initial Fund Levy Capacity Rate Capacity Rate Levy Capacity Rate Levy Rate HRA Revenue (01) 125, % % 128, % 2.00% % County of Sibley Tax Levy (Authority 12) Levy after Initial Tax Initial Tax Levy after Initial Tax Initial Fund CPA Capacity Rate Capacity Rate CPA Capacity Rate Levy Rate General Revenue (01) 4,947, % % 5,096, % 3.01% % Public Works (02) 3,903, % % 3,966, % 1.61% % Health & Human Services (03) 2,008, % % 2,249, % 11.95% -8.27% Sub-Total 10,860,247 11,312, % Debt Service (05) 272, % % 248, % -8.68% % Total 11,132, % % 11,560, % 3.85% % Total All Funds 11,258, % % 11,689, % 3.83% % % % % % % of Inc./(Dec.) Initial Rate % Proof Payable ,183,208 X % = 11,560, ,183,208 X % = 128, ,689, /3/13 lkp Prepared by the Office of the Sibley County Auditor 12/3/2013 8:16 PM paper color: white S:\AUD\SHARED\Property Tax Administration\Taxes\Levy Forms\Manual Calculations - County Levy - Current Year Page 10 of 74

11 Class Rate Percentages of Real and Personal Property by Property Type Taxes Payable 2013 and 2014 Payable 2013 Payable 2014 Class Real Property Description Class Rate Class Real Property Description Class Rate 1a Residential homestead Residential homestead first 500, % first 500, % over 500, % over 500, % 1b Blind/Disabled homestead Blind/Disabled homestead agricultural: agricultural: first 50, % first 50, % non-agricultural: non-agricultural: first 50, % first 50, % 1c Commercial seasonal - residential Commercial seasonal - residential recreational - under 250 recreational - under 250 days and includes homestead days and includes homestead first 600, % first 600, % 600,000 to 2,300, % 600,000 to 2,300, % over 2,300, % * over 2,300, % * 1d Migrant housing (structures only) Migrant housing (structures only) first 500, % first 500, % over 500, % over 500, % 2a Agricultural homestead Agricultural homestead House, Garage, One Acre: House, Garage, One Acre: first 500, % first 500, % over 500, % over 500, % 2a Remainder of Agricultural Homestead Remainder of Agricultural Homestead classified as 2a - Productive Agricultural: classified as 2a - Productive Agricultural: Page 11 of 74

12 Payable 2013 Payable 2014 Class Real Property Description Class Rate Class Real Property Description Class Rate first 1,290, % ** first 1,500, % ** over 1,290, % ** over 1,500, % ** 2b Remainder of Agricultural Homestead Remainder of Agricultural Homestead classified as 2b - Rural Vacant: classified as 2b - Rural Vacant: first 1,290, % ** first 1,500, % ** over 1,290, % ** over 1,500, % ** 2a Non-homestead Property classifed as 1.00% ** Non-homestead Property classifed as 1.00% ** 2a - Productive Agricultural: 2a - Productive Agricultural: 2a 2a Agricultural Non-Homestead Property 0.50% ** 2a Agricultural Non-Homestead Property 0.50% ** owned by Farming Entities with owned by Farming Entities with shareholders or members utilizing unused shareholders or members utilizing unused 1st tier Agricultural Homestead Value 1st tier Agricultural Homestead Value 2b Non-homestead Property classified as 1.00% ** Non-homestead Property classified as 1.00% ** 2b - Rural Vacant: 2b - Rural Vacant: 2b 2b Rural Vacant Non-Homestead Property 0.50% ** 2b Rural Vacant Non-Homestead Property 0.50% ** owned by Farming Entities with owned by Farming Entities with shareholders or members utilizing unused shareholders or members utilizing unused 1st tier Agricultural Homestead Value 1st tier Agricultural Homestead Value 2c Managed Forest 0.65% ** Managed Forest 0.65% ** 2d Private Airport 1.00% ** Private Airport 1.00% ** 2e Unmined Commercial Aggregate Deposit 1.00% ** Unmined Commercial Aggregate Deposit 1.00% ** 3a Commercial-Industrial Commercial-Industrial and public utility and public utility first 150, % * first 150, % * over 150, % * over 150, % * 3a Electric generating public utility Electric generating public utility machinery 2.00% machinery 2.00% Page 12 of 74

13 Payable 2013 Payable 2014 Class Real Property Description Class Rate Class Real Property Description Class Rate 3a All other public utility machinery 2.00% * All other public utility machinery 2.00% * 3a Real property owned in fee by a utility for Real property owned in fee by a utility for transmission line right-of-way 2.00% * transmission line right-of-way 2.00% * 4a Apartment (four or more units, including Apartment (four or more units, including private for-profit hospitals) 1.25% private for-profit hospitals) 1.25% 4b(1) Residential non-homestead one to three units Residential non-homestead one to three units that does not qualify for class 4bb 1.25% that does not qualify for class 4bb 1.25% 4b(2) Unclassified manufactured homes 1.25% Unclassified manufactured homes 1.25% 4b(3) Farm non-homestead containing more than one Farm non-homestead containing more than one residence but fewer than four along with the residence but fewer than four along with the acre(s) and garage(s) 1.25% acre(s) and garage(s) 1.25% 4b(4) Residential non-homestead not containing a 1.25% Residential non-homestead not containing a 1.25% structure structure 4bb(1) Residential non-homestead single unit Residential non-homestead single unit first 500, % first 500, % over 500, % over 500, % 4bb(2) Single house, garage and 1st acre on ag Single house, garage and 1st acre on ag non-homestead land non-homestead land first 500, % first 500, % over 500, % over 500, % 4c(1) Seasonal residential recreational Seasonal residential recreational commercial commercial first 500, % * first 500, % * over 500, % * over 500, % * Page 13 of 74

14 Payable 2013 Payable 2014 Class Real Property Description Class Rate Class Real Property Description Class Rate 4c(2) Qualifying golf courses 1.25% Qualifying golf courses 1.25% 4c(3) Nonprofit community service Nonprofit community service oriented organization oriented organization (i) Non-Revenue 1.50% (i) Non-Revenue 1.50% (ii) Donations 1.50% * (ii) Donations 1.50% * 4c(4) Post secondary student housing 1.00% ** Post secondary student housing 1.00% ** 4c(5)(i) Manufactured home park 1.25% Manufactured home park 1.25% 4c(5)(ii)Manufactured home park cooperative Manufactured home park cooperative over 50% shareholder occupied 0.75% over 50% shareholder occupied 0.75% 50% or less shareholder occupied 1.00% 50% or less shareholder occupied 1.00% 4c(6) Metro non-profit recreational property 1.25% Metro non-profit recreational property 1.25% 4c(7) Certain leased or privately owned non- 1.50% Certain leased or privately owned non- 1.50% commercial aircraft storage hangars commercial aircraft storage hangars (includes land) : on leased land (includes land) : on leased land 4c(8) Certain leased or privately owned non- 1.50% Certain leased or privately owned non- 1.50% commercial aircraft storage hangars commercial aircraft storage hangars (includes land) : on private land (includes land) : on private land 4c(9) Bed and Breakfast up to 5 units 1.25% Bed and Breakfast up to 5 units 1.25% 4c(10) Seasonal Restaurant on a Lake 1.25% Seasonal Restaurant on a Lake 1.25% 4c(11) Qualifying Marinas: Qualifying Marinas: First 500, % First 500, % Over 500, % Over 500, % 4c(12) Non-Commercial Seasonal residential recreational Non-Commercial Seasonal residential recreational first 500, % * ** first 500, % * ** over 500, % * ** over 500, % * ** Page 14 of 74

15 Payable 2013 Payable 2014 Class Real Property Description Class Rate Class Real Property Description Class Rate 4d Qualifying low income - land and buildings 0.75% Qualifying low income - land and buildings 0.75% 5(1) Unmined or low recovery iron ore 2.00% * Unmined or low recovery iron ore 2.00% * 5(2) All other property not All other property not included in any other class 2.00% included in any other class 2.00% * State tax is applicable to these classifications NOTE: For purposes of the state general property tax only, the net tax capacity of non-commercial class 4c(1) seasonal residential recreational property has the following class rate structure: First 76, % 76, , % Over 500, % In addition to the state tax base exemptions referenced by property classification, airport property exempt from city and school district property taxes under M.S is exempt from the state general property tax (MSP International Airport and Holman Field in St.Paul are exempt under this provision). ** Exempt from referendum market value based taxes. Page 15 of 74

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17 Examples Calculating Net Tax Capacity and Net Tax Capacity Tax T-IN-T Payable 2014 Sibley County s Net Tax Capacity Tax Rate = % Residential Homestead Residential Homestead (Class 1a) parcel with a taxable market value of 249,000 (after applying the Market Value Exclusion). Net Tax Capacity = Taxable Market Value x Class Rate 249,000 x 1.00% = 2,490 Net Tax Capacity Tax = Net Tax Capacity x Tax Rate 2,490 x % = 1,156 Agricultural Homestead A 160-acre farm parcel (2a). The house, garage and first acre have a value of 120,000 (after applying the Market Value Exclusion). The remainder of the farm (Productive Ag.) is valued at 159,000. Net Tax Capacity = Taxable Market Value x Class Rate HGA: 120,000 x 1.00% = 1,200 Remainder of farm: 159,000 x 0.50% = 795 Total Net Tax Capacity = 1, = 1,995 Net Tax Capacity Tax = Net Tax Capacity x Tax Rate 1,995 x % = 926 Commercial A commercial (Class 3a) parcel with a taxable market value of 352,000. Net Tax Capacity = Taxable Market Value x Class Rate 150,000 x 1.50% = 2, ,000 x 2.00% = 4,040 Total Net Tax Capacity = 6,290 Net Tax Capacity Tax = Net Tax Capacity x Tax Rate 6,290 x % = 2,920 Page 17 of 74

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19 County of Sibley Comparison of County Tax by Property Type County SCMMCHRA (Amberfield Housing Project) S:\AUD\SHARED\Finance Administration\Budget\2014\TNT\TNT Packet\T&T Pages\27 TNT 2014 Packet Comparison of County Tax by Property Type - HSTD MV OLD LAW VS HSTD MV NEW LAW OLD LAW Payable 2011 Payable 2012 Payable 2012 Payable 2013 Payable 2014 Proposed Rate Rate Rate Rate Rate % % (TMV) % % % % % % % % % % 40% % % % -2.33% 4.07% 9% 4.07% -2.29% % (EMV) Taxable Market Value Class Description Estimated Market Value Tax Capacity Tax Tax (after HSTD MV Exclusion) Tax Capacity Tax Tax Tax Residential Homestead 50, , , , ,000 1, , ,000 1, , ,000 1, ,260 1, ,000 1, ,510 1, ,000 2,000 1,073 1, ,760 1,808 1, ,000 2,250 1,207 1, ,010 2,080 1,161 1, ,000 2,500 1,341 1, ,260 2,353 1,314 1,284 1, ,000 2,750 1,475 1, ,510 2,625 1,466 1,432 1, ,000 3,000 1,610 1, ,760 2,898 1,618 1,581 1,345 Agricultural Homestead 100, , (Productive Ag Value Only) 200,000 1, ,000 1, Add Residential Homestead value 300,000 1, ,000 1, from above to get Total Tax 400,000 2,000 1,073 1, ,000 2,000 1,117 1, ,000 2,500 1,341 1, ,000 2,500 1,396 1,364 1, ,000 3,000 1,610 1, ,000 3,000 1,675 1,637 1, ,000 3,500 1,878 1, ,000 3,500 1,954 1,910 1, ,000 4,000 2,146 2, ,000 4,000 2,233 2,182 1, ,000 4,500 2,414 2, ,000 4,500 2,513 2,455 2,089 1,000,000 5,000 2,683 2,792 1,000,000 5,000 2,792 2,728 2,321 Agricultural Non Homestead 100,000 1, ,000 1, (Productive Ag Value Only) 200,000 2,000 1,073 1, ,000 2,000 1,117 1, ,000 3,000 1,610 1, ,000 3,000 1,675 1,637 1, ,000 4,000 2,146 2, ,000 4,000 2,233 2,182 1, ,000 5,000 2,683 2, ,000 5,000 2,792 2,728 2, ,000 6,000 3,219 3, ,000 6,000 3,350 3,274 2, ,000 7,000 3,756 3, ,000 7,000 3,908 3,819 3, ,000 8,000 4,292 4, ,000 8,000 4,467 4,365 3, ,000 9,000 4,829 5, ,000 9,000 5,025 4,910 4,178 1,000,000 10,000 5,365 5,584 1,000,000 10,000 5,584 5,456 4,642 Commercial/Industrial 100,000 1, ,000 1, ,000 2,250 1,207 1, ,000 2,250 1,256 1,228 1, ,000 3,250 1,744 1, ,000 3,250 1,815 1,773 1, ,000 4,250 2,280 2, ,000 4,250 2,373 2,319 1, ,000 5,250 2,817 2, ,000 5,250 2,931 2,864 2, ,000 7,250 3,890 4, ,000 7,250 4,048 3,956 3, ,000 9,250 4,963 5, ,000 9,250 5,165 5,047 4, ,000 11,250 6,036 6, ,000 11,250 6,281 6,138 5, ,000 13,250 7,109 7, ,000 13,250 7,398 7,229 6, ,000 15,250 8,182 8, ,000 15,250 8,515 8,320 7, ,000 17,250 9,255 9, ,000 17,250 9,632 9,411 8,007 1,000,000 19,250 10,328 10,748 1,000,000 19,250 10,748 10,503 8,935 Prepared by the Office of the Sibley County Auditor 12/3/2013 8:46 PM lkp paper color: white NEW LAW Page 19 of 74

