Agenda - Council - 06/23/1981 - Laserfiche WebLink

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budget. Property tax revenue has grown by an average of 34.5% per year, and has not been subject to levy limitations because the city was exempt from this law based on its 1970 population. During the next decade, however, the city will be subject to levy limits based on the 1980 census results. Therefore, the levy limit legislation will be the determining factor in projecting this revenue source for th~ next five years. Local Government Aid also makes up a significant portion of the operating budget, at 16%. This revenue source has been increasing at a rate of 20.2% per year, although it appears at present that this source may stabilize and will not continue to increase as it has in the past. 1. Levy Limitations a. Previous Levy Limit Law~ The levy limit law for 1981 limited the growth of the per capita "levy limit base" to 8% per year (6% prior to 1981). The "levy limit base" was the total of the property tax levy plus the local government aid. Limiting the growth of the base presumably provided a way for the state to ensure that an increase in local aid will have the effect of reducing.the relative amount raised by property taxes. Since it was expressed in "per capita" terms, there was some built in allowance for growing communities because the levy limit base was divided by the previous year's population to get the base per capita. This figure was then increased by 8% and then was multiplied by the current or most recent population estimate to arrive at the levy limit base. Prior to 1981, the increase in the per capita base was limited to 6%. During the period 1975-80, Ramsey's population grew by an average of 7.4%. Therefore, if Ramsey had been subject to levy limits, the levy limit base would have been allowed to increase only about 13% (6% plus 7.4%) per year. Looking at the increase in the t'otal of Ramsey's local aid and property taxes from 1978- 81, the average increase was 32% per year, the bulk of which was made up by property taxes. Since the amount raised by property taxes is directly related to the need for funds to provide the necessary services, the 13% increase allowed under levy limits would clearly have been inadequate to meet Ramsey's needs. 1982 Levy Limit For 1982, the levy limit law was substantially changed. Under the new law, all communities - 2-