Agenda - Council Work Session - 06/28/2016

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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 increased 7.1 percent for 2014 and 9.5 percent for 2015. The following graph shows the City's change in tax capacities over the past 10 years: Tax Capacity Value $30,000,000 $25,000,000 M PM $20,000,000 $15,000,000 $10,000,000 $5,000,000 $- 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 The improvement in property tax capacities contributed to decreases to the overall state-wide and metro area tax rates for 2015. 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: Rates expressed as a percentage of net tax capacity All Cities Seven-County City of State-Wide Metro Area Ramsey 2014 2015 2014 2015 2014 2015 Average tax rate City 48.8 46.9 46.0 43.4 44.2 42.3 County 47.6 44.7 46.6 42.9 43.6 38.4 School 28.9 27.1 30.9 28.3 30.8 24.6 Special taxing 7.3 6.9 9.5 8.8 6.9 5.2 Total 132.6 125.6 133.0 123.4 125.5 110.5 The school tax rate for the City represents an average of Independent School District (ISD) No. 11, Anoka-Hennepin and ISD 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. -5-