Agenda - Council Work Session - 06/12/2012

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Tax capacity is considered the actual base available for taxation. It is calculated by applying the state's property classification system to each property's market value. Each property classification, such as commercial or residential, has a different calculation and uses different rates. Consequently, a city's total tax capacity will change at a different rate than its total market value, as tax capacity is affected by the proportion of the City's tax base that is in each property classification from year -to -year, as well as legislative changes to tax rates. The City's tax capacity decreased 5.0 percent for 2010 and 13.4 percent for 2011. The following graph shows the City's change in tax capacities over the past 10 years: $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $- Tax Capacity Value -7- 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 The following table presents the average tax rates applied to city residents for each of the last two levy years, along with comparative state -wide and metro area rates. The general increase in rates reflects both the increased reliance of local governments on property taxes and the recent decline in tax capacities previously discussed. Rates expressed as a percentage of net tax capacity All Cities Seven - County City of State -Wide Metro Area Ramsey 2010 2011 2010 2011 2010 2011 Average tax rate City 39.2 42.5 36.0 40.0 38.0 39.8 County 41.0 43.7 36.8 42.1 35.6 40.4 School 23.0 25.2 24.0 26.8 22.5 26.5 Special taxing 5.9 6.4 6.5 8.1 6.2 6.2 Total 109.1 117.8 103.3 117.0 102.3 112.9 The City's portion of the tax rate increased slightly for 2011, despite the City reducing its levy, due largely to the declining market values of property within the City's taxing jurisdiction, which has reduced tax capacity. The school tax rate for the City represents an average of Independent School District No. 11, Anoka - Hennepin and Independent School District No. 728, Elk River Area Schools.