1. City Council Meeting December 6, 2017
Truth in Taxation Meeting
***
Proposed 2018
Budget & Property Tax Levy Information

2. Truth in taxation meeting
This annual Truth in Taxation Meeting is required by State Statutes.
The meeting may not begin prior to 6:30 p.m.
The purpose of the meeting is to explain the tax impact the City’s levy will have on the taxpayers of the City of Sandstone.

3. REMINDER – Tonight we discuss the City’s share of your total tax bill – NOT property valuations.
You can discuss your property valuation with the County Assessor at any time, followed by the Board of Adjustment and Appeal hearing in the spring.

4. Who Levies Property Taxes?
Counties
Cities and Townships
School Districts
State
Various special taxing jurisdictions (e.g., watershed districts, library districts, hospital districts, HRA, ECRDC).

5. Distribution of Tax