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HomeMy WebLinkAbout2006-06-12 06-231 ORDERItem No, Date: 6-12-06 06 231 Item/Subject ORDER, Authorizing the Fiscal Year 2007 Tax Levyto Increase Above the Property Tax Levy Limit, As Calculated Under 30-A MRSA Section 5721-A, for the Purpose of Excluding Net New State Urban -Rural Initiative Revenues from the Computation of the Tax Levy Limit. Responsible Department: Cry Manager Commentary: The State Legislature has enacted a system designed th limit the growth of municipal tax levies W tie rate of growth of real personal income and the growth in new real and personal property. As a part of the levy limit calculation, m arclpalRles are required to reduce their tax levies in an amount equal to any "net new state revenues," defined as Increases in revenues from the State over and above the percentage growth allowed for the property tax levy. The calculation of 'net new State revenues" is based on the actual revenues received during FY05 (July 1, 2004 to June 30, 2005) compared to Nose projected W be received during H06 (July I, 2005 to June 30, 2006). We project that we will recove $60,720 in State Urban - Rural Initiative Program revenues above the allowable growth. The URIP program is designed to provide assistance to municipalities for major street maintenance projects. As a part of this program, municipalities may receive a bonus payment tied W their level of expenditure for public transportation. It is largely tris bonus that has increased this payment over the limit. I would note tat state law has treated tie unique situation where a reward for good behavior under one program requires a reduction in Cre, expenditures to offset the reward. I would also note that the legislature has approved a measure which would largely exempt the URIP program from the "net new state revenues" limit, however, this measure will not go into effect until after July 1, the date by which the City must adopt Its FY07 budget Overall, therefore, l consider this increase W be technical in nature and to reflect the intent of the State legislature as shown by their actons during this year's session. Department Head Mataperrs Comments: This was reviewed at the most recent budget workshop, and those Councilors; in attendance have recommended this order to me full Council for passage. 79A= AG t•P City Manager Associated Information: Budget Approval: NMaaA —° Flnance Director Legal Approval: ity Soliciror Introduced for Passage First Reading Page _ of _ Referral 06 231 Aesiegea m r cit v eaves uwn 12. 2006 CITY OF BANGOR (TITLE.) ORDER, Authorizing the Fiscal Year 2007 Tax Levy to Increase Above the Property Tax Levy Limit, As Calculated Under 30-A MRSA Section 5721-A, for the Purpose of Excluding Net New State Urban -Rural Initiative Program Revenues from the Computation of the Tax Levy Dmlt. WHEREAS, the State Legislature has enacted a system designed to limit the growth of municipal tax levies to the rate of growth of real personal income and the growth In new real and personal property; and WHEREAS, as a part of the levy limit calculation, municipalities are required to reduce their tax levies in an amount equal to any "net new state revenues," defined as increases in revenues from the State over and above the allowable percentage growth allowed for the property tax levy; and WHEREAS, the calculation of"net new state revenues" is based on the actual revenues received during FY05 (July 1, 2004 to June 30, 2005) compared to those projected to be received during FY06 (July 1, 2005 to June 30, 2006); and WHEREAS, the City projects that it will receive $60,720 in excess of the allowable growth factor from the State through payments to the City under the Urban - Rural Initiative, a program designed to assist munidpolities In Improving their street conditions; and WHEREAS, this Increase is largely the result of a transit bonus payment received by the City in recognition of increased municipal expenditures for public transportation; and WHEREAS, the intent of the transit bonus payment is to reward municipalities for increased spending on public transportation; and WHEREAS, to require municipalities receiving such bonus payments to reduce their tax levy to the extent that the payment exceeds the LD. I net new revenue limits negates the incentive and reward system intended by the State; and 06 231 WHEREAS, during the recently ended legislative session, this conflict was recognized by the legislature when R adopted LD. 1909 which will eliminate the Urban - Rural Initiative Program from the net new revenue limits of LD. 1; and WHEREAS, this legislation, however, will not go into effect until after July 1, 2006, the date by which the City must adopt its Fiscal Year 2007 budget, and WHEREAS, it is clear that the intent of the legislature is to exempt this program from the L.D. 1 limits; and WHEREAS, Mese funds will be used to finance the overlay and major maintenance of the City's street system, an area of significant City-wide need; and WHEREAS, given the recent significant increases in asphalt prices, additional funding is necessary to maintain the City's level of effort in street maintenance; and WHEREAS, to reduce the City's tax levy limit in recognition of the additional reimbursements received from the State for this program would require the City to reduce capital funding for street maintenance; and WHEREAS, the legislature has authorized municipalities to increase their property, tax levy limit by majority vote of the City Council; NOW, THEREFORE, BE IT ORDERED BY THE CRY COUNCIL OF THE CRY OF BANGOR THAT In accordance with 30-A MRSA Sections 5721-A. 6. and 7. M it is the intent of the CRY Council to Increase, and we hereby do increase, the property tax levy limit for Fiscal Year 2007 by the amount of $60,720. This represents the amount of additional State Urban -Rural Initiative Program funding that the City estimates R will receive In excess of the legislatively mandated growth limit on "net new state revenues" as set forth in 30-A MRSA Section 5721-A. 4. for the City's Fiscal Year 2007. m CIn COONCIL June 12. 2006 P edy �y/�-f����(/ 'IT4 CLBH[ 0 6 D 8 8 pYl E I Authorising the Pistol Year 2007 TaoLevy to IvcreeeeT of rry Seo Lew Lfaft. Aa Calculated Odder 30 -A gLSA Sea[iov 5721-A. for [he Wryoae of g Imxlins Net Nn State Urhan- g al Initiative Program llevenues frm the M1n Ta AnieoW to Counetlor 44,1 UI •"