The City of Shakopee is required to comply with the statutory deadlines for submittal of the property tax levy to Scott County and must certify the levy by September 30, 2019.

The levy is the base for budget work that will be brought back to the City Council for continuing budget discussion in November.

The final levy, which cannot be higher than the preliminary levy but can be lower, will be brought to the council for review at the December 3, 2019 council meeting. This will also be the date that will serve as the Public Input meeting which provides the public an opportunity to comment on the budget and levy. Final approval of the budget and levy needs to be approved by December 31, 2019 and is expected to occur at the December 17, 2019 council meeting.

Staff recommends the city council adopt the property tax levy as reviewed and discussed on September 3, 2019 council meeting. The preliminary 2020 levy represents a 5.98% increase over the 2019 levy. This levy does not include the EDA special benefit levy, which is a separate levy requiring separate EDA and council approval. 

The average-valued home increased in value 6.7 percent from $255,400 to $272,600 for taxes payable 2020. The net effect of the increases in value and tax levy will result in a 4.6 percent or $39 annual tax increase for 2020. This $39 tax increase is similar to the tax cut the average valued property experienced this year. 

The city's overall tax capacity grew by over 10 percent this year or $6.4 million to $66.3 million. Over $1 million of this growth is related to new construction. New construction creates a larger tax base thus reducing the tax burden for all property owners. In terms of levy dollars, this new growth allows the city to increase the levy by approximately $346,000 without having a tax impact on existing properties. 

The proposed levy also decreases our current tax rate, lowering it from 34.943 percent to an estimated 33.914 percent.

There was discussion at the budget workshop about implementing the revised rent charges for the building, park asset and IT internal service funds over two years rather than one year. This action would reduce the levy by approximately $175,000 this year, but defer the increase to next year's levy.

The $175,000 decrease in the levy would reduce the city levy increase from 5.98 to 5.07 percent and reduce the annual tax increase on the average-valued home from $39 to $31. Conversely, these reductions would then need to be added to next year's base levy increase.

There did not appear to be a clear consensus on the preferred course of action for the implementation of the internal service charges. The proposed levy and attached resolution maintain the original proposed levy, implementing the rent changes in one year. If the council chooses to implement the rent charges over two years and reduce this year's levy, a motion to amend the attached resolution would be required.  

Attached is the budget memo that was provided at the budget workshop on the September 3, 2019 council meeting which provides specifics on the preliminary levy, valuation changes for residential properties and the levy impact for residents. Also attached is a graph illustrating the 2020 preliminary levies for our comparable cities. The average levy increase for our ten comparable cities is 5.93 percent.

Staff is also requesting the council approve a resolution canceling the debt service levies for specific debt issuances. These debt issuances have sufficient fund balances available to pay for future debt service payments without levying the entire required debt service levy.