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 police, administration, property management, street lighting, insurance, record keeping, land-use planning, and professional services for finance, legal, and engineering needs.

Why does St. Paul need additional General Fund Revenue?

The City currently gets funding from a small 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 the costs of these services. Based upon FY 2004/05 budget information, tax revenue collected for General Fund purposes will be reduced from approximately $48,424 to approximately $14,092 unless another local option tax is approved by the voters. Without additional funding, the City will be required to reduce budget levels within the General Fund to compensate for the loss in revenue.

The City is legally required to carry out General Fund functions relating to a variety of issues such as police service, land-use planning and development, and administration. These issues are currently being addressed with one full-time employee, limited consultant assistance, and citizen volunteer contributions. The local option tax is needed as the City’s current permanent tax rate provides insufficient resources to adequately address these issues and run the day-to-day business of the City.

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 totaling $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 the recommended 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,

Kay E. Gooding, City Administrator/Recorder

City of St. Paul

No arguments in favor of or opposed to this measure were filed.