7.1 SR 12-02-2024The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community
engagement that encourages and inspires prosperity
Request for Action
To
City Council
Item Number
7.1
Meeting Date
December 2, 2024
Prepared By
Lori Stich, Finance Manager
Item Description
2025 Budget and Tax Levy Resolution 24-73
Reviewed by
Lori Stich
Joe Stremcha
Cal Portner
Tina Allard
Action Requested
▪ Approve, by motion, the 2025 General, Special Revenue, and Enterprise Fund budgets.
▪ Adopt, by motion, Resolution 24-73 authorizing the property tax levy for collection in 2025.
Background/Discussion
In May, staff began the budgeting process by developing their 2025 department goals and budget requests.
Over numerous work sessions, the City Council and staff reviewed in detail each department’s operating
budget and the property tax levy. In September, the Council approved the preliminary tax levy that was used
to calculate the proposed property tax notice that was mailed to each property owner.
General Fund Budget
The 2025 General Fund budget is $22,210,100, compared to $21,570,600 in 2024. The largest portion of the
city’s General Fund operating budget is dedicated to public safety programs and services, with general
government, public works, and parks and recreation making up the balance. Because city government is
primarily a service industry, 77% of the operating budget is for personal service expenditures.
Tax Levy
On September 16, the City Council adopted the preliminary tax levy of $17,232,183. Since then, additional
reductions of $388,000 have been made for a proposed tax levy of $16,844,183 for 2025.
The county estimates the city’s Net Tax Capacity (NTC) will increase by about 1.7%, attributable to new
growth and market value increases. The final NTC may change slightly as the county continues to update
property values before calculating property taxes in early 2025. Based on the current NTC values, the
proposed tax rate is 38.903%, an increase from last year’s rate of 37.895%. The Minnesota legislature
increased the Homestead Market Value Exclusion limit for 2025 from $413,800 to $517,200. Excluding over
$100,000 of NTC from many residential properties increases the tax rate required for the levy.
The city accounts for about 38% of a homeowner’s total property tax bill. The remainder is attributed to the
Page 178 of 211
county (36%), the school district (24%), and other jurisdictions (2%). For businesses, the city’s share is about
28% of the total.
Primarily, the property tax levy (93%) funds city services such as police, fire, street maintenance, parks and
recreation, and general government. The remaining 7% pays for debt service, tax abatement, and library
operations.
Special Revenue Fund Budget
The FT Center budget is undergoing further revisions based on several changes for 2025 to be reviewed by
the Multipurpose Facility Advisory Commission (MFAC) on December 9, 2024. The MFAC will recommend
an amended budget for Council approval on December 16, 2024. Factors for 2025 changes include:
▪ Use of federal ARPA funds as revenue replacement with the sole purpose of those dollars funding hard
surface improvement including concrete flooring, sportcourt, and turf alterations to enable the turf to
be rolled and replaced seasonally for peak utilization periods.
▪ Revised revenue and expense projections for the Overlook Lounge using current market trends and
established hours of operation.
▪ Revised revenue projections based on approved rates and projected facility rentals.
Financial Impact
Below is a summary of the proposed budgets Council has reviewed and to be approved:
Mission/Policy/Goal
Responsible for every dollar - good stewards.
Attachments
1. 2025 Final levy resolution
2. 2025 Budget Presentation
Page 179 of 211
City of Elk River
City Council
Resolution 24-____
A Resolution of the City Council of the City of Elk River Adopting the
Preliminary Property Tax Levy for Taxes Payable in 2025
WHEREAS,the Elk River City Council has reviewed the City’s anticipated expenditures
for all funds in 2025; and,
WHEREAS,the Elk River City Council has considered projected revenues for all funds in
2025; and,
WHEREAS,revenues from sources other than property taxes are not sufficient to meet
anticipated expenditures of all funds; and,
WHEREAS,debt levies have been adjusted or cancelled based on revenue collections and
projections.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk
River, Minnesota, as follows: The following amounts are the maximum to be levied as
property taxes payable in 2025:
Passed and adopted this _____ day of _______ 2025.