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21 IMPORTANT PROPERTY TAX LAW CHANGE 2011 Law Change: A New Homestead Market Value Exclusion replaces the Homestead Market Value Credit The 2011 Legislature repealed the Homestead Residential Market Value Credit and replaced it with a new program called the Homestead Market Value Exclusion. This change is impacting the property taxes on all homesteaded and non-homesteaded property for Pay This change saves the state 261 million. LOCAL GOVERNMENTS CANNOT UNDO THIS STATE LAW CHANGE. Old Law: All homesteaded property less than 413,800 in value received a Homestead Residential Market Value Credit. This credit reduced the property taxes billed and was shown on line 4 of the property tax statement mailed in March of each year. Homesteaded property received a credit or reduction on the amount of property taxes. The credit was equal to.4% of market value for the first 76,000 in market value, reaching its maximum level of 304. The 304 credit was gradually phased out for homes valued more than 76,000, until it was reduced to 0 at a value of 413,800. The chart below gives examples of the amount of credit on various valued homes. Estimated Market Value Taxable Market Value Old Law Homestead Credit 76,000 76, , , , , , , , , , ,000 - New Law: All homesteaded property less than 413,800 in value will receive a Homestead Market Value Exclusion. This value exclusion will be identified on the valuation notices mailed in March of each year. The taxable value listed on your Proposed Property Tax Statement has been reduced by the amount of the homestead exclusion. Homesteaded property no longer receives a credit that reduces the property taxes paid. Instead, a portion of the homestead s property value will be excluded from taxation. The Homestead Market Value Exclusion excludes from taxation 40% of the value on the first 76,000 of a property s value. The amount excluded is reduced as the value rises above 76,000 (the exclusion reduction is equal to 9% of the value above 76,000). Homesteads that exceed 413,800 in value will receive no homestead exclusion. The chart below gives examples of the exclusion amount on homes of various values. Estimated Market Value Homestead Exclusion Taxable Market Value (after Homestead Exclusion) 76,000 30,400 45, ,000 23, , ,000 14, , ,000 5, , ,000 1, , , ,000 6 Page 21 of 74

22 IMPORTANT PROPERTY TAX LAW CHANGE 2011 Law Change: A New Homestead Market Value Exclusion replaces the Homestead Market Value Credit Page 2 Why the State Change: The elimination of the market value homestead credit was included in the 2011 budget bills passed in the legislative special session in July of By eliminating the credit, the state was able to save roughly 260 million each year. This was one cost saving measure the state used to close the 5 billion two-year state budget deficit. Under the old credit law, the state was reducing the taxes paid by homesteaded property and instead the state was promising to pay that portion of the tax to the local taxing districts (i.e., your city, county, school, and other local taxing districts). However, in seven of the last eight years, the state did not pay the full credit amount to at least some local governments, due to its budget problems. This meant each year many local governments were left with a deficit in their budgets because of the state s inability to pay the amount it owed. What is the Impact: The impact of this state change will vary for each property depending on a variety of factors. However, in general, the elimination of the homestead credit and replacement with a homestead exclusion is going to mean higher property taxes for most property owners, even if property tax levies adopted by local governments do not increase. The bullets below explain the most significant impacts of this change: The state is no longer providing a homestead credit and instead the entire levy is being paid by local property taxpayers. The new homestead exclusion lowers the tax base, which has led to increases in the property tax rates of most local taxing jurisdictions. A property tax rate is calculated by dividing the property tax levy by the total tax base. For properties that are non-homestead, including commercial and industrial property, the higher property tax rates are likely to mean higher property tax bills even if their values have declined. For properties that are homestead, the new homestead exclusion may not be enough to offset the increases in tax rates and the elimination of the homestead credit, thus many homestead properties as well will experience tax increases. For additional information on understanding the changes in homestead benefits and to see detailed calculations of how it affects taxes in 2012, please visit: Additional Resources for Homeowners Affected homeowners with household incomes below 100,780 or whose property taxes increase by more than 12% or 100 (whichever is greater) may apply for the state s property tax refund and, if qualified, will get some of the increase refunded. Information contained in this flyer was gathered from bulletins and documents prepared by the Minnesota House Research Department and Minnesota Department of Revenue. 7 Page 22 of 74

23 Understanding Recent Changes in Homestead Benefits For Property Tax Purposes What Changed? The 2011 Legislature repealed the Homestead Market Value Credit, (the homestead credit), and replaced it with a new Homestead Market Value Exclusion. The last year of the credit is for property taxes paid in 2011 and the exclusion begins for property taxes payable in What is a credit? A credit is a reduction in the amount of taxes due. What is an exclusion? An exclusion is a reduction in the amount of value subject to tax. The old law with the credit was as simple as: X Y = Z If your initial tax was X, and your credit was Y, then the tax you had to pay was Z. Under the new law, an exclusion changes the initial tax amount (X), and with the credit gone, the new initial tax becomes the final tax (X = Z). HOW DO HOMESTEAD BENEFITS CHANGE? Under the old law, the credit itself equaled the homestead benefit, and its calculation depended only on the value of the homestead. Because the credit was subtracted from the initial tax amount, the credit affected each taxpayer independently. Under the new law, the exclusion is still calculated using the value of the homestead, but the tax benefit depends on a variety of factors other than homestead value. Because the exclusion is a reduction in the value subject to tax, it also affects tax rates and the taxes of all properties. WHY IS THIS CHANGE COMMONLY RESULTING IN TAX INCREASES? There are four reasons why the change commonly results in increases: 1) State money is no longer reducing total taxes. For 2012, the state was projected to pay approximately 260 million of local taxes through the credit program. With the change, there will be no state paid credit and the entire local property tax levy will be paid by taxpayers. 2) The reduction in taxable value increases tax rates. With the total taxable value being reduced by the exclusion, raising the same total levy as the prior year requires a higher rate. 3) The reduction in taxable value shifts the relative burdens of who pays. With homestead values reduced, other property types (and homes with higher values) pay a larger share of the tax. 4) The exclusion provides less benefit in low tax rate areas than the credit. The computation of the exclusion and credit amounts are roughly comparable where the tax rate is close to the state average, but in lower tax rate areas the excluded value provides less benefit. High rate areas may see greater benefit. Minnesota Revenue, Understanding Recent Changes in Homestead Benefits 1 Page 23 of 74

24 COMPUTATION OF CREDIT AND EXCLUSION AMOUNTS Even though the tax benefits of the credit and the exclusion are not equal, the calculation of the exclusion amount is similar to the calculation of the former credit. Both reach their maximum at 76,000 of market value (304 for the credit; 30,400 for the exclusion). Both reduce to 0 at about 414,000 of market value. Example: A house valued at 116,000. Credit = (0.4% x 76,000) (40,000 x 0.09%) = = 268 AVERAGE TAX RATE ILLUSTRATION Old Law: New Law: Credit Exclusion Estimated Market Value 116, ,000 Exclusion 0 26,800 Taxable Market Value 116,000 89,200 Class Rate 1% 1% Net Tax Capacity 1, Tax Rate % % Gross Tax 1, Credit Net Tax LOW TAX RATE ILLUSTRATION Tax Rate % % Gross Tax Credit Net Tax Exclusion = (40% x 76,000) (40,000 x 9%) = 30,400 3,600 = 26,800 WANT MORE DETAILS? CONSIDER THIS THEORETICAL ILLUSTRATION Similarly computed amounts do not yield equal benefits: NOTE: This illustration does not reflect an actual location. Credit = 0.4% of the first 76,000, minus 0.09% of the value over 76,000. Exclusion = 40% of the first 76,000, minus 9% of the value over 76,000. Let s say you live in a house valued at 116,000. Under the old law the full value was taxed, but the new exclusion lowers the taxable value. Different classes of property are taxed at different levels. The first 500,000 of homestead value has a rate of 1%. (Higher value has a rate of 1.25%.) Net tax capacity is a term describing the taxable value after class rates are applied. Again, this is lower under the new law due to the exclusion. Tax rates increase because the exclusion shrinks the taxable value. This illustration shows statewide average rates before and after the change. The gross tax under the old law was higher because there was no exclusion, but the credit reduced the net tax. Under the new law the gross and net are the same. Here the increase is modest, but Tax rates affect the relative strength of the exclusion because multiplying excluded value by a low rate is less beneficial than multiplying it by a high rate. So, under a low tax rate example, the increase in tax is more extreme. WHAT ELSE AFFECTS MY TAXES (IN ADDITION TO THE HOMESTEAD BENEFIT)? Local levy decisions, including the effects of changes in state aid and local budget priorities. Market forces can affect property taxes in two ways: The value of your property may increase or decrease. The value of other properties may increase or decrease and change the share that your property is of the total tax base, whether your property s value changed or not. Various other changes (the classification or your property, eligibility for other benefits, and miscellaneous law changes) may also affect property taxes. Minnesota Revenue, Understanding Recent Changes in Homestead Benefits 2 Page 24 of 74

25 2014 VS 2013 TAX LEVIES BY TAXING AUTHORITES 2014 PROPOSED LEVY SURVEY 2013 FINAL NTC 2014 PROPOSED PERCENT 2013 FINAL MV 2014 PROPOSED PERCENT COUNTY CTCODE SD STD OBJ NAME LEVY NTC LEVY CHANGE LEVY MV LEVY CHANGE SIBLEY COUNTY 11,258,427 11,689, % 0 0 County Government Total 11,258,427 11,689, % ARLINGTON CITY OF 756, , % GAYLORD CITY OF 811, , % GIBBON CITY OF 420, , % GREEN ISLE CITY OF 502, , % HENDERSON CITY OF 635, , % NEW AUBURN CITY OF 213, , % WINTHROP CITY OF 637, , % 0 0 Cities Total 3,976,940 4,129, % ALFSBORG TOWN OF 152, , % ARLINGTON TOWN OF 162, , % BISMARCK TOWN OF 140, , % CORNISH TOWN OF 120, , % DRYDEN TOWN OF 102, , % FAXON TOWN OF 101, , % GRAFTON TOWN OF 215, , % GREEN ISLE TOWN OF 150, , % HENDERSON TOWN OF 196, , % JESSENLAND TOWN OF 158, , % KELSO TOWN OF 85,000 85, % MOLTKE TOWN OF 143, , % NEW AUBURN TOWN OF 157, , % SEVERANCE TOWN OF 116, , % SIBLEY TOWN OF 170, , % TRANSIT TOWN OF 106, , % WASHINGTON LAKE TOWN OF 199, , % 0 0 Townships Total 2,477,678 2,505, % IND SCHOOL DIST , , % 589, , % IND SCHOOL DIST ,088,276 1,126, % 695, , % School Districts Total 1,766,286 1,808, % 1,285, , % HIGH ISLAND WATERSHED 150, , % Special Taxing Districts Total 150, , % Total 19,629,331 20,282, % 1,285, , % S:\AUD\SHARED\Property Tax Administration\Taxes\Payable 2014\Levy Survey for MN DOR\Sibley County Certification of Payable 2014 Proposed Levies for MN Dept of Rev Prepared by the Office of the Sibley County Auditor Page 25 of 74

