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Truth in Taxation Presentation 2025.12.02Truth in Taxation 2026 Budgets & Property Tax Levy PRESENTATION & PUBLIC INPUT DECEMBER 2, 2025 Before We Start •PROPERTY VALUATION •That is not the focus of this meeting. •No changes can be made at this meeting. •LOCAL BOARD APPEAL & EQUALIZATION MEETING •Annual Meeting between April 1 –May 31 •Payable 2026 Valuation Meeting was held: •April 22, 2025 •MINNESOTA DEPARTMENT OF REVENUE •Requirement for cities with a population over 500 •NOTIFICATION •County sends a parcel specific notice between November 11-24 •PURPOSE OF THIS MEETING •Discussion of 2025 Budgets •Discussion of Levy for Taxes Payable 2025 •Discussion of Capital Improvement Plan •Public Input Truth in Taxation Otsego’s Strategic Vision Budget Process •CITY COUNCIL OUTLINES 2026 BUDGET GOALS AND OBJECTIVES •STAFF PREPARE PROPOSED BUDGETS •PROPOSED BUDGETS REVIEWED •City Council Meetings from May to November (open to public) •6 Meetings Prior to Tonight •PRELIMINARY TAX LEVY •Certified September 22, 2025 •TRUTH IN TAXATION •FINAL BUDGET ADOPTION •Pending December 8, 2025 General Fund General Fund Summary 2025 2026 ($)(%) Budget Budget Change Change Revenue Source Taxes 6,992,002$ 7,553,534$ 561,532$ 8.03% Cable Franchise Fees 117,000 106,000 (11,000) -9.40% Licenses & Permits 1,703,459 1,904,463 201,004 11.80% Intergovernmental 209,554 186,333 (23,221) -11.08% Charges for Services 244,830 268,365 23,535 9.61% Special Assessments 3,500 3,400 (100) -2.86% Fines & Forfeitures 33,600 37,100 3,500 10.42% Investment Interest 142,657 175,126 32,469 22.76% Miscellaneous 15,500 13,000 (2,500) -16.13% Interfund Transfers 478,000 603,000 125,000 26.15% Total 9,940,102$ 10,850,321$ 910,219$ 9.16% Expenditure Function General Government 2,196,516$ 2,549,850$ 353,334$ 16.09% Public Safety 4,263,499 4,827,286 563,787 13.22% Public Works 2,118,872 2,234,775 115,903 5.47% Parks & Recreation 1,250,315 1,306,497 56,182 4.49% Economic Development 110,900 101,150 (9,750) -8.79% Total 9,940,102$ 11,019,558$ 1,079,456$ 10.86% Revenues Taxes, 70% Cable Franchise Fee Licenses & Permits Intergovernm… Charges for Services Miscellaneous Transfers In 2025 Taxes, 70% Cable Franchise Fee Licenses & Permits Intergovernmen… Charges for Services Miscellaneous Transfers In 2026 •PROPERTY TAXES •Total Expenditures and Subtract Other Revenue Sources •CABLE FRANCHISE FEES •Fewer Subscribers = Declining Revenue Source •LICENSES & PERMITS •New Residential Construction Permits (280 for 2025 / 285 for 2026) •INTERGOVERNMENTAL •Public Safety Aid Allocation ($90,054 for 2025 / $54,033 for 2026) •TRANSFERS IN •Administrative Services Reimbursement -$603,000 •USE OF FUND BALANCE •Fund Balance Exceeds Minimum Policy Goal by $169,237 Revenues –Changes from 2025 Expenditures General Government 22% Public Safety 43% Public Works 21% Parks & … Economic Development 1% 2025 General Government 23% Public Safety 44% Public Works 20% Parks & … Economic Development 1% 2026 •CITY COUNCIL; ADMINISTRATION; ELECTIONS; ASSESSING; FINANCE; INFORMATION TECHNOLOGY; LEGAL; HUMAN RESOURCES; COMMUNICATIONS; AND CITY BUILDINGS. •Staffing •Human Resources: New Position Budgeted to Start in April 2026 •Information Technology: New Position Budgeted to Start in July 2026 •Communications: Currently Part-Time, Budgeted for Full-Time in 2026 •Cost of Living Adjustments for Wages •Insurance Adjustments for Benefits •Elections –Primary and General Elections in 2026 General Government –Changes from 2025 (16.09%) General Government –Changes from 2025 (16.09%) 2025 2026 ($)(%) Budget Budget