John J. Dietz, Mayor
ATTEST:
Tina Allard, City Clerk
Le vy
General Fund $15,626,050
Library 79,000
2020A GO CIP Bond 604,771
2021A GO CIP/Equipment Bond 394,123
Economi c Deve lopment Tax Abate ment 140,239
Total Tax Le vy $16,844,183
Page 180 of 211
City Council
Truth in Taxation – 2025 Budget
Page 181 of 211
Purpose of Meeting
§Review 2025 Budgets:
Ø General Fund
Ø Special Revenue Funds
Ø Enterprise Funds
§Property Tax Levy Overview
§Receive Public Comment
§Approve 2025 Budgets
§Adopt City Tax Levy
Truth in Taxation Public Hearing
Page 182 of 211
2025 General Fund Budget Summary
Page 183 of 211
General Fund Expenditures – by Function
General
Government
25%
Public Safety
49%
Public Works
13%
Parks &
Recreation
12%
Page 184 of 211
General Fund Expenditures – by Category
Personal Services
77%
Supplies
6%
Service Charges
17%
Page 185 of 211
General Fund Revenues – by Source
Transfers In
13%
Property Taxes
70%
Other Taxes
1%
Licenses/ Permits
5%
Intergovt
3%
Charges for Services
6%
Fines
1%
Other
Revenues
2%
Page 186 of 211
General Fund Budget History
2016201720182019202020212022202320242025$0
$4,000,000
$8,000,000
$12,000,000
$16,000,000
$20,000,000
$24,000,000
Capital
Service Charges
Supplies
Personal Services
Avg. - 5%
Page 187 of 211
Other Budgets – Special Revenue Funds
FT Center Budget
§Undergoing further revisions
based on several changes for
2025 to be reviewed by the
Multipurpose Facility Advisory
Commission (MFAC) on
December 9, 2024.
§The MFAC will recommend an
amended budget for Council
approval on December 16, 2024.
Page 188 of 211
Other Budgets – Enterprise Funds
Page 189 of 211
Your Property Tax: Who Determines It?
State Legislature
Establishes property classes/class
rates, determines the levels of
state aid, levies state business
tax, and sets levy limits
County Assessor
Determines market value and
assigns property class
Taxing Jurisdictions
Determines levy amount
(Overall budget amount and the
portion to be raised through
property taxes)
Page 190 of 211
PROPOSED TAXES 2025
2024 2025
$340,000
$6,640
N/A
$333,360
RES HMSTD
$263,000
$13,570
N/A
$249,430
RES HMSTD
Estimated Market Value:
Homestead Exclusion:
Other Exclusion/Deferrals:
Taxable Market Value:
Property Classification:
Taxes Payable Year
Market Value Questions?
§Contact Sherburne County Assessor
§Attend Local Board of Review Public Hearing
(Spring 2025)
Property Tax Valuation Example
Estimated Market Value
Increased by 30%
Homestead Exclusion
Rate Reduced by 51%
Taxable Market Value
Increased by 34%
Page 191 of 211
City Tax Levy
Page 192 of 211
Tax Levy by Use
General Govt.
23%
Public Safety
46%
Public Works
12%
Parks & Recreation
11%
Library
0%
Debt Service
6%Econ. Develop.
1%
Page 193 of 211
Municipal Liquor Reduces Our Tax Levy Impact
§100% of all proceeds are reinvested into our community and this reduces our tax levy.
§In 2025, our liquor operations will provide $1,100,000 in governmental fund transfers.
§In 2022, Elk River was ranked #8 out of 176 municipal liquor operations gross sales.
The 2023 Minnesota Municipal Liquor Store Report will be published December 2024.
Page 194 of 211
Tax Capacity Rates
**City, county, and school comparison are estimates only.
Page 195 of 211
Property Tax Dollar Distribution
City
$0.37
County
$0.37
School
$0.24
Other
$.02
Page 196 of 211
Tax Levy - Tax Rate History
Page 197 of 211
Estimated City Tax Impact
Page 198 of 211
Tax Rate Impact on
Taxable Market ValuePROPOSED TAXES 2025
2024 2025
$340,000
$6,640
N/A
$333,360
RES HMSTD
$263,000
$13,570
N/A
$249,430
RES HMSTD
Estimated Market Value:
Homestead Exclusion:
Other Exclusion/Deferrals:
Taxable Market Value:
Property Classification:
Taxes Payable Year
Page 199 of 211
City Council Next Steps
Receive public comment
regarding budget/levy
Approve 2025 General,
Special Revenue, and
Enterprise Fund budgets
Adopt 2025 City
Property Tax Levy
Questions?
Page 200 of 211