This two (2) year local option tax will continue a current tax of $1.50 per $1,000 assessed value due to expire June 30, 2005. This local option tax is in addition to the City’s permanent tax rate of $0.6157. This tax revenue would go into the city’s General Fund.

What is the General Fund?

The General Fund pays for most city expenditures not covered by the city’s sewer, water, and street revenues which are dedicated funds. The General Fund covers such services as street lighting, police, land-use planning, housing development, budget and financial management, record keeping, insurance, administration, and professional services for auditing, legal, engineering and planning.

Why does St. Paul need additional General Fund Revenue?

The City currently gets funding from a permanent tax rate of $0.6157 and a temporary local option tax of $1.50 to supplement the General Fund. The temporary tax will expire June 30, 2005. Without additional tax revenue, the City must rely on the permanent tax rate to support services. Based on 2005/06 budget information, tax revenue collected for General Fund purposes will be reduced to approximately $15,600 unless another local option tax is approved by the voters.

The City is legally required to carry out General Fund functions relating to a variety of issues such as land-use planning and development, budgeting and record keeping. These issues are currently being addressed with one full-time employee, limited consultant assistance, and citizen volunteer contributions. The local option tax is being proposed to maintain the current level of City services for two more years.

How much tax revenue does St. Paul currently collect?

The current property tax rate for the City of St. Paul is a combination of three separate taxes (permanent, local option, and sewer bond) totaling approximately $2.59 per $1,000 of assessed value. If voters approve the proposed local option tax, the City’s combined tax rate will continue at approximately this rate from July 1, 2005 to June 30, 2007.

What should citizens know about the requested local option tax?

Under state law, the City cannot increase its permanent tax rate. It may ask voters to approve temporary tax measures. The revenues from the measure must be put into a separate fund and can only be used for the purpose stated in the measure. If this measure is approved, the City would collect the first year’s revenues beginning in fiscal year 2005-06. If the local option tax is not approved, the City will only collect taxes at the permanent tax rate of $0.6157 per $1,000 of assessed value starting July 1, 2005.

The impact of the proposed levy on an individual homeowner will vary by the value of the home. At the proposed combined rate of $2.59, property taxes on a $150,000 home would be $388.50 per year.

Submitted by,

Kaye E. Gooding, City Recorder