Change Change General Government City Council 114,299$ 103,178$ (11,121)$ -9.73% City Administrator 251,975 251,087 (888) -0.35% Administration 413,202 425,331 12,129 2.94% Elections 7,600 84,408 76,808 1010.63% Assessing 165,735 168,075 2,340 1.41% Finance 418,578 449,615 31,037 7.41% Information Technology 209,443 300,909 91,466 43.67% Legal 37,950 38,110 160 0.42% Human Resources 205,129 312,365 107,236 52.28% Communications 138,017 166,339 28,322 20.52% Prairie Center 71,091 79,013 7,922 11.14% City Hall & Public Works 157,940 165,713 7,773 4.92% Old Town Site 5,557 5,707 150 2.70% Total 2,196,516$ 2,549,850$ 353,334$ 16.09% Per Capita 95$ 107$ 12$ 12.88% •POLICE PROTECTION; PUBLIC SAFETY COMMISSION; FIRE PROTECTION; BUILDING SAFETY; EMERGENCY MANAGEMENT; AND ANIMAL CONTROL. •Law Enforcement Contract -$2,098,750 •Hourly Rate Increase -$115 per hour, 4.5% Increase •Lawful Gambling Proceeds –Covering $50,915 of this Cost for 2026 •Fire Protection Contracts -$1,635,607 •Adjustments for Tax Capacity, Market Value, Call Volumes, Budgets =18.47% increase •Otsego Fire Department •Phased Hiring of PT and FT Positions During 2026 ($173k) •Training for Fire, EMS, Hazardous Materials, Etc. •Otsego Fire Station •Construction Complete in Summer 2026, Partial Year of Facility Operating Costs Public Safety –Changes from 2025 (13.22%) Public Safety –Changes from 2025 (13.22%) 2025 2026 ($)(%) Budget Budget Change Change Public Safety Police Services 2,043,000$ 2,086,735$ 43,735$ 2.14% Public Safety Commission 2,420 2,420 - 0.00% Fire Protection 1,593,755 2,052,150 458,395 28.76% Fire Station - 37,067 37,067 #DIV/0! Building Safety 576,549 611,739 35,190 6.10% Emergency Management 25,775 16,675 (9,100) -35.31% Animal Control 22,000 20,500 (1,500) -6.82% Total 4,263,499$ 4,827,286$ 563,787$ 13.22% Per Capita 184$ 203$ 19$ 10.09% Public Works –Changes from 2025 (5.47%) •STREETS MAINTENANCE; ENGINEERING; STREET LIGHTS AND FLEET MANAGEMENT. •Staffing •Cost of Living Adjustments for Wages •Insurance Adjustments for Benefits •Street Maintenance •Compost Site Attendant and Brush Chipping •Gravel Road Dust Coating Applications •Street Lighting: Electrical Utilities, Signal Light Repairs •Fleet Services: •Fuel, Vehicle & Equipment Maintenance, and Supplies •Contracted Services for Major Repairs Public Works –Changes from 2025 (5.47%) 2025 2026 ($)(%) Budget Budget Change Change Public Works Street Maintenance 1,327,663$ 1,417,531$ 89,868$ 6.77% Engineering 100,320 87,380 (12,940) -12.90% Street Lights 184,520 201,860 17,340 9.40% Fleet Management 506,369 528,004 21,635 4.27% Total 2,118,872$ 2,234,775$ 115,903$ 5.47% Per Capita 92$ 94$ 2$ 2.55% •PARK MAINTENANCE; RECREATION; PARKS AND RECREATION COMMISSION; AND HERITAGE PRESERVATION COMMISSION. •Staffing •Cost of Living Adjustments for Wages •Insurance Adjustments for Benefits •Parks Maintenance: Athletic Fields, Playgrounds, Irrigation, Natural Landscapes •Recreation: Program Supplies & Equipment Culture and Recreation–Changes from 2025 (4.49%) Culture and Recreation–Changes from 2025 (4.49%) 2025 2026 ($)(%) Budget Budget Change Change Culture and Recreation Park Maintenance 874,655$ 914,798$ 40,143$ 4.59% Recreation 370,560 386,499 15,939 4.30% Heritage Preservation Commission 2,680 2,780 100 3.73% Parks and Recreation Commission 2,420 2,420 - 0.00% Total 1,250,315$ 1,306,497$ 56,182$ 4.49% Per Capita 54$ 55$ 1$ 1.60% •PLANNING COMMISSION, PLANNING & ZONING, ECONOMIC DEVELOPMENT. •Advisory Commissioner –Meeting Stipends •Planning & Zoning Services •Economic Development Authority –Meeting Stipends Economic Development–Changes