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27 SIBLEY COUNTY 2014 TAX CAPACITIES AND MARKET VALUES ** Proposed ** TOWNSHIP ESTMATED MARKET VALUE - REAL ESTMATED MARKET VALUE - PERSONAL ESTMATED MARKET VALUE - TOTAL TAXABLE MARKET VALUE TAX CAPACITY - AG TAX CAPACITY - NON AG TAX CAPACITY - PERSONAL TAX CAPACITY - TOTAL TIF RETAINED CAPTURED VALUE TAXABLE TAX CAPACITY TAXABLE REFERENDUM MARKET VALUE STATE SRR TAX STATE C/I TAX ALFSBORG 179,482,600 4,217, ,700, ,760,400 1,368,607 92,566 81,681 1,542,854-1,542,854 20,671, ,955 ARLINGTON 178,898,300 1,239, ,137, ,486,200 1,220, ,764 23,730 1,438,276-1,438,276 33,187,300 30,211 BISMARCK 171,705,600 3,292, ,998, ,693,000 1,346, ,246 65,856 1,519,004-1,519,004 17,219, ,869 CORNISH 176,486,000 3,148, ,634, ,067,300 1,397,979 61,011 62,849 1,521,839-1,521,839 15,714,200 69,604 DRYDEN 145,595, , ,987, ,460,300 1,045,650 86,221 7,390 1,139,261-1,139,261 16,786, ,044 FAXON 111,117,800 5,486, ,604, ,426, , , ,982 1,040,086-1,040,086 56,084, ,356 GRAFTON 189,513,000 2,900, ,413, ,184,600 1,552,719 37,278 58,004 1,648,001-1,648,001 13,473,500 58,054 GREEN ISLE 157,753, , ,330, ,841, , ,966 11,530 1,172,727-1,172,727 32,131, ,511 HENDERSON 135,904,000 53, ,957, ,286, , , ,060,303-1,060,303 42,129,800 1,143 15,634 JESSENLAND 130,668, ,668, ,095, , ,013-1,036,584-1,036,584 30,817,700 2,192 14,525 KELSO 178,077, , ,325, ,630,400 1,316, ,548 4,968 1,426,856-1,426,856 17,551,400 1,047 28,439 MOLTKE 189,439,300 3,136, ,575, ,914,700 1,427,885 37,392 62,720 1,527,997-1,527,997 14,024,500-63,876 NEW AUBURN 128,149,100 71, ,220, ,297, , ,203 1, , ,709 21,642, ,068 SEVERANCE 178,526, , ,635, ,304,400 1,328,653 45,619 2,190 1,376,462-1,376,462 10,989, ,645 SIBLEY 172,083, ,083, ,476,900 1,263,258 66,672-1,329,930-1,329,930 14,832,900 1,258 TRANSIT 166,557, , ,745, ,030,500 1,201,377 75,674 3,750 1,280,801-1,280,801 15,738, ,076 WASHINGTON LAKE 160,091,800 4,128, ,220, ,483,200 1,034, ,854 82,570 1,324,850-1,324,850 37,342, ,221 TOWNSHIP SUB TOTAL 2,750,049,900 29,187,300 2,779,237,200 2,724,438,300 19,418,190 2,304, ,386 22,301,540-22,301, ,336,900 6, ,346 CITIES ESTMATED MARKET VALUE - REAL ESTMATED MARKET VALUE - PERSONAL ESTMATED MARKET VALUE - TOTAL TAXABLE MARKET VALUE TAX CAPACITY - AG TAX CAPCAITY - NON AG TAX CAPCAITY - PERSONAL TAX CAPCAITY - TOTAL TIF RETAINED CAPTURED VALUE TAXABLE TAX CAPACITY TAXABLE REFERENDUM MARKET VALUE STATE SRR TAX STATE C/I TAX ARLINGTON 83,347, ,100 83,681,200 66,794,000 21, ,645 6, , ,425 80,950, ,846 GAYLORD 72,597,600 1,529,700 74,127,300 58,859,600 26, ,859 30, , , ,500 70,499, ,221 GIBBON 20,186, ,600 20,518,200 15,178,700 11, ,764 6, ,449 5, ,799 19,361,975-48,613 GREEN ISLE 24,388, ,900 24,538,300 19,156,600 18, ,936 2, , ,606 22,784,700-56,193 HENDERSON 36,090, ,800 36,623,600 28,865,200 2, ,274 10, , ,873 36,254, ,710 NEW AUBURN 10,603, ,300 10,862,800 7,849,900 3,481 74,941 5,186 83,608-83,608 10,336,425 1,280 11,971 WINTHROP 66,742, ,100 67,003,300 55,429,000 15, ,082 5, , ,857 64,557, ,623 CITIES SUB TOTAL 313,956,200 3,398, ,354, ,133,000 98,835 2,864,501 67,487 3,030, ,155 2,881, ,744,375 1,545 1,096,177 GRAND TOTAL 3,064,006,100 32,585,800 3,096,591,900 2,976,571,300 19,517,025 5,169, ,873 25,332, ,155 25,183, ,081,275 8,328 1,894, vs 13 INC/(DEC) 505,125,600 2,062, ,188, ,966,300 4,571,542 (62,095) 41,257 4,550,704 2,991 4,547,713 (8,223,380) (321) 20, % 6.76% 19.59% 20.77% 30.59% -1.19% 6.82% 21.90% 2.05% 22.04% -1.14% -3.71% 1.07% S:\AUD\SHARED\Property Tax Administration\Taxes\TAX CAPACITIES AND MARKET VALUES BY TAXING AUTHORITIES\Tax Capacities and Market Values by Taxing Authorities Prepared by the Office of the Sibley County Auditor 12/3/2013 6:54 PM paper color: white 1 of 2 Page 27 of 74

28 SIBLEY COUNTY 2014 TAX CAPACITIES AND MARKET VALUES ** Proposed ** WATERSHEDS ESTMATED MARKET VALUE - REAL ESTMATED MARKET VALUE - PERSONAL ESTMATED MARKET VALUE - TOTAL TAXABLE MARKET VALUE TAX CAPACITY - AG TAX CAPCAITY - NON AG TAX CAPCAITY - PERSONAL TAX CAPCAITY - TOTAL TIF RETAINED CAPTURED VALUE TAXABLE TAX CAPACITY TAXABLE REFERENDUM MARKET VALUE STATE SRR TAX STATE C/I TAX HIGH ISLAND 797,124,400 4,640, ,764, ,559,200 5,032,991 1,300,061 92,006 6,425,058 6,425, ,989,305 2, ,418 BUFFALO CREEK 65,479,500-65,479,500 63,480, ,270 66, , ,383 13,310, ,868 WATERSHEDS TOTAL 862,603,900 4,640, ,244, ,040,100 5,448,261 1,366,174 92,006 6,906,441-6,906, ,299,905 2, ,286 SCHOOLS ESTMATED MARKET VALUE - REAL ESTMATED MARKET VALUE - PERSONAL ESTMATED MARKET VALUE - TOTAL TAXABLE MARKET VALUE TAX CAPACITY - AG TAX CAPCAITY - NON AG TAX CAPCAITY - PERSONAL TAX CAPCAITY - TOTAL TIF RETAINED CAPTURED VALUE TAXABLE TAX CAPACITY TAXABLE REFERENDUM MARKET VALUE STATE SRR TAX STATE C/I TAX 108 NORWOOD YOUNG AMERICA 36,585,500 3,362,700 39,948,200 39,154, ,517 43,391 67, , ,162 11,562,000-75, BELLE PLAINE 120,569,600 6,173, ,742, ,546, , , ,714 1,138,543-1,138,543 56,949, , BUFFALO LAKE HECTOR 175,285,900 2,900, ,186, ,089,900 1,437,057 35,244 58,004 1,530,305-1,530,305 12,761,900-58, SIBLEY EAST 1,205,404,100 4,314,800 1,209,718,900 1,150,548,100 7,207,506 2,369,700 84,790 9,661, ,202 9,518, ,568,930 1, , GIBBON FAIRFAX WINTHROP 1,074,492,000 14,635,900 1,089,127,900 1,058,031,400 7,555,316 1,308, ,934 9,153,379 5,650 9,147, ,509, , LESUEUR HENDERSON 323,245, , ,005, ,240,000 1,791, ,467 14,445 2,605, ,605, ,449,625 4, , GLENCOE SILVER LAKE 128,423, , ,862, ,961, , ,359 8, , ,097 33,279,425 1,812 20,013 SCHOOLS SUB TOTAL 3,064,006,100 32,585,800 3,096,591,900 2,976,571,300 19,517,025 5,169, ,873 25,332, ,155 25,183, ,081,275 8,328 1,894,523 Footnote: 2887 MCLEOD WEST This specified portion of ISD# 2887 was consolidated with ISD# 2159, effective Payable 2010 S:\AUD\SHARED\Property Tax Administration\Taxes\TAX CAPACITIES AND MARKET VALUES BY TAXING AUTHORITIES\Tax Capacities and Market Values by Taxing Authorities Prepared by the Office of the Sibley County Auditor 12/3/2013 6:54 PM paper color: white 2 of 2 Page 28 of 74

29 **Proposed** SIBLEY COUNTY 2014 TAX EXTENSION RATES MKT MKT 2014 STATE SPECIAL T.D. MULTI LOCAL VALUE LOCAL VALUE SRR C/I CODE DISTRICT TWP/CITY SCHOOL COUNTY WTRSHD REG. 9 CO HRA TAX RATE RATE TAX RATE RATE TAX RATE TAX RATE 801 Alfsborg Alfsborg Arlington Arlington HI Arlington HI Bismarck Bismarck HI Cornish Dryden Dryden HI Faxon Faxon Grafton 2159 (Old 2887) - HI Grafton Grafton HI Grafton BC Grafton HI Green Isle Green Isle HI Green Isle BC Green Isle Green Isle HI Green Isle BC Henderson Henderson HI Henderson LS/Exempt Jessenland Jessenland HI Jessenland Jessenland HI Kelso Kelso Kelso HI Moltke Moltke HI New Auburn HI New Auburn BC New Auburn HI New Auburn Severance Sibley Transit Transit HI Transit Transit HI Washington Lake 108 (FD #2) Washington Lake 716 (FD #1) Washington Lake 2310 (FD #1) Washington Lake HI (FD #1) Washington Lake 2397 (FD #1) Washington Lake 716 (FD#2) Washington Lake 2310 (FD #2) Washington Lake 2310 (FD #1) Washington Lake 2397 (FD #1) Arlington City HI Arlington RSD HI Arlington Annex HI Gaylord City Gaylord City (Trtmnt Plt) Annex Gibbon City Gibbon RSD Green Isle City Green Isle RSD Henderson City New Auburn City HI Winthrop City Winthrop RSD STATE S:\AUD\SHARED\Property Tax Administration\Taxes\TAX EXTENSION RATES\2014 TAX EXTENSION RATES - Proposed Prepared by the Office of the Sibley County Auditor 12/3/2013 6:34 PM Page 1 of 1 Page 29 of 74

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31 Examples Comprehensive Tax Calculations T-IN-T Payable 2014 For All Examples: Unique Taxing Area = District 1505 County Net Tax Capacity Rate % + Township (City) Rate % + School District Rate % + Special Taxing District Rate % = Total Net Tax Capacity Tax Rate (Local Tax Rate) % Total Referendum Market Value Rate.12018% State Tax Rate % (C/I Rate = % & SRR Rate = %) Basic Formula for Calculating Net Tax: Local NTC Tax Credits + Ref. MV Tax + State Tax = Net Tax Residential Homestead Residential Homestead (Class 1a) parcel with a taxable market value of 249,000. Market Value Exclusion Residential Homestead MV Exclusion = Base Exclusion Exclusion Reduction Base Exclusion: 76,000 x 40% = 30,400 Exclusion Reduction: (249,000-76,000) x 9% = 173,000 x 9% = 15,570 Final MV Exclusion: 30,400-15,570 = 14,830 Net Tax Capacity = (Taxable Market Value Final MV Exclusion) x Class Rate (249,000 14,830) x 1.00% = 234,170 x 1.00% = 2,342 Local NTC Tax Net Tax Capacity Tax = Net Tax Capacity x Local Tax Rate 2,342 x % = 1,576 (1,087 is County Tax) Credits - This property receives no credits. Referendum Market Value Tax Referendum Market Value Tax = RMV X RMV Tax Rate Referendum Market Value = 249,000 Referendum Market Value Tax = 249,000 x % = 299 State Tax State Tax = State Net Tax Capacity X State Tax Rate State Net Tax Capacity = 0 State Tax = 0 (Not Subject to State Tax) Net Tax = 1, = 1,875 Page 31 of 74

32 Examples Comprehensive Tax Calculations T-IN-T Payable 2014 For All Examples: Unique Taxing Area = District 1505 County Net Tax Capacity Rate % + Township (City) Rate % + School District Rate % + Special Taxing District Rate % = Total Net Tax Capacity Tax Rate (Local Tax Rate) % Total Referendum Market Value Rate.12018% State Tax Rate % (C/I Rate = % & SRR Rate = %) Basic Formula for Calculating Net Tax: Local NTC Tax Credits + Ref. MV Tax + State Tax = Net Tax Agricultural Homestead A 160-acre farm parcel (2a) has a taxable market value of 279,000. The house, garage and first acre have a value of 120,000. The remainder of the farm (Productive Ag.) is valued at 159,000. Market Value Exclusion Residential Homestead MV Exclusion = Base Exclusion Exclusion Reduction Base Exclusion: 76,000 x 40% = 30,400 Exclusion Reduction: (120,000-76,000) x 9% = 44,000 x 9% = 3,960 Final MV Exclusion: 30,400-3,960 = 26,440 Net Tax Capacity = (Taxable Market Value Final MV Exclusion) x Class Rate HGA: (120,000-26,440) x 1.00% = 93,560 x 1.00% = 936 Remainder of farm: 159,000 x 0.50% = 795 Total Net Tax Capacity = = 1,731 Local NTC Tax Net Tax Capacity Tax = Net Tax Capacity x Local Tax Rate 1,731 x % = 1,165 (803 is County Tax) Agricultural Homestead Credit = Base Credit Credit Reduction Base credit: 115,000 x 0.3% = 345 Credit reduction: (159, ,000) x 0.05% = 22 Final credit: = 323 Referendum Market Value Tax Referendum Market Value Tax = Referendum Market Value X RMV tax rate Referendum Market Value = 120,000 Referendum Market Value Tax = 120,000 x % = 144 State Tax State Tax = State Net Tax Capacity X State Tax Rate State Net Tax Capacity = 0 State Tax = 0 (Not Subject to State Tax) Net Tax = 1, = 986 Page 32 of 74

