4.3 SR 02-12-19934kiiver
TO:
_ity FROM:
'41 DATE
ITEM 4.3.
MAYOR & CITY COUNCIL
PAT KLAERS, CITY ADMINISTRATOR
FEBRUARY 12, 1993
SUBJECT: URBAN/RURAL TAXING DISTRICTS
At the last City Council meeting on 2/8/93, the Finance
Director updated the City Council on a recent development
relating to the City urban and rural taxing districts. Lori
indicated that earlier on 2/8/93, she had been advised by the
County that the rural taxing district (for the first time)
exceeds the urban taxing district in terms of its tax rate.
As this is contrary to the goals of the consolidation
agreement, Lori expressed some concerns to the County Auditors
department and discussed possible amendments with the City
Council. The Council gave staff direction to proceed with
making amendments as necessary.
During the past week, a number of issues have surfaced
regarding this topic. First, the County said it could not
accommodate the City if the City held a public hearing to
change the tax rates or formula on March 22, 1993. The County
had to get the tax statements prepared prior to that date and
the City could not hold a public hearing earlier than that date
due to the thirty day notice requirement. Secondly, the
Department of Revenue indicated on 2/11/93 that it would not
allow the City to change the taxing district ratio as it had to
be changed before August 1 to be effective for taxes payable in
1993 according to Statute 272. Therefore, the County not being
able to accommodate the City is a moot point based on this
Thursday, 2/11/93 discussion with State representatives.
During discussions with the Department of Revenue, Lori
discovered that an October, 1992, directive issued by the
Department relating to the calculation of urban/rural tax rates
had not been used when the County calculated the rates. After
correctly calculating the rates, the rural rate is lower than
the urban rate. However, the rate is now lower than it should
be and will need to be adjusted for taxes payable in 1994.
As the situation now stands, people in the rural taxing
districts will receive a lower tax statement than originally
anticipated. However, as the City will review this situation
in the summer of 1993, these same taxpayers will most likely
see a jump in their tax rate in 1994 in order to bring the
urban and rural rates closer together which is in line with the
intent of the consolidation agreement.
In the final analysis nothing can be done at this time to
change the tax rates for taxes payable in 1993. This issue is
somewhat difficult to describe on paper and Lori will be at the
meeting to provide the Council with an update and answer
questions.
720 Dodge Avenue N.W., Elk River, Minnesota 55330 (612) 441-7420