The property tax levy is the total dollar amount calculated by the City as needed to fund City services, capital expenditures and general debt obligations. It is applied to property values (taxable market values translated into tax capacities) and determines the amount that is placed on your property tax statements for the following year. The Rogers City Council set the preliminary 2013 levy on Tuesday, September 11, 2012. The preliminary levy is the maximum levy amount that can be certified as a final levy by December 28, 2012. The levy can be reduced but not increased between the time the preliminary and final levies are set.
The 2013 preliminary levy was set at:
General Fund Operating Levy
Special Revenue Fund Levy (RAC)
Capital Sinking Fund Levy
PW Interfund Loan Repayment Levy
Special Levies (debt , et. al.)
Total Preliminary Levy
The 2013 General Fund Operating Levy (amount used for general fund services) of $3,991,605 is a 20.28% increase over the 2012 general levy which did not include Hassan Township services. The total preliminary levy is a 27.75% increase over the 2012 final City of Rogers levy (Rogers only, zero levy by Hassan) which also did not include Hassan Townships General Fund expenditures. This increase includes the full effects of annexation, with economies of scale (consolidation savings), the incorporation of first year planned repayment of interfund loan for building debt, the creation of capital improvement sinking funds for buildings, equipment, streets and parks, and no intentional use of fund balance to maintain a balanced budget. The combination of the 2011 Hassan & 2012 Rogers total levy would amount to $5,545,275. The preliminary 2013 levy would be a 6.8% increase over that figure, with the difference being more than made up by the addition of the capital sinking funds, which will provide future savings on debt service.
The 2013 projected tax rate based upon the preliminary levy is 38.260%. This rate would be a 7% decrease over the Rogers 2012 tax rate of 41.18%.
Based upon the estimated 38.260% tax rate, the property tax bill for a Rogers property (those that were in Rogers prior to December 31, 2011) with no increase in taxable market value should see a reduction to the City share of property taxes in 2013 (7% reduction if value is identical).
Property owners who were in the final phase of the Hassan Township annexation will pay City property taxes for the first time in 2013. The 2013 Truth in Taxation notices will reflect an increase from 0% (2012 “zero levy”) to an estimated 38.260% (projected City tax rate)
(chart data provided by the League of Minnesota Cities)
The unapproved preliminary General Fund operating budget is currently $6,153,413 which reflects a 21.06% increase over the 2012 adopted budget, which did not include Hassan Township expenditures. The preliminary budget reflects a 7.81% increase over the amended 2012 budget which included conservative Hassan Township service-level expenditure estimates (reduced personal services, 2012 prepaid expenditures by the Township in 2011, one time reductions to dues and subscriptions by various government entities, cautious service levels, etc.).
On December 31, 2011, Hassan Township was annexed by the City of Rogers. This merger resulted in the following service-related impacts:
The Hassan Township 2011 Tax Rate was 27.89%.
The City of Rogers 2011 Tax Rate was 41.05%, and the 2012 tax rate is 41.18%[Speculative: Had Hassan Township continued into 2012 without annexing into Rogers, Township tax payers may have seen a tax rate of approximately 33% for 2012. This assumes that the exact same levy would have been adopted for 2012, as had been done the previous three years. The potential increase in tax rate would have been primarily due to the reduction of total tax capacity (levy of $1,181,368 divided into tax capacity of $3,564,204). Again, this is speculative, but likely based upon the 2011 levy].Hassan Township 2011 General Fund Budgeted Expenditures were $1,220,924 (which would not have included the cost one additional police officer hired to expand service territory, 2012 inflationary costs or other 2012 budget changes that may have been implemented).
The City of Rogers 2012 General Fund budgeted expenditures were $5,082,836.The combination of the 2011 Hassan & 2012 Rogers General Fund budgeted expenditures totals $6,303,760, which would be $150,347 higher than the 2013 City of Rogers preliminary budget of $6,153,413. As noted previously, the Rogers 2013 levy also includes more than $500,000 in new capital funds designed to help reduce future borrowing costs for facilities and equipment.
The Metropolitan Area Fiscal Disparities Program is a mandatory program enacted by the State Legislature in an attempt to address fiscal concerns within the seven‐county Metro area and to equalize tax base by requiring that all communities in the area contribute 40 percent of the growth in their commercial/industrial tax base after 1971 to a regional pool. The tax base is then redistributed to cities based upon a State formula.The primary objectives of the program can be summarized as:
What Does this Mean for Rogers?Of the 180 cities and townships in the program, the City of Rogers is by far the largest net contributor, or “net loser” in terms of percentage of total tax base lost to the program. In 2011, Rogers lost 19.54% of its tax capacity to Fiscal Disparities, the largest loss among all taxing jurisdictions. The second largest net loser was Bloomington with a 15.6% net loss of tax capacity, meaning that the impact to Rogers was 25% greater than to even the second highest city on that list. Rogers will be the largest net contributor in terms of percentage of tax capacity once again in 2012.Of the Cities shown on the opposite page under “Tax Rate Comparison,” only Rogers is negatively impacted by Fiscal Disparities. All others are either net recipients (positive affect to tax capacity/rate) or they are exempt from the program due to location.
The tax rate/tax bill impacts to Rogers as a result of the program are large significant. As noted above, in 2011, the City lost nearly 20% of its taxable tax capacity to the program pool on a net basis. At the 2011 City tax rate of 41.05%, the loss of tax base translates into $1.2 million in lost revenue potential. The loss of tax capacity caused the Rogers tax rate and individual municipal tax bills to be 34.4% higher than if there were no Fiscal Disparities tax sharing program. Without Fiscal Disparities, the Rogers tax rate would have been 30.54% in 2011. In 2012, the Rogers tax rate was 21.5% higher due to the program.
Largely because there are many more net recipients than net contributors to the program, substantial legislative changes are unlikely in the near future, meaning that Rogers will continue to see significant negative impacts and pressure on the local tax rate due to Fiscal Disparities.