33 Examples Comprehensive Tax Calculations T-IN-T Payable 2014 For All Examples: Unique Taxing Area = District 1505 County Net Tax Capacity Rate % + Township (City) Rate % + School District Rate % + Special Taxing District Rate % = Total Net Tax Capacity Tax Rate (Local Tax Rate) % Total Referendum Market Value Rate.12018% State Tax Rate % (C/I Rate = % & SRR Rate = %) Basic Formula for Calculating Net Tax: Local NTC Tax Credits + Ref. MV Tax + State Tax = Net Tax Commercial A commercial (Class 3a) parcel with a taxable market value of 352,000. Net Tax Capacity = Taxable Market Value x Class Rate 150,000 x 1.50% = 2, ,000 x 2.00% = 4,040 Total Net Tax Capacity = 6,290 Local NTC Tax Net Tax Capacity Tax = Net Tax Capacity x Local Tax Rate 6,290 x % = 4,232 (2,920 is County Tax) Credits - This property receives no credits. Referendum Market Value Tax Referendum Market Value Tax = Referendum Market Value X RMV tax rate Referendum Market Value = 352,000 Referendum Market Value Tax = 352,000 x % = 423 State Tax State Tax = State Net Tax Capacity X State Tax Rate State Net Tax Capacity = 6,290 State Tax = 6,290 x % = 3,334 Net Tax = 4, ,334 = 7,989 Page 33 of 74

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35 CITIES SIBLEY COUNTY 2014 GROSS TAX BY TAXING AUTHORITY ** Proposed ** City/Twp % of City Levy Schools Watersheds County % of County Region 9 % of Region 9 HRA % of HRA State % of State Tax Increment Gross Tax Ag Credit (-) Homestead Credit (-) Net Tax % of Net Tax 14 vs 13 INC/(DEC) % of Total Arlington 793, % 128, , , % 1, % 3, % 71, % - 1,331, ,330, % (13,326.34) -2% Gaylord 1,026, % 107, , % % 3, % 160, % 171, ,733, ,733, % (5,632.31) -1% Gibbon 444, % 41, , % % % 25, % 7, , , % (21,418.95) -4% Green Isle 522, % 36, , % % 1, % 29, % - 685, , % (33,136.96) -6% Henderson 599, % 124, , % % 1, % 28, % , , % (85,663.48) -15% New Auburn 218, % 21, , , % % % 6, % - 286, , % (30,423.88) -5% Winthrop 649, % 178, , % 1, % 3, % 258, % - 1,443, ,443, % (117,855.35) -21% 4,254, % 638, , ,272, % 4, % 14, % 581, % 179, ,958, , ,956, % (307,457.27) -55% 14 vs 13 INC/(DEC) 187, TOWNSHIPS City/Twp % of Twp Levy Schools Watersheds County % of County Region 9 % of Region 9 HRA % of HRA State % of State Tax Increment Gross Tax Ag Credit (-) Homestead Credit (-) Net Tax % of Net Tax 13 vs 12 INC/(DEC) % of Total Alfsborg 132, % 141, , % 2, % 7, % 58, % - 1,050, , ,037, % 34, % Arlington 162, % 133, , , % 2, % 7, % 16, % - 1,003, , , % 21, % Bismarck 139, % 137, , % 2, % 7, % 54, % - 1,039, , ,029, % 61, % Cornish 119, % 134, , % 2, % 7, % 36, % - 999, , , % 67, % Dryden 119, % 92, , , % 1, % 5, % 11, % - 756, , , % 49, % Faxon 101, % 480, , % 1, % 5, % 72, % - 1,138, , ,127, % 46, % Grafton 214, % 83, , , % 2, % 8, % 30, % - 1,122, , ,110, % 61, % Green Isle 150, % 117, , , % 1, % 5, % 7, % - 831, , , % (1,274.17) 0% Henderson 196, % 313, , , % 1, % 5, % 8, % - 1,013, , , % 21, % Jessenland 161, % 219, , , % 1, % 5, % 8, % - 882, , , % 18, % Kelso 84, % 197, , % 2, % 7, % 15, % - 962, , , % 78, % Moltke 148, % 130, , , % 2, % 7, % 33, % - 1,029, , ,012, % 105, % New Auburn 157, % 91, , , % 1, % 4, % 1, % - 689, , , % 23, % Severance 109, % 114, , % 2, % 7, % 9, % - 874, , , % 91, % Sibley 189, % 102, , % 2, % 6, % % - 912, , , % 65, % Transit 114, % 113, , % 2, % 6, % 4, % - 829, , , % 66, % Washington Lake 200, % 221, , , % 2, % 6, % 54, % - 1,097, , ,078, % 57, % 2,505, % 2,824, , ,238, % 35, % 113, % 424, % - 16,233, , ,968, % 870, % 14 vs 13 INC/(DEC) 27, Grand Total 6,759, ,462, , ,510, % 39, % 128, % 1,006, % 179, ,191, , ,924, % 562, % 14 vs 13 INC/(DEC) 214, (124,616.89) (2,634.91) 424, , , , , (24,532.42) - 562, S:\AUD\SHARED\Property Tax Administration\Taxes\TAX BY TAXING AUTHORITIES-ENTITY - GROSS TAX\Tax Value & Credit List Recap of Gross Tax by Taxing Authority-Entity Prepared by the Office of the Sibley County Auditor 12/3/2013 6:59 PM paper color: white Page 1 of 1 Page 35 of 74

36 CITIES SIBLEY COUNTY 2013 GROSS TAX BY TAXING AUTHORITY ** Certified ** City/Twp % of City Levy Schools Watersheds County % of County Region 9 % of Region 9 HRA % of HRA State % of State Tax Increment Gross Tax Ag Credit (-) Homestead Credit (-) Net Tax % of Net Tax 13 vs 12 INC/(DEC) % of Total Arlington 756, % 163, , , % 1, % 3, % 68, % - 1,344, ,344, % (153,044.68) -30% Gaylord 892, % 169, , % 1, % 3, % 158, % 167, ,739, ,739, % (67,670.93) -13% Gibbon 428, % 55, , % % 1, % 25, % 7, , , % 15, % Green Isle 502, % 59, , % % 1, % 27, % - 718, , % (51,221.09) -10% Henderson 635, % 142, , % % 1, % 28, % , , % (56,036.47) -11% New Auburn 213, % 32, , , % % % 7, % - 317, , % (11,711.45) -2% Winthrop 637, % 218, , % 1, % 4, % 271, % - 1,561, ,561, % (42,987.07) -9% 4,066, % 842, , ,554, % 5, % 18, % 587, % 175, ,265, , ,264, % (366,845.46) -73% 13 vs 12 INC/(DEC) 84, TOWNSHIPS City/Twp % of Twp Levy Schools Watersheds County % of County Region 9 % of Region 9 HRA % of HRA State % of State Tax Increment Gross Tax Ag Credit (-) Homestead Credit (-) Net Tax % of Net Tax 13 vs 12 INC/(DEC) % of Total Alfsborg 152, % 142, , % 2, % 7, % 58, % - 1,017, , ,002, % 100, % Arlington 162, % 148, , , % 2, % 7, % 16, % - 982, , , % 73, % Bismarck 139, % 134, , % 2, % 7, % 54, % - 979, , , % 51, % Cornish 119, % 129, , % 2, % 7, % 36, % - 932, , , % 75, % Dryden 102, % 97, , , % 1, % 5, % 10, % - 708, , , % 58, % Faxon 101, % 427, , % 1, % 5, % 59, % - 1,092, , ,081, % (59,586.01) -12% Grafton 215, % 124, , , % 2, % 7, % 30, % - 1,062, , ,048, % 73, % Green Isle 149, % 129, , , % 1, % 5, % 7, % - 834, , , % 33, % Henderson 196, % 288, , , % 1, % 5, % 7, % - 994, , , % (14,941.51) -3% Jessenland 158, % 206, , , % 1, % 5, % 7, % - 865, , , % 9, % Kelso 85, % 174, , % 2, % 6, % 15, % - 885, , , % 77, % Moltke 143, % 121, , , % 2, % 6, % 33, % - 926, , , % 79, % New Auburn 157, % 91, , , % 1, % 4, % 1, % - 667, , , % 28, % Severance 116, % 104, , % 1, % 6, % 7, % - 784, , , % 80, % Sibley 169, % 105, , % 1, % 6, % % - 848, , , % 103, % Transit 106, % 112, , % 1, % 6, % 4, % - 763, , , % 56, % Washington Lake 199, % 206, , , % 2, % 6, % 44, % - 1,041, , ,020, % 45, % 2,477, % 2,745, , ,532, % 33, % 107, % 398, % - 15,387, , ,097, % 871, % 13 vs 12 INC/(DEC) 135, Grand Total 6,544, ,587, , ,086, % 38, % 125, % 986, % 175, ,652, , ,361, % 504, % 13 vs 12 INC/(DEC) 219, (185,141.74) (525.09) 430, , , (5,960.61) 496, (8,622.00) - 504, S:\AUD\SHARED\Property Tax Administration\Taxes\TAX BY TAXING AUTHORITIES-ENTITY - GROSS TAX\Tax Value & Credit List Recap of Gross Tax by Taxing Authority-Entity Prepared by the Office of the Sibley County Auditor 3/20/ :13 AM paper color: white Page 1 of 1 Page 36 of 74

37 Fourteen Reasons WHY PROPERTY TAXES VARY FROM YEAR TO YEAR THE MARKET VALUE OF A PROPERTY MAY CHANGE. Each parcel of property is assessed at least once every five years and a sales ratio study is done to determine if the property is assessed similarly to like properties. If not, the Commissioner of Revenue may issue an order that would affect the taxable value of a parcel. Additions and improvement made to a property generally increases its market value. THE MARKET VALUE OF OTHER PROPERTIES IN YOUR TAXING DISTRICT MAY CHANGE, SHIFTING TAXES FROM ONE PROPERTY TO ANOTHER. If the market value of a property increases more or less than the average increase or decrease in a taxing district, the taxes on that property will also change. New construction in a taxing district increases the tax base and will affect the district s tax rate. THE STATE GENERAL PROPERTY TAX MAY CHANGE. The state legislature directly applies a State General Property Tax to commercial/industrial and season/recreational property classes. A publication of the Association of Minnesota Counties A publication of the Association of Minnesota Counties Page 37 of 74

38 THE CITY BUDGET AND LEVY MAY CHANGE. Each year, cities review the needs and wants of their citizens and how to meet those needs and wants. This is called discretionary spending in the city budget. Also included in the budget is non-discretionary spending which is required by state and federal mandates and court decisions and orders. THE TOWNSHIP BUDGET AND LEVY MAY CHANGE. Each March, townships set the levy and budget for the next year. THE COUNTY BUDGET AND LEVY MAY CHANGE. Each year, counties review the needs and wants of their citizens and how to meet those discretionary needs and wants. In addition, also included in the county budget is nondiscretionary spending which is required by state and federal mandates and court decisions and orders. As much as sixty to eighty-five percent of the county expenditures are used to deliver mandated services. THE SCHOOL DISTRICT S BUDGET AND LEVY MAY CHANGE. The Legislature determines basic funding levels for K-12 education and mandates services that schools must perform. On average, approximately seventy percent of school costs are paid by the state. Local school districts set levies for purposes including safe school and community education, etc. A SPECIAL DISTRICT S BUDGET AND LEVY MAY CHANGE. Special districts such as the Metropolitan Council, hospital districts, watershed districts, drainage districts, etc. set levies to balance their budgets. SPECIAL ASSESSMENTS MAY BE ADDED TO YOUR PROPERTY TAX BILL. Water lines, curb and gutter, and street improvements that directly benefit your property may be funded, in whole or in part, through a special assessment that is added to your tax bill. A publication of the Association of Minnesota Counties Page 38 of 74