from 2025 (-8.79%) 2025 2026 ($)(%) Budget Budget Change Change Economic Development Planning Commission 3,500$ 3,500$ -$ 0.00% Planning 90,640 85,490 (5,150) -5.68% Economic Development 16,760 12,160 (4,600) -27.45% Total 110,900$ 101,150$ (9,750)$ -8.79% Per Capita 5$ 4$ (1)$ -11.31% Additional Budgets 21 •DRINKING WATER •7% Rate Increase •SANITARY SEWER •2% Rate Increase •STORM WATER •10.84% Rate Increase Public Utility Funds Budget Budget 2025 2026 Utility Revenues Operating 8,118,701$ 8,372,395$ Non-Operating 2,966,469 1,084,179 Availability + Connection Charges 4,696,540 5,143,579 Special Assessments 35,274 40,248 Bond Proceeds 10,098,000 26,441,878 Subtotal 25,914,984 41,082,279 Expenditures Personal Services 1,488,288 1,750,532 Supplies 1,019,630 1,024,788 Services & Other Charges 1,582,905 1,726,747 Capital Outlay 20,506,400 17,851,584 Depreciation 4,638,841 5,144,320 Debt Service 5,208,236 5,411,154 Interfund Transfers 478,000 603,000 Subtotal 34,922,300 33,512,125 Excess (Deficiency) of Revenues Over (Under) Expenditures (9,007,316)$ 7,570,154$ Description 22 Debt Service Funds Budget Budget 2025 2026 Revenues Taxes 290,308$ 1,567,613$ Special Assessments 168,333 160,924 Subtotal 458,641 1,728,537 Expenditures Principal 480,000 495,000 Interest 521,315 814,381 Fiscal Agent Fee's 3,500 3,900 Subtotal 1,004,815 1,313,281 Excess (Deficiency) of Revenues Over (Under) Expenditures (546,174)$ 415,256$ Description Original Liability 2026 Liability Maturity Issue Balance Principal Balance Date Amount 12/31/2025 Payment 12/31/2026 Outstanding Bonds 2018A General Obligation Improvement 2/1/2034 2,305,000$ 1,390,000$ 205,000$ 1,185,000$ 2020A General Obligation Improvement Refunding 2/1/2028 2,950,000 1,205,000 290,000 915,000 2024A EDA Lease Revenue 2/1/2046 16,900,000 16,900,000 - 16,900,000 Grand Total 22,155,000$ 19,495,000$ 495,000$ 19,000,000$ Description of Bond Issue - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 16,000,000 18,000,000 20,000,000 - 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 Principal Payments Bonds Outstanding Special Revenue Funds •BUDGETED FUNDS •Tax Increment District No. 1 •Tax Increment District No. 2 •Tax Increment District No. 3 •OTHER FUNDS •Insurance Reserve •Vireo Health •Lawful Gambling •Street Light District •Development Revolving Budget Budget 2025 2026 Revenues Tax Increments 609,601$ 645,302$ Subtotal 609,601 645,302 Expenditures Personal Services 3,200 3,500 Services & Other Charges 4,500 5,100 Development Incentives 510,542 576,435 Subtotal 518,242 585,035 Excess (Deficiency) of Revenues Over (Under) Expenditures 91,359$ 60,267$ Description Property Tax Levy 25 •MARKET VALUE •Wright County Assessor sets valuations •Board of Appeal and Equalization (4-22-2025) •2025 ASSESSMENT – PAYABLE 2026 •Residential: 4.21% •Median Value (2024): $386,400 •Median Value (2025): $402,500 or 4.2% Increase •Multi-Family: 2.85% •Commercial: 3.01% •Industrial: 15.37% •Agricultural: -1.24% 2026 Tax Capacity - Factors Market Value Class Rate Tax Capacity Tax Capacity ADD THEM ALL UP = TAX BASE Tax Capacity - Continued 80% 16% 2%2% 2026 Residential Commercial & Industrial Agricultural Personal Property $- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 Residential Commercial & Industrial Agricultural Personal Property 2022 2023 2024 2025 2026 Tax Levy •$11,105,525 Tax Capacity •$41,701,870 Tax Rate •26.631 Tax Rate School District County City School Total RMV Elk River Area - 728 35.167 26.631 24.478 86.276 25.428 STMA - 885 35.167 26.631 33.721 95.519 15.139 Monticello - 882 35.167 26.631 12.921 74.719 15.454 2026 2026 Tax