HomeMy WebLinkAbout2007-11-14 08-021 ORDERBaal , 08 021
Date: 11-14411
Item/Subject: Order, Establishing a Policy to Annually Appropriate a Portion of New
Development Generated Property Taxes to the Credit Reserve
Responslble Department: Finance
Councilor Stone requested staff to draft an Order that would require the City m set aside a
portion of tax revenues generated by new development as part a the annual budget process.
The attached Order outlines the reasons why such an approach would be fiscally prudent for the
City m adopt. This set aside would be deposited Into a previously established fund balance
account, one Credit Reserve. The purpose of a Credit Reserve is to assist the City in continuing
Its normal operations without increasing the tax rate or by reducing tax rate increases
Based upon the new value Information that is available from the last four years, annually
appropriations, had this policy been in place, would have ranged from $32,600 to $95,100.
n
Depa ent Heatl
City Manager
Associated Infolmanon:
Excerpt of City of Bangor OesignatedNndesignated Fundi Balance Policy— Credit Reserve
Budget Appm al:
Finvirice Director
Legal Approeal:
5olicitdr
_ Passage
3 First Reading Page _ of
z Refwml—Fimm CommR ofll-lg-07at S:00pm
oe 02i
Assumed to Camwllor Stone November 16, 2007
a E CITY OF BANGOR
(TITLE.) ORDER, Establishing a Policy to Annually Appropriate a Portion of New
Development Generated Property Taxes to the Credit Reserve
Whereas, the City has previously established a Credit Reserve as a specific designated reserve
Intended to assist the City in continuing its normal operations without increasing the
tax rate or by reducing tax rate increases; and
Whereas, beginning with Fiscal year 2006, the City has prepared Its budget in accordance with
the State mandated LD 1 Limitations on the Municipal Property Tax Levy; and;
Whereas, under LO 1, the City is lim'ilted as W the amount the net tax levy an increase based
primarily on the percentage increase in the tan year average statewide real income
growth and the percentage Increased In total assessed value resulting from new
development; and
Whereas, given LD 14 formula for determining the maximum tax levy, there is a tendency to
use the full amount of the allowable levy Increase W fund services and programs; and
Whereas, annually utilizing the maximum allowable tax levy will reduce the City's budgetary
flexibility in years with low increases in new value and/or f the growth in real income
slows; ant
Whereas, bond rating agencies have also recently commentad an the need for the City W
improve its fund balances to haul fiscal stability; and
Whereas, W address these contra", it is appropriate that a portion of the Was generated by
new development be captured on an annual basis and set aside in a reserve that will
be available to enhance the Citys fuud balance levels and to also provide a means to
minimize finure tax Impaces;
NOW, THEREFORE, BE IT ORDERED BY THE CIN COUNCIL OF THE CIN OF BANGOR THAT
as part of the annual budget process, the City Council will appropriate 5%of the taxes
assessed to new developments, net of any value increases within a her increment financing
district, W the Credit Reserve.
oe 02i
Assumed to Camwllor Stone November 16, 2007
a E CITY OF BANGOR
(TITLE.) ORDER, Establishing a Policy to Annually Appropriate a Portion of New
Development Generated Property Taxes to the Credit Reserve
Whereas, the City has previously established a Credit Reserve as a specific designated reserve
Intended to assist the City in continuing its normal operations without increasing the
tax rate or by reducing tax rate increases; and
Whereas, beginning with Fiscal year 2006, the City has prepared Its budget in accordance with
the State mandated LD 1 Limitations on the Municipal Property Tax Levy; and;
Whereas, under LO 1, the City is lim'ilted as W the amount the net tax levy an increase based
primarily on the percentage increase in the tan year average statewide real income
growth and the percentage Increased In total assessed value resulting from new
development; and
Whereas, given LD 14 formula for determining the maximum tax levy, there is a tendency to
use the full amount of the allowable levy Increase W fund services and programs; and
Whereas, annually utilizing the maximum allowable tax levy will reduce the City's budgetary
flexibility in years with low increases in new value and/or f the growth in real income
slows; ant
Whereas, bond rating agencies have also recently commentad an the need for the City W
improve its fund balances to haul fiscal stability; and
Whereas, W address these contra", it is appropriate that a portion of the Was generated by
new development be captured on an annual basis and set aside in a reserve that will
be available to enhance the Citys fuud balance levels and to also provide a means to
minimize finure tax Impaces;
NOW, THEREFORE, BE IT ORDERED BY THE CIN COUNCIL OF THE CIN OF BANGOR THAT
as part of the annual budget process, the City Council will appropriate 5%of the taxes
assessed to new developments, net of any value increases within a her increment financing
district, W the Credit Reserve.
Excerpt of City of Bangor Designated/Undesignated Fund Balance Policy
11.1 purpose. In accordance with State law and the City Charter,
the credit reserve is established to assist the City in
continuing its normal operations wthout Increasing the tax
rate or by reducing tax rate increases. As such, this source
may be used to fund any appropriate City expenditure.
11.2 Funding. The Credit Reserve may be funded by direct
annual appropriation and through transfers from
undesignated fund balance or other reserves.
11.3 Authority to Use The City Council must authorize the use of
this reserve through an appropriation resolve.
11.4 Amounts and limits. No limitations are placed on the
amounts which may be placed in this reserve.
I8 CIW COBBCIL
Bwemher 14. 2007
First Reeding and Referred
to the. Fimoce Comitree
D&PIITY CI'f4 CL
IN an C CIL
Rosenher 26. 2007
Plotiou Made and Beeauded
for Passage
Cberles Birtrel expressed his
suppoof this Item
Pashev A
( mE.1 Establishing a Pali" t0 �nmually
Appropriate -d forties Ofverse at
Ceaerated Property Eases to the "Iiit
smog rocoeuuarLMi��_