39 VOTERS MAY HAVE APPROVED A SCHOOL, CITY/ TOWNSHIP, COUNTY, OR SPECIAL DISTRICT REFERENDUM. Local referendums may be held for local government construction projects, excess operating levies for schools or many other purposes. Referendum levies may be spread on the market value or the tax capacity of a property depending on process and type of referendum levy. FEDERAL AND STATE MANDATES MAY HAVE CHANGED. Both the state and federal governments require local governments to provide certain services and follow certain rules. These mandates often require an increase in the cost and level of service delivery. AID AND REVENUE FROM THE STATE AND FEDERAL GOVERNMENTS MAY HAVE CHANGED. Each year the state legislature reviews and adjusts the level of funding for a variety of aids provided to local governments including Local Government Aid and County Program Aid. The formulas for how aid is determined and distributed among local governments may have changed. While direct aid and revenue from the federal government to local governments has declined greatly in recent years, federal revenue continues to be a key portion of the local government revenue stream and that revenue stream may have changed. THE STATE LEGISLATURE MAY HAVE CHANGED THE PORTION OF THE TAX BASE PAID BY DIFFERENT TYPES OF PROPERTIES. A change in class rates will require a change in the tax rate to raise the same amount of money. OTHER STATE LAW CHANGES MAY ADJUST THE TAX BASE. Fiscal disparities, personal property taxes on utility properties, limited market value, and tax increment financing are example of laws that affect property taxes. A publication of the Association of Minnesota Counties Page 39 of 74

40 Glossary of Terms CATEGORICAL AID: Aid given to a local unit of government to be used only for a specific purpose. CIRCUIT BREAKER: See Property Tax Refund. CLASS RATES: The percent of market value set by state law that establishes the property s tax capacity subject to the property tax. COUNTY PROGRAM AID: State property tax relief aid to counties, distributed with a formula based on needs (households on foodstamps, age of the population, number of serious crimes) and tax base equalization for counties with smaller tax bases. EDUCATION AID: The total amount of state dollars paid for K-12 education. This aid is paid to the school districts. FISCAL DISPARITIES: A program in the Twin Cities metropolitan area and on the iron range in which a portion of the commercial and industrial property value of each city and township is contributed to a tax base sharing pool. Each city and township then receives a distribution of property value from the pool based on market value and population in each city. GENERAL PURPOSE AID: Aid given to units of government to be used at their own discretion. Examples are Local Government Aid and County Program Aid. HIGHWAY AID: Motor fuels tax and license tab money the state distributes to counties, cities and townships for highways and bridges. HOMESTEAD: A residence occupied by the owner. INDIVIDUAL INCOME TAX: A state tax on the income of residents and non-residents with Minnesota sources of income that is deposited into the state general fund. LEVY: The imposition of a tax, associated with the property tax. LEVY LIMIT: The amount a local unit of government is permitted to levy for specific services under state law. LIMITED MARKET VALUE: A state imposed limit on property value increases for the purpose of calculating property taxes. LOCAL GOVERNMENT AID (LGA): A state government revenue sharing program for cities with low property wealth or high service burdens that is intended to provide an alternative to the property tax. LOCAL SALES TAX: A local tax, authorized by the state, levied on the sale of goods and services to be used for specific purposes by the local government. MARKET VALUE HOMESTEAD CREDIT: The Market Value Homestead Credit (MVHC) program was eliminated during the 2011 Special Session for taxes payable in 2012 and beyond. The credit was replaced with a market value exclusion. This guide describes the (MVHC) reimbursement program. The program was designed to provide state-paid property tax relief to owners of certain qualifying homestead property. This program has been replaced by the Market Value Homestead Exclusion (defined below). MARKET VALUE HOMESTEAD EXCLUSION: The exclusion reduces the taxable value of qualifying homesteads. Despite the decreased taxable value, taxes will increase on most properties including apartments and businesses and is independent of any action taken by local governments. The exclusion provides for a portion of each home s market value to be excluded from its value for property tax calculations. The amount of value excluded is directly proportional to the MVHC the home received under the old law. In this way, each home contributes a smaller amount to each taxing jurisdiction s tax base. The tax rate tends to be a little higher because of the reduced tax base, which is why taxes increase for the other types of property. The tax burden on any given homestead could be lesser or greater depending upon the mix of properties in the jurisdiction and the level of the tax rate. PROPERTY TAX: A tax levied on any kind of property. PROPERTY TAX REFUND: A partial property tax refund program for those who have property taxes out of proportion with their income. This program is available to homeowners and renters. SALES RATIO STUDY: A study conducted by the Department of Revenue of open market property sales, which is then compared to local assessments to ensure that local assessments adequately reflect the market. STATE GENERAL PROPERTY TAX: A state-imposed property tax on commercial, industrial, and seasonal recreational properties. STATE SALES TAX: A state tax (6.5%) levied on the sale of goods and services that is deposited into the state general fund. TAX CAPACITY: The valuation of property based on market value and class rates, on which property taxes are determined. Revised December 2011 LOCAL TAX RATE: The tax rate usually expressed as a percentage of tax capacity, used to determine the property tax due on a property. MARKET VALUE: An assessor s estimate of what property would be worth if it were sold. MARKET VALUE AGRICULTURE CREDIT: A state credit to reduce the property tax paid by agricultural homesteads to the local taxing jurisdiction. Association of Minnesota Counties 125 Charles Avenue Saint Paul, MN Main Line/Switchboard: Fax: Page 40 of 74

41 County Budget Overview A publication of the Association of Minnesota Counties by Jim Culotta, Research Assistant, National Association of Counties (NACo); Edited by Association of Minnesota Counties (AMC) The budget is one of the most important documents a county government prepares because it identifies the services to be provided and how they are to be financed. Almost every decision, activity and program in a county government can be expressed in the financial language of the budget. To fully understand county budgets, it is essential to know the critical parts of the budget document, the primary budget players, the budget process, the different types of budgets, and how the budget is a tool for governing. Critical Parts of a County Budget Operating Budget The operating budget section is usually the longest of the budget document. This section outlines the operational and spending plans for county government agencies and programs. The operating budget is an aggregation of the individual budgets of each department and agency. Information on the mission, staffing levels, performance objectives and indicators, expenditure levels, and possibly even financing sources, are presented for each county department and agency. Financial Summaries The financial summary section of a county budget summarizes information contained in the operating detail section. At a minimum, most financial summaries present a consolidated budget summary, cross-classify financial data, and present information on revenues, indebtedness, and capital spending. The Budget Process The budget process is nearly as important as the budget itself. The process determines whose opinions will be solicited and how they will be weighed. The period for which a budget is authorized typically spans a fiscal year that may correspond to a calendar year or to some other twelve-month period. Budgeting is a yearlong process that consists of four phases: preparation, adoption, implementation and evaluation. Below is a typical budget process. Date June June/July activity Distribute instructions and forms for the next fiscal year to department managers for proposed capital improvements. Deadline for submission of capital improvements proposed by departments. Planning Department begins preparation of budget for capital improvement plan. Distribute operating budget request forms to department managers. Managers prepare department budgets. Begin study of capital improvements program. Capital Budget A capital budget is the appropriation of bonds or operating revenue for improvements to facilities and other infrastructure. A capital project is the acquisition or construction of fixed assets, which are of a long-term and permanent nature. Examples include land, buildings, streets and highways, bridges, sewers, and parks. Primary Budget Players County Commission: The ultimate holder of the purse strings. Makes and approves all budgetary changes. Chief Financial Officer (CFO): The primary architect of the budget. Provides options and recommendations to County Commission. This may be the County Administrator or Coordinator, Auditor, Financial Manager or other individual given this responsibility by the board. Central budget office/finance office: The CFO s main tool in preparing the budget for consideration and coordinating its implementation. Performs analyses and makes projections of revenues, expenditures and trends. This function can be performed in many offices. Department officials: The day-to-day managers of county programs and services. July/August September October November December January January-December Complete preliminary revenue estimates, based on current year s experience. Managers submit departmental budget requests, which are reviewed for accuracy and adherence to guidelines. Conduct meetings with department managers. Submit preliminary levy to the state. Note: the final levy cannot be higher than this amount. Prepare revenue estimates based on current year expenditures. Complete preliminary budget, including staff recommendations. Submit budget to County Commission for approval. Conduct Truth in Budgeting Hearing. County Commission finalizes budget decisions and adopts budget. New fiscal year begins. Adopted budget implemented, annual financial reports are prepared, external auditor hired and budget review conducted. Financial audit completed and submitted to the state auditor. Adopted budget is implemented, monitored and evaluated. Page 41 of 74

42 Major Types of Budgets Line-Item Budget: Focus is on financial accountability. Control oriented. Departmental outlays are grouped according to the items that will be purchased, with one item or group of items on each line (e.g. salaries and wages, contract services, supplies and equipment). Predominant form of budgeting because it is easiest to prepare and implement. Performance Budget: Focus is on improving service delivery. Output oriented. Budget becomes a work contract between departments and commission based on desired service levels. Workload measures help justify the budget; cost and output measures help evaluate whether service delivery is efficient and economical; and outcome measures reveal to what extent programs are achieving their goals. Program Budget: Focus is on goal attainment or effectiveness. Outcome oriented. Organizes budgetary information into a set of organized activities directed to particular goals. Funds are allocated along program rather than departmental lines. In pure form, depends heavily on analytical techniques (e.g. costbenefit analysis) to determine best allocation of resources. Zero Base Budget: Focus is on cost efficiency of services. Priority ranking oriented. Departments divide their activities into discrete services called decision units. Decision units area considered at various funding levels called decision packages (elimination, minimum, current and enhancements) and rank ordered. Departmental rankings are merged across the whole governmental unit to form a single, ranked list and final resource allocations are assigned. Target Base Budget: Focus is on limiting expenditures. Justification oriented. Revenue projections are done and a proportion is set aside for discretionary budget decisions. The remainder of the budget is allocated to departments based on historical share. Departments submit budgets showing spending plans for target base budget. Departments also submit requests that justify the need for enhancement packages, which are funded out of the discretionary set aside. Typically used in budget cutting situations. The Budget: A Tool for Governing Policy Making Tool: All budgets reflect decisions about a variety of policy issues. Ignoring the policy dimensions of budgeting may result in poor policy decisions by default. (For example, failure to allocate funds for ADA renovations could allow outdated policies to remain in effect.) The budget format, presentation, and even wording of a document all influence the making of public policy. A budget that explicitly reveals trade-offs can help ensure the making of policy rather than the obscuring of policy is the primary focus. Planning and Management Tool: A budget is a plan of financial activity for a specified period of time (either a fiscal year or biennium) indicating all planned revenues and expenses for the budget period. It provides a mechanism to allocate resources for the pursuit of community goals. Budgeting helps policy makers set goals, and assists program managers and department heads in improving organizational performance. Communication Tool: The budget is a concise way for decision makers to communicate changes in priorities and rationale for decisions made. The budget document and process can be an effective tool in helping citizens understand the need for change and the reasons behind policy and political decisions. A budget also provides a means of establishing public accountability by offering residents a clear statement of how tax money is spent and proof that county finances are in good shape. Sources and Additional References Berman, David R., State-Local Relations: Devolution, Mandates and Money in The Municipal Year Book 1997 (Washington, DC: International City Management Association, 1997) Petersen, John E. and Stachota, Dennis R., Local Government Finance (Chicago, IL: Government Finance Officers Association of the United States and Canada, 1991) U.S. Advisory Commission on Intergovernmental Relations, State Laws Governing Local Government Structure and Administration, March 1993 (Washington DC: United States Government Printing Office, 1993) Revised July 2002 Association of Minnesota Counties 125 Charles Avenue Saint Paul, MN Main Line/Switchboard: Fax: A publication of the Association of Minnesota Counties Page 42 of 74