Levy Summary 2022 2023 2024 2025 2026 General Operations $5,009,000 $5,366,000 $6,336,000 $7,000,000 $7,545,000 Capital Projects 2,988,590 3,344,939 2,265,393 2,015,126 1,884,287 Debt Service 547,187 544,416 299,144 290,308 1,567,614 Tax Abatements 40,228 74,668 88,224 87,436 108,624 $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 Per Capita City of Otsego 430$ 438$ 396$ 406$ 467$ 30 2026 Taxes - Calculation Payable Payable (%) 2025 2026 Change Comments Residential Median Appraised Value 386,400$ 402,500$ 4.17%Source - Wright County Less: Market Value Exclusion (11,774) (10,325) Max Benefit = $30,400 / Phase Out = $517,200 Taxable Market Value 374,626 392,175 Subtract MV Exclusion from Estimated MV Class Rate 1.00%1.00%Set by Legislature (Over $500k is 1.25%) Tax Capacity 3,746 3,922 Taxable MV Multiplied by Class Rate City of Otsego - Tax Rate 24.352 26.631 9.36%Tax Levy Divided by Tax Capacity * 100 City of Otsego - Estimated Taxes 912$ 1,044$ 14.48%Tax Capacity Multiplied by Tax Rate 31 2022 to 2026 Taxes – Comparison •MARKET VALUE •92.8% of Residential Properties In This Range 2026 Wright County Tax Rates - Preliminary St. Michael (*) Otsego Dayton Hanover (*) Monticell o (*) Annandal e Rockford Delano Albertville Waverly Buffalo (*) Maple Lake Clearwate r Montrose Cokato Howard Lake South Haven Tax Rate 26.138 26.631 35.944 36.485 38.185 42.480 44.091 44.497 44.809 44.895 51.638 56.371 57.435 61.444 63.751 70.117 74.136 City Tax 1,025 1,044 1,410 1,431 1,498 1,666 1,729 1,745 1,757 1,761 2,025 2,211 2,252 2,410 2,500 2,750 2,907 - 500 1,000 1,500 2,000 2,500 3,000 3,500 - 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 Wright County Cities - 2026 Tax Rates Tax Rate City Tax Notes: (*) Indicates a City has either an EDA or HRA Tax Levy in addition to the tax rate included above. Tax Rate is Preliminary Tax Rate for Taxes Payable 2026. City Tax Calculation Assumes Residential Value of $402,500 (Otsego median appraised value for taxes payable 2026). 2026 Wright County Tax Levies - Preliminary Monticell o (*) Buffalo (*)Otsego St. Michael (*) Dayton Albertvill e Delano Hanover (*)Rockford Montrose Cokato Annandal e Howard Lake Maple Lake Clearwat er Waverly South Haven City Levy 15,337,0 12,860,3 11,105,5 9,761,90 9,538,06 6,237,57 5,735,73 2,687,45 2,644,98 2,465,26 2,197,99 1,980,86 1,958,42 1,914,35 1,739,76 1,461,08 191,062 Per Capita 992 765 467 449 880 728 762 612 547 630 780 568 874 862 782 654 1,044 - 200 400 600 800 1,000 1,200 - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 16,000,000 18,000,000 Wright County Cities - 2026 Tax Levies City Levy Per Capita Notes: (*) Indicates a City has either an EDA or HRA Tax Levy in addition to the tax rate included above. Tax Levy is the Preliminary 2026 Tax Levy for each City. Per Capita Tax Levy is Based on 2024 Population from the Minnesota State Demographer. Capital Improvement Plan 35 •10-YEAR PLAN (2026 – 2035) •THE CIP DOES NOT PROVIDE FINAL AUTHORITY •City Council approves each item specifically before expenditures incurred. •SNAPSHOT OF SOME 2026 PROJECTS •Pavement Management: $2,634,738 •Parks and Trails: $1,819,799 •Vehicles and Equipment: $587,598 •City Facilities & Property: $143,753 •Fire Department: $4,249,897 •Water Utility: $15,649,389 •Sanitary Sewer Utility: $1,735,395 •Storm Water Utility: $28,000 Capital Improvement Plan (CIP) Public Input CITY COUNCIL ACTION – PENDING DECEMBER 8, 2025 -ADOPT 2026 OPERATING BUDGETS -SET FINAL TAX LEVY FOR PAYABLE 2026 -ADOPT THE 2026-2035 CIP Questions: CITY ADMINISTRATOR/FINANCE DIRECTOR – ADAM FLAHERTY AFLAHERTY@OTSEGOMN.GOV (763) 441-4414