Agenda - Council Work Session - 06/10/2014

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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 3.5 percent and 9.1 percent for taxes payable in 2012 and 2013, respectively. 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 $- Local Net Tax Capacity -5- 17 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 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. Rates expressed as a percentage of net tax capacity All Cities Seven - County City of State -Wide Metro Area Ramsey 2012 2013 2012 2013 2012 2013 Average tax rate City 46.3 48.8 43.4 46.1 44.2 44.2 County 46.8 48.5 45.0 47.1 41.6 44.8 School 27.3 28.5 28.5 30.3 26.0 29.7 Special taxing 6.8 7.2 8.7 9.4 5.8 4.9 Total 127.2 133.0 125.6 132.9 117.6 123.6 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. As presented in the table above, the average tax rates for the City and other taxing authorities are similar to the state -wide and metro area averages. In total, the City is below both averages for both the current year and prior year presented.