43 County Fund Payable Proposed Proposed CPA Net CPA Adjusted Net Year Revenue Amt of % of Expenditure Amt of % of Property Amt of % of % of Amt of Property Amt of % of Amt of Property Amt of % of Budget Inc./(Dec.) Inc./(Dec.) Budget Inc./(Dec.) Inc./(Dec.) Tax Levy Inc./(Dec.) Inc./(Dec.) Tax Levy Distribution Tax Levy Inc./(Dec.) Inc./(Dec.) Unallotment Tax Levy Inc./(Dec.) Inc./(Dec.) (51,146) % 7,922,635 18, % 5,310,186 69, % 44.98% 164,484 5,145,702 72, ,145,702 72, % ,663,595 (572,344) % 7,903,960 (500,346) % 5,240,365 71, % 46.18% 167,017 5,073,348 37, % - 5,073,348 (34,345) % ,235,939 (517,582) % 8,404,306 (1,128,198) % 5,168,367 (610,616) % 48.41% 132,161 5,036,206 (515,583) % 71,487 5,107,693 (590,224) % ,753,521 9,532,504 5,778, % 227,194 5,551, ,128 5,697,917 General Revenue ,612,449 Public Works ,432,329 2,310, % 11,699,916 2,546, % 4,267, , % 36.15% 132,189 4,135, , ,135, , % ,121,498 (51,422) % 9,153, , % 4,032, , % % 128,508 3,903, , % - 3,903, , % ,172,920 (151,464) % 8,617, , % 3,445, , % % 88,093 3,356, , % 47,650 3,404, , % ,324,384 8,346,958 3,022, % 118,829 2,903,745 76,429 2,980,174 Public Health & ,034, , % 6,262, , % 2,228, , % 18.87% 69,020 2,159, , ,159, , % Human Services ,802,681 (471,381) % 5,877,791 (460,022) % 2,075,110 11, % % 66,136 2,008,974 (2,005) % - 2,008,974 (30,550) % ,274,062 1,940, % 6,337,813 2,104, % 2,063, , % % 52,772 2,010, , % 28,545 2,039, , % ,333,474 4,233,198 1,899, % 74,685 1,825,039 48,036 1,873,075 25,885,230 11,805, % 365,693 11,440,298-11,440, ,587,774 22,935,362 11,347, % 361,661 10,985,927-10,985, ,682,921 23,360,056 10,677, % 273,026 10,404, ,682 10,551, ,411,379 22,112,660 10,701, % 420,708 10,280, ,593 10,551,166 Sub-Total: ,079,239 Proposed 2014 PROPERTY TAX LEVY AND COUNTY PROGRAM AID (CPA) DISTRIBUTION Debt Service #DIV/0! 248,840 (23,660) -8.68% 248,840 (23,660) -8.68% 248,840 (23,660) -8.68% 248,840 (23,660) -8.68% #DIV/0! 272,500 (1,120) -0.41% 272,500 (1,120) -0.41% 272,500 (1,120) -0.41% 272,500 (1,120) -0.41% #DIV/0! 273,620 (625) -0.23% 273,620 (625) -0.23% 273,620 (625) -0.23% 273,620 (625) -0.23% , , , ,245 Total All Funds ,079,239 2,491, % 26,134,070 2,926, % 12,054, , % 365,693 11,689, , % - 11,689, , % ,587,774 (1,095,147) % 23,207,862 (425,814) % 11,620, , % 361,661 11,258, , % - 11,258, , % ,682,921 1,271, % 23,633,676 1,246, % 10,950,755 (24,771) % 273,026 10,677, , % 147,682 10,825, % ,411,379 22,386,905 10,975, ,708 10,554, ,593 10,825,411 SPECIAL LEVIES ,840 (23,660) -8.68% ,500 (1,120) -0.41% Sub-Total Special Levies - DEBT SERVICE ,620 (625) -0.23% , ,871 (1,847,248) % ,029,119 (39,973) -1.93% Sub-Total Special Levies - OTHER ,069,092 (205,101) -9.02% ,274, ,711 (1,870,908) % ,301,619 (41,093) -1.75% TOTAL SPECIAL LEVIES ,342,712 (205,726) -8.07% ,548, ,258,427 2,301, % ,956, , % Adjusted Property Tax Levy "Subject to Levy Limitation" ,482, , % ,276, ,258,427 #VALUE! #VALUE! 2013 N/A #VALUE! #VALUE! CERTIFIED PAYABLE LEVY LIMIT 2012 N/A #VALUE! #VALUE! ,492, #VALUE! Over/(Under) Levy Limit 2012 #VALUE! 2011 (215,122) S:\AUD\SHARED\Finance Administration\Budget\2014\Budget 2014 Property Tax Levy and County Program Aid Distribution Prepared by the Office of the Sibley County Auditor 12/4/ :12 PM paper color: white Page 43 of 74

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47 Community/Economic Development 0.80% Non-Departmental 0.00% Conservation/Natural Resources 1.53% Sibley County 2014 Expenses by Function Public Works 44.77% Culture & Recreation 2.06% Health & Sanitation 6.81% Public Safety 10.04% General Government 15.04% Debt Services 0.95% Human Services 18.00% Adopted Adopted Adopted Proposed Expenditures 2011 Percent 2012 Percent 2013 Percent 2014 Percent INC/(DEC) % of inc/(dec) General Government 3,825, % 4,057, % 3,929, % 3,930, % 1, % Public Safety 2,645, % 2,575, % 2,620, % 2,622, % 2, % Health & Sanitation 1,885, % 237, % 1,716, % 1,779, % 63, % Culture & Recreation 453, % 457, % 523, % 538, % 15, % Conservation/Natural Resources 391, % 389, % 396, % 400, % 4, % Community/Economic Development 330, % 256, % 233, % 209, % (24,365) % Non-Departmental % 430, % % % - #DIV/0! Public Works 8,346, % 8,617, % 9,153, % 11,699, % 2,546, % Human Services 4,233, % 6,337, % 4,362, % 4,702, % 340, % Debt Services 274, % 273, % 272, % 248, % (23,660) -8.68% Total Expenditures 22,386, % 23,633, % 23,207, % 26,134, % 2,926, % 5.57% -1.80% 12.61% 12,000,000 11,500,000 11,000,000 10,500,000 10,000,000 9,500,000 9,000,000 8,500,000 8,000,000 7,500,000 7,000,000 6,500,000 6,000,000 5,500,000 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 - General Government Public Safety Health & Sanitation Culture & Recreation Conservation/Natural Resources Community/Economic Development Non-Departmental Public Works Human Services Debt Services S:\AUD\SHARED\Finance Administration\Budget\2014\Budget 2014 Prepared by the Office of the Sibley County Auditor 12/4/ :16 PM paper color: white Page 47 of 74

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49 General Revenue Fund Sibley County Expenses by Classification Adopted Adopted Adopted Proposed INC/(DEC) Personal Services 5,401,125 3,955,167 4,140,109 4,224,668 84,559 Other Services & Charges 2,244,523 2,186,222 2,089,441 1,970,852 (118,589) Supplies 467, , , ,243 6,696 Capital Expenses 564, , , ,943 17,350 Appropriations & Pass Through Funding 850, , , ,929 41,567 Debt Other Financing Uses 5, ,589 12,908 - (12,908) SUB-TOTAL: 9,532,504 8,404,306 7,903,960 7,922,635 18,675 6,000,000 5,000,000 4,000,000 3,000, ,000,000 1,000,000 - Personal Services Other Services & Charges Supplies Capital Expenses Appropriations & Pass Through Funding Debt Other Financing Uses S:\AUD\SHARED\Finance Administration\Budget\2014\Budget 2014 Prepared by the Office of the Sibley County Auditor 12/4/ :27 PM paper color: white Page 49 of 74

50 Public Works Sibley County Expenses by Classification Adopted Adopted Adopted Proposed INC/(DEC) Personal Services 1,727,789 1,664,710 1,683,435 1,700,522 17,087 Other Services & Charges 5,090,942 5,030,410 5,639,844 7,079,242 1,439,398 Supplies 669, , , ,633 (23,177) Capital Expenses 383, , , , ,800 Appropriations & Pass Through Funding 277, , ,022 1,475, ,197 Debt Other Financing Uses 198, ,000 54, ,000 47,000 SUB-TOTAL: 8,346,958 8,617,937 9,153,611 11,699,916 2,546,305 8,000,000 7,000,000 6,000,000 5,000,000 4,000, ,000,000 2,000,000 1,000,000 - Personal Services Other Services & Charges Supplies Capital Expenses Appropriations & Pass Through Funding Debt Other Financing Uses S:\AUD\SHARED\Finance Administration\Budget\2014\Budget 2014 Prepared by the Office of the Sibley County Auditor 12/4/ :27 PM paper color: white Page 50 of 74

51 Human Services Sibley County Expenses by Classification Adopted Adopted Adopted Proposed INC/(DEC) Personal Services 2,030,400 3,467,270 3,449,772 3,723, ,658 Other Services & Charges 2,118,918 2,377,629 2,284,240 2,404, ,602 Supplies 29, , ,379 99,707 (4,672) Capital Expenses Appropriations & Pass Through Funding 54,440 41,707 39,400 34,700 (4,700) Debt Other Financing Uses - 310, SUB-TOTAL: 4,233,198 6,337,813 5,877,791 6,262, ,888 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500, ,000, ,000 - Personal Services Other Services & Charges Supplies Capital Expenses Appropriations & Pass Through Funding Debt Other Financing Uses S:\AUD\SHARED\Finance Administration\Budget\2014\Budget 2014 Prepared by the Office of the Sibley County Auditor 12/4/ :27 PM paper color: white Page 51 of 74

52 Debt Service Sibley County Expenses by Classification Adopted Adopted Adopted Proposed INC/(DEC) Personal Services Other Services & Charges 16,029 15,997 15,947 14,817 (1,130) Supplies Capital Expenses Appropriations & Pass Through Funding Debt 258, , , ,023 (22,530) Other Financing Uses SUB-TOTAL: 274, , , ,840 (23,660) 300, , , , ,000 50,000 - Personal Services Other Services & Charges Supplies Capital Expenses Appropriations & Pass Through Funding Debt Other Financing Uses S:\AUD\SHARED\Finance Administration\Budget\2014\Budget 2014 Prepared by the Office of the Sibley County Auditor 12/4/ :27 PM paper color: white Page 52 of 74

53 All Funds Sibley County Expenses by Classification Adopted Adopted Adopted Proposed INC/(DEC) Personal Services 9,159,314 9,087,147 9,273,316 9,648, ,304 Other Services & Charges 9,470,412 9,610,258 10,029,472 11,469,753 1,440,281 Supplies 1,165,967 1,325,611 1,400,736 1,379,583 (21,153) Capital Expenses 947, , , , ,150 Appropriations & Pass Through Funding 1,182,318 1,489,491 1,561,784 2,407, ,064 Debt 258, , , ,023 (22,530) Other Financing Uses 203, ,589 66, ,000 34,092 GRAND TOTAL: 22,386,905 23,633,676 23,207,862 26,134,070 2,926,208 14,000,000 12,000,000 10,000,000 8,000,000 6,000, ,000,000 2,000,000 - Personal Services Other Services & Charges Supplies Capital Expenses Appropriations & Pass Through Funding Debt Other Financing Uses S:\AUD\SHARED\Finance Administration\Budget\2014\Budget 2014 Prepared by the Office of the Sibley County Auditor 12/4/ :27 PM paper color: white Page 53 of 74

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55 County Government Revenue A publication of the Association of Minnesota Counties In Minnesota, local governments derive the majority of their funding from property taxes and from state and federal grants. Fees, fines, forfeitures, sale of public lands, investments and special assessments are other sources that augment these major revenue sources. Property Tax The property tax is the chief source of revenue for Minnesota counties. Most counties receive between 30 and 50 percent of their revenues from property tax collections. All property except that owned by governments, churches, charitable institutions and certain other tax exempt entities, is subject to the ad valorem property tax. The ad valorem tax is based on the value of an undivided piece of property or building. Minnesota has one of the most complicated property tax systems in the nation. Property taxes are levied by counties, cities and school districts, and some special purpose taxing jurisdictions such as watershed districts. County commissioners have the power to raise the county property tax levy, i.e., the amount of money which homes, businesses and land within the county will pay, if additional income is needed to fund county programs and services. However, city and school district officials also levy taxes on property within the county. The state establishes the class rates, or the percentage of each property s market value subject to taxation. For example, the class rate for low value homes is 1.0 percent while the class rate for most commercial property is 3.4 percent (recently reduced from 4.0 percent). These class rates are one factor that makes Minnesota s property tax system so complex. State and Federal Grants Grants from the state and federal government are another large source of revenue for counties. Generally, these grants assist the county in providing and paying for mandated services. However, the amount of the grant is often insufficient to cover the full cost of services, and the county must supplement the state or federal revenues with local property tax dollars. Categorical aids and block grants are the two basic categories of grants. They differ primarily in terms of the amount of flexibility they offer the county board. Categorical aids are the most restrictive, with the money provided on the condition that it is spent to provide specific services. Often, the purpose of a categorical grant and the associated mandate is to increase spending for specific programs. Block grants provide the county board with greater flexibility in using the money. In fact, some block grants are intended to provide property tax relief by replacing local property tax dollars. The distinctions between categorical aids and property tax relief are not always clear. One of the larger aids to counties, the County State Aid Highway money, has characteristics of both a block grant and a categorical aid. It reduces the property tax cost for county highway maintenance, the money must be used for county highways, and there are specific requirements and highway standards that accompany the money. SOURCE: Minnesota County Finances; 2008 Revenues, Expenditures and Debt produced by the Minnesota Office of State Auditor. Page 55 of 74

56 County Program Aid In the 2003 legislative session, county general-purpose aids were restructured into a single program called County Program Aid ) CPA. The following individual aid programs were eliminated: homestead and agricultural aid credit (including manufactured housing HACA), county criminal justice aid, family preservation aid, and attached machinery aid. The formula for distributing county program aid encompasses some factors from the programs being subsumed, along with some new ones. One-half of the funding for county program aid is distributed based on each county s relative shares of (1) persons receiving food stamps, (2) age-adjusted population (population weighted more heavily for the number of persons over age 65), and (3) reported crimes. The other half is distributed based on a formula that takes into account each county s population and its property wealth. For 2004, approximately 112 million was distributed based on the distribution formulas of the aid programs that were eliminated, minus the substantial aid cuts enacted during the 2003 legislative session. For 2005 through 2008, about 205 million was distributed according to the new formula, with the aid cuts fully restored. The total amount of county program aid for taxes payable in 2007 is 205,382,792. This total is after subtraction of 500,000 to pay for court-ordered counsel and 214,000 to pay for preparation of local impact notes. SOURCE: The county program aid data was obtained from the Department of Revenue and appeared in Major State Aids and Taxes: A Comparative Analysis produced by the Minnesota House of Representatives Research Division, December Fees The law permits certain fees to be charged for services provided by various county departments. Counties charge fees for, among other things, examining the record for taxes due, serving and filing legal papers in court actions, and renewing licenses. Most of the money generated by these fees go into the county s general revenue fund. In some cases, fees are set to fully cover the cost of the related services. Counties, acting as an agent of the state, also collect fees set by the state. In some instances, such as for game and fish licenses, the law allows counties to keep a small portion of the fees collected when acting as an agent of the state. Other Revenue Sources Fines and forfeitures of bail money are paid into a county s general fund. Some of this money is shared with the State of Minnesota as payment for state takeovers of certain judicial districts. Counties can assess property owners with a special assessment if their property benefits from county-made improvements. Such special assessments account for a small amount of county revenue. Some counties have pursued an aggressive program of investing county funds not needed immediately and have yielded considerable returns on their investments. In most cases, the law requires that income from such investments be used to support county expenditures. Counties can also invest funds not currently needed for cash flow purposes (i.e., funds needed on hand to pay bills as they become due) in securities issued by the U.S. government, the State of Minnesota, or any political subdivision or municipality therein subject to certain conditions and repurchase agreements as laid out in Minnesota statute. Updated September Charles Avenue Saint Paul, MN Main Line/Switchboard: Fax: A publication of the Association of Minnesota Counties Page 56 of 74

57 Sibley County 2014 Revenues By Source Local Taxes 44.73% Fees For Services 5.41% Interest Income 0.77% Use of Fund Balance 8.00% All other Sources 8.33% Federal/State Aids 32.76% Adopted Adopted Adopted Proposed Revenues: 2011 Percent 2012 Percent 2013 Percent 2014 Percent INC/(DEC) Federal/State Aids 7,977, % 7,392, % 8,332, % 8,562, % 229, % Local Taxes 10,825, % 10,825, % 11,258, % 11,689, % 430, % Fees For Services 1,449, % 1,431, % 1,243, % 1,413, % 170, % Interest Income 332, % 312, % 236, % 200, % (36,389) % Use of Fund Balance 855, % 1,820, % 907, % 2,090, % 1,183, % All other Sources 947, % 1,852, % 1,229, % 2,177, % 948, % Total Revenue 22,386, % 23,633, % 23,207, % 26,134,070 % of INC/(DEC) % 2,926, % 5.57% -1.80% 12.61% 11,000,000 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 - Federal/State Aids Local Taxes Fees For Services Interest Income Use of Fund Balance All other Sources S:\AUD\SHARED\Finance Administration\Budget\2014\Budget 2014 Prepared by the Office of the Sibley County Auditor 12/4/ :20 PM paper color: white Page 57 of 74

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59 Sibley County Revenues by Classification Adopted 2011 GENERAL REVENUE FUND Property Taxes (includes DRA) All Other Taxes Special Assessments Licenses & Permits Federal Grants Local Grants County Aid Program State Grants Charges for Services Fines & Forfeits Interest on Investments Miscellaneous Revenues Other Financing Sources Transfers from Other Funds Use of Fund Balance SUB-TOTAL: Adopted ,697,917 47, ,000 33, , ,410 81, ,780 1,261,500 35, , ,320 4,000 5, ,135 9,532,504 5,107,693 47, ,000 23,780 89, ,478 60, , ,110 35, , ,500 2, ,117 1,103,397 8,404,306 Adopted ,073,348 82, ,000 28,380 96, , , , ,945 35, , ,766 2,000 12, ,828 7,903,960 Proposed ,145,702 82, ,000 23,380 96, , , , ,840 36, , ,125 2, ,525 7,922,635 INC/(DEC) 72, (5,000) 0 (9,510) (2,533) (21,510) 29, (36,389) (34,641) 0 (12,908) 38,697 18,675 6,000,000 5,000,000 4,000, ,000, ,000,000 1,000,000 - S:\AUD\SHARED\Finance Administration\Budget\2014\Budget 2014 Prepared by the Office of the Sibley County Auditor 12/4/ :36 PM paper color: white Page 59 of 74

60 Sibley County Revenues by Classification Adopted 2011 PUBLIC WORKS FUND Property Taxes (includes DRA) All Other Taxes Special Assessments Licenses & Permits Federal Grants Local Grants County Aid Program State Grants Charges for Services Fines & Forfeits Interest on Investments Miscellaneous Revenues Other Financing Sources Transfers from Other Funds Use of Fund Balance SUB-TOTAL: Adopted ,980,174 83, ,000 3,216,674 42, ,253 63,219 73, , ,943 8,346,958 3,404,574 94,000 3,583,610 40, , ,015 74,295 89, , ,000 8,617,937 Adopted ,903, ,400 3,597, , ,080 99,247 94,327 30, ,000 9,153,611 Proposed ,135,398 94, ,000 2,595, ,189 1,129,578 88,611 74,706 35,500 1,286,801 1,178,000 11,699,916 INC/(DEC) 231,793 (36,400) 950,000 (1,002,811) 3, ,498 (10,636) (19,621) 5,000 1,086,801 1,178,000 2,546,305 4,500,000 4,000,000 3,500,000 3,000, ,500, ,000, ,500,000 1,000, ,000 - S:\AUD\SHARED\Finance Administration\Budget\2014\Budget 2014 Prepared by the Office of the Sibley County Auditor 12/4/ :36 PM paper color: white Page 60 of 74

61 Sibley County Revenues by Classification Adopted 2011 HUMAN SERVICES FUND Property Taxes (includes DRA) All Other Taxes Special Assessments Licenses & Permits Federal Grants Local Grants County Aid Program State Grants Charges for Services Fines & Forfeits Interest on Investments Miscellaneous Revenues Other Financing Sources Transfers from Other Funds Use of Fund Balance SUB-TOTAL: Adopted ,873, , ,290 26, , , ,983 4,233,198 2,039,524 1,033, ,404 24,227 1,314, , , ,067 6,337,813 Adopted ,008,974 22,400 1,297, ,735 66,136 1,072, , , ,236 5,877,791 Proposed ,159,198 1,372, ,049 69,020 1,053, , , ,382 6,262,679 INC/(DEC) 150,225 (22,400) ,777 92,314 2,883 (18,654) 151, (12,943) 0 0 (32,854) 384,888 2,500,000 2,000, ,500, ,000, ,000 - S:\AUD\SHARED\Finance Administration\Budget\2014\Budget 2014 Prepared by the Office of the Sibley County Auditor 12/4/ :36 PM paper color: white Page 61 of 74

62 Sibley County Revenues by Classification Adopted 2011 DEBT SERVICE FUND Property Taxes (includes DRA) All Other Taxes Special Assessments Licenses & Permits Federal Grants Local Grants County Aid Program State Grants Charges for Services Fines & Forfeits Interest on Investments Miscellaneous Revenues Other Financing Sources Transfers from Other Funds Use of Fund Balance SUB-TOTAL: Adopted , , , ,620 Adopted , ,500 Proposed , ,840 INC/(DEC) (23,660) (23,660) 300, , , , ,000 50,000 - S:\AUD\SHARED\Finance Administration\Budget\2014\Budget 2014 Prepared by the Office of the Sibley County Auditor 12/4/ :36 PM paper color: white Page 62 of 74

63 Sibley County Revenues by Classification Adopted 2011 ALL FUNDS Property Taxes (includes DRA) All Other Taxes Special Assessments Licenses & Permits Federal Grants Local Grants County Aid Program State Grants Charges for Services Fines & Forfeits Interest on Investments Miscellaneous Revenues Other Financing Sources Transfers from Other Funds Use of Fund Balance GRAND TOTAL: Adopted ,825, , ,000 33,500 1,540,707 4,009, ,115 2,277,551 1,449,119 35, , , ,500 5, ,078 22,386,905 10,825, , ,000 23,780 1,122,927 4,408, ,344 1,735,777 1,431,047 35, , ,356 91, ,117 1,820,464 23,633,676 Adopted ,258, , ,000 28,380 1,393,838 4,318, ,661 2,259,398 1,243,052 35, , ,738 32, , ,064 23,207,862 Proposed ,689, , ,000 23,380 2,418,615 3,398, ,693 2,379,732 1,413,851 36, , ,533 37,500 1,286,801 2,090,907 26,134,070 INC/(DEC) 430,711 (58,800) 0 (5,000) 1,024,777 (920,007) 4, , , (36,389) (67,205) 5,000 1,073,893 1,183,843 2,926,208 14,000,000 12,000,000 10,000, ,000, ,000,000 4,000,000 2,000,000 - S:\AUD\SHARED\Finance Administration\Budget\2014\Budget 2014 Prepared by the Office of the Sibley County Auditor 12/4/ :36 PM paper color: white Page 63 of 74

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65 Debt Management for Counties A publication of the Association of Minnesota Counties By Jim Culotta, Research Assistant, National Association of Counties (NACo) The act of borrowing, obtaining funds today in exchange for a promise to pay them back tomorrow, is one of the most potent and profound activities undertaken in government finance. In recent years, counties have increasingly turned toward the issuance of debt to help finance basic infrastructure projects, such as schools, roads, and hospitals. A poorly designed or poorly managed bond issue can burden taxpayers with excess interest costs over the life of the issue. For this reason, it is more critical than ever that counties effectively manage their debt. Debt Policy: An Important Financial Management Tool A formal debt policy is an essential part of effective financial management and should be incorporated into a county s capital improvement program. There are several reasons to establish a debt policy. First, it establishes the parameters for the issuance of debt, which help prevent exceeding acceptable levels of indebtedness. Second, debt policies give investors and rating agencies evidence of the county s commitment to sound financial management. Third, debt policies provide consistency and continuity for public policy development and help guide county decision makers. The Government Finance Officers Association (GFOA) recommends that all state and local governments intending to issue debt develop a comprehensive debt policy. A debt policy should include the following elements: Purposes for which debt may be issued. Legal debt limitations, or limitations established by policy. Use of moral obligation pledges. Types of debt permitted to be issued and criteria for issuance. Structural features that may be considered. Credit objectives. Method of sale. Selection of external financial professionals. Refunding of debt. Disclosure (primary and secondary market). Compliance with federal tax law provisions, including arbitrage requirements. Integration of capital planning and debt financing activities. Investment of bond proceeds where otherwise not covered by explicit written law or written investment policy. In order to be an effective management tool, debt policy provisions must be compatible with the jurisdiction s goals pertaining to the capital program and budget, the financial plan, and the operating budget. It is important to find the appropriate balance between establishing limits on the debt program and providing sufficient flexibility to respond to unforeseen circumstances and opportunities. The debt policy should be formally adopted by the county board and continuously monitored to ensure compliance. Analyzing Debt Capacity and Establishing Debt Limits When a county issues bonds, it enters into a long-term commitment that requires it to make timely principal and interest payments over the life of the bonds. Therefore, the county needs to ensure that future debt service payments to bondholders can be made on time, without jeopardizing essential county services. A comprehensive and routine analysis of debt capacity provides assurance that the amount of debt issues by the county is affordable and cost-effective. An analysis of debt capacity should cover the following range of factors: Statutory or constitutional limitations affecting the amount that can be issued. Other legal limitations, such as coverage requirements or additional bonds tests imposed by bond covenants. Measures of the tax and revenue base. Evaluation of trends relating to the county s financial performance. Debt service obligations. Measures of debt burden on the community. Tax-exempt market factors affecting interest costs. Bond Ratings When a county borrows money by selling bonds, the most important variable that determines the interest cost of the bonds is their bond rating. Bond ratings are an assessment of credit quality or, conversely, the risk that the borrower will not make scheduled payments of principal and interest. Rating agencies base their ratings on a number of key economic, debt, financial and governmental factors. Economic Factors Rating agencies focus on major employers and taxpayers, regional economic factors, the impact of national and international economic developments on the local economy, and demographic data regarding the county s population (such as per capita income, average age, educational attainment, etc.). Debt Factors Rating agencies evaluate debt per capital, debt as a percentage of the assessed value of property, debt service as a percentage of annual revenues, payout rate, use of short term or variable rate debt, authorized but unissued debt and the legal structure of the issue s security. Page 65 of 74

66 Financial Factors Rating agencies analyze the county s comprehensive annual financial reports, annual budgets, revenue and expenditure composition and growth rates, accounting methods, contingent obligations (such as pension liabilities), intergovernmental transfers, and cash liquidity levels. Administrative Factors Rating agencies assess the county s management professionalism, ability to respond to economic adversity, willingness of elected officials to make unpopular financial decisions, the county s state objectives related to debt management, economic development activities, tax policies, capital improvement planning, employee relationships (e.g. unions), and the county s willingness to adhere to long-range financial plans. Major Forms of Debt Securities General Obligation (GO) Bonds are the most common form of debt issuance by state and local governments. These securities are commonly referred to as full-faith-and credit bonds because they are based on the pledge of a government unit to levy the necessary taxes to pay the interest and retire the principal. Unlimited-tax GO bonds legally obligate the county to levy taxes on all assessed property within its jurisdiction at whatever level necessary to meet the debt service payments. Limited-tax GO bonds are backed only by special taxes such as a sales tax; others are backed only by specific revenue sources. Historically, voter approval has been required to authorize the issuance of GO bonds. However, a growing number of jurisdictions have been given authority to issue limited amounts of GO bonds without referendum. Revenue Bonds are limited-liability obligations. The security for revenue bond issues is provided by a pledge of a specific revenue stream - usually derived from the project being funded or the enterprise system of which the project is a part. This ensures equitable distribution of the debt burden. These bonds are not backed by the taxing power, and as a result, they are not included in the usual debt limits. Unlike GO bonds, revenue bonds typically do not require voter approval. Certificates of Participation (COP) are a form of lease obligation in which the county enters into an agreement to pay a fixed amount annually to a third party, usually a nonprofit agency or a private leasing company. Otherwise, they do what municipal bonds do: They raise money to acquire equipment or construct a facility. According to municipal finance experts, almost anything can be engineered for lease. COPs do not need voter approval, and they do not generally count toward a jurisdiction s debt volume limitations. Payments are subject to annual appropriations. However, COPs are not permissible in all states, and they are generally more expensive to issue than bonds due to the involvement of a third party. More importantly, COPs are considered riskier investments because government can, in any given year, negate a lease contract without being considered in default. As a result, investors often require higher interest rates. Investment Grade Rating Designations of Major Rating Agencies Investment Grade Category Fitch Moody s Standard & Poor s Highest Quality AAA Aaa AAA Very high quality AA Aa AA High or strong quality A A A Adequate or satisfactory quality BBB Baa BBB Note: Fitch and Standard & Poor s use + and - to indicate relative quality with a major category. Moody s indicates better quality within a category by the symbols Aa1, A1 and Baa1. How To Win A Bond Referendum Most capital finance experts agree that bond referendums are risky business. This helps explain why a growing number of local officials are turning to COPs and other bond alternatives that do not require voter approval. However, bonds remain the basic means of raising money for capital improvements. When the voters say no to a bond referendum, more than a worthwhile infrastructure project my be at stake. A county s bond rating may be downgraded if county officials can t deliver the votes most of the time. The following are a few tips for a successful bond referendum campaign: Start off with a clearly defined statement of purpose - why the project that will be bond-financed is necessary. Get your voters attention and educate them on the issue. Meet with the news media early and often to gain their support and free publicity. Develop a good track record by promising only what you can deliver. Finance the bond campaign adequately by tapping funds from private industries and county government agencies affected by the bond, if allowable by law. Internet Resources Fitch Investors Service, L.P. ( Moody s Investors Service ( Standard & Poor s Rating Services ( Government Finance Officers Association ( U.S. Securities and Exchange Commission ( Municipal Securities Rulemaking Board ( The Bond Buyer ( Revised July 2002 Association of Minnesota Counties 125 Charles Avenue Saint Paul, MN Main Line/Switchboard: Fax: A publication of the Association of Minnesota Counties Page 66 of 74

67 SIBLEY COUNTY STATEMENT OF CHANGES IN LONG-TERM LIABILITIES DECEMBER 31, 2012 Type of Indebtedness Date of Issue Maturity Date: Interest Rate Outstanding January 01 Issued in 2012 Paid in 2012 Outstanding December 31 Due Within One Year General Obligation Bonds 2012B Capital Improvement Refunding Bonds December 4, 2012 March 1, % 2,120,000 1,800, ,000 3,740,000 1,940,000 Total General Obligation: 2,120,000 1,800, ,000 3,740,000 1,940,000 General Obligation Special Assessment Bonds 2012A Drainage Ditch GO Refunded Bonds (JD LAT 1,2,3, & 4) January 26, 2012 January 31, % 120, , , ,000 25, A Watershed District GO Refunded Bonds (High Project #11) January 26, 2012 January 31, % 555, , , ,000 45,000 Less: Discounts (32,367) - (3,237) (29,130) - Plus: Premium - 2, ,894 - Total General Obligation Special Assessment Bonds: 642, , , ,764 70,000 Total Bonds Payable: 2,762,633 2,447, ,938 4,357,764 2,010,000 General Obligation Revenue Note County Wide Individual Sewage Treatment System I August 1, 2001 January 30, % 93,300-10,330 82,970 10,330 Total General Obligation Special Assessment Bonds: 93,300-10,330 82,970 10,330 Minnesota Pollution Control Agency Loans MnPCA Loan - High Island Creek I November 18, 2004 May 31, % 163,138-25, ,283 26,375 MnPCA Loan - High Island Creek II November 13, % 352,980 14,973 33, ,364 34,264 MnPCA Loan - Rush River Creek I July 24, 2006 May 31, % 178,419-25, ,450 26,491 MnPCA Loan - Rush River Creek II December 1, % 552,906 24,711 52, ,889 53,787 MnPCA Loan - Buffalo Creek I December 17, 2007 December 15, % 36,908-4,426 32,482 4,514 MnPCA Loan - Buffalo Creek II 2.00% 22,412 1,090-23,502 - MnPCA Loan - Middle Minnesota I July 10, % 22, ,266 21,204 2,313 MnPCA Loan - Middle Minnesota II February 8, % 26,568 15,431-41,999 - MnPCA Loan - Bevens Silver Creek March 22, % 69,133 42, ,364 - Minnesota Department of Agriculture Loans Department of Ag - Sibley County SSTS Program March 12, % - 384, ,382 - Total Minnesota Pollution Control Agency Loans: 1,425, , ,833 1,763, , Total Bonded & Notes Payable: 4,281,116 2,930,638 1,007,101 6,204,653 Compensated Absences: 1,019,751 48,387 57,654 1,010, ,831 Net OPEB Obligation - Non-current 138,284 43, ,385 Governmental Activates Long-Term Liabilities: 5,439,151 3,022,126 1,064,755 7,396,522 2,440,905 Page 67 of 74

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69 Who Does What? A GUIDE TO MINNESOTA S PROPERTY TAX SYSTEM ASSESSOR Locates the property to be taxed, estimates its market value (how much the property would sell for in today s market), and assigns it to a class according to its use. Sends out notices in the spring to all property owners. Multiplies the estimated market value of each piece of property by the tax capacity percentage set by law for its class. The result is the tax capacity. Adds together the tax capacities for all the property in the taxing district and gives the total to: Property owners who disagree with the assessor may appeal to: BOARDS OF APPEAL AND EQUALIZATION CITY OR TOWNSHIP BOARD OF APPEAL AND EQUALIZATION: The city council or township board. Meets between April 1 and May 31. COUNTY BOARD OF EQUALIZATION: County board of commissioners. Meets for two weeks in June. STATE BOARD OF EQUALIZATION: Commissioner of Revenue. Meets between April 15 and June 30. The review board may change the estimate of the market value of the classification. MINNESOTA TAX COURT: Small claims or regular division. TAXING DISTRICTS (YOUR SCHOOL DISTRICT, CITY OR TOWNSHIP, COUNTY, ETC.) Determine the services (such as street maintenance, fire and police protection) to be provided in the coming year. Estimate the costs of those services and determine what portion will come from property taxes. Prepare proposed budget/levy amounts Send final levy amounts to: Hold Truth-in-Taxation (TnT) hearings on budgets (if required by state law). Send final levy amounts to: FINANCE DEPARTMENT AUDITOR/TREASURER Determines the tax capacity rates and also uses the state general tax rate by dividing the proposed levy by the proposed total amount of tax capacity in the taxing district. Auditor uses state general tax rate to compute taxes (certified by the Commissioner of MN Dept. of Revenue). Calculates the amount of each property owner s proposed state paid credits and net tax amount. Prepares TnT notice and mails to each taxpayer. Recalculates the amount of each property owner s tax based upon the final levy amounts. Prepares a listing of the tax on all property owners in the county and gives the list to: Creates the property tax statements from the county tax lists. Mails the statements by March 31 of the following year. Property owners mail in their payments (due in two installments on May 15 and October 15; except that the second installment of taxes on agricultural property is due on November 15). A A publication of of the Association of of Minnesota Counties Page 69 of 74

70 Do You Think Your Property is Over-Assessed? THE DIAGRAM BELOW SHOWS THE STEPS IN CONTESTING YOUR PROPERTY VALUATION: VISIT YOUR LOCAL ASSESSOR S OFFICE Check the facts. Compare neighboring property values. Seek an adjustment. 3-STEP APPEAL 1-STEP APPEAL APPEAL TO CITY OR TOWNSHIP BOARD OF REVIEW Meets in April or May. Appeals in person or by letter. Call city or township clerk for appointment. APPEAL TO COUNTY BOARD OF EQUALIZATION Meets for two weeks in June. Appeal in person or by letter. Call county auditor or assessor for appointment. APPEAL TO MINNESOTA TAX COURT Appeal by April 30 of year following assessment. REGULAR DIVISION Attorney recommended. Decisions appealable to Supreme Court. Can be used for any property. Must be used for property assessed over 100,000. SMALL CLAIMS DIVISION Attorney not necessary. Decisions are final. Use for your home, or any property assessed under 100,000. A publication of the Association of Minnesota Counties Page 70 of 74

71 Property Tax Classification Rates 2011 Property Type 11 Class Rate Tax Code (a) Disabled Homestead up to 50,000 (b) 0.45 R Residential Homestead (b) Up to 500, % R Over 500, R Residential Nonhomestead Single unit: Up to 500, R Over 500, R 2-3 unit and vacant land 1.25 R Apartments (4 or more units) 1.25 R Low-income apartments 0.75 R Agricultural Homestead House, garage, and one acre (HGA) (c) (c) Other land and buildings: Up to 1,140,000 (d) 0.5 Over 1,140,000 (d) 1.0 Agricultural Nonhomestead 1.0 Rural Vacant Land Nonhomestead 1.0 Managed Forest Land 0.65 Commercial-Industrial-Public Utility Electric generation machinery 2.0 R Other: Up to 150, S1, R Over 150, S1, R Seasonal-Recreational-Residential Up to 500, S2 Over 500, S2 Property Type 11 Class Rate Tax Code (a) Seasonal-Recreational-Commercial Homestead resorts (1c): Up to 500,000 R 500,000-2,200,000 R Over 2,200,000 S2, R Up to 600, R 600,000-2,300, R Over 2,300, S2, R Seasonal resorts (4c): Up to 500, S2, R Over 500, S2, R Homestead bed and breakfasts (first R units) Miscellaneous Properties Golf courses (open to the public) 1.25 R Nonprofit service organizations 1.5 R (nonrevenue) Nonprofit service organizations 1.5 S2, R (donations) (e) Fraternity/sorority houses 1.0 Manufactured home park land (>50% 0.75 R owner-occupied) Manufactured home park land (<50% 1.0 R owner-occupied) Metro indoor rec. facilities 1.25 R Noncommercial aircraft hangars 1.5 R Seasonal restaurants on lake 1.25 R Market Value Homestead Credit (f) Rate 0.4% Maximum 304 Phase-out rate 0.09% Market Value Agricultural Credit (g) Rate 0.3% Maximum 345 Phase-out rate 0.05% (a) Tax Codes: S1=Subject to state general levy (commercial-industrial rate); S2=Subject to state general levy (seasonal-recreational rate); R=Subject to operating referenda (all property is subject to school bond referenda) (b) Homesteads of disabled veterans have 300,000 of market value excluded if the disability is permanent and total (100 percent), or 150,000 excluded otherwise, provided that the disability is rated 70 percent or higher. Properties receiving a market value exclusion do not qualify for the disabled homestead classification rate. (c) Same as residential homestead. (d) The first-tier valuation limit for agricultural homestead property is annually adjusted by the Commissioner of Revenue. It was set to 1,140,000 for taxes payable in 2011, and then indexed to the change in the statewide average taxable market value per acre of deeded farmland. (e) Nonprofit service organizations that generate revenue qualify for this classification by making charitable donations at least equal to the previous year s property taxes and making the facility available for public meetings at no charge. (f) Due to the phase-out provision, homesteads valued above 414,000 receive no credit. (g) The phase-out rate reduces the credit, but will not reduce it below 230. More information on Property Taxes can be found on the Minnesota House of Representatives Research Department web site at A publication of the Association of Minnesota Counties Page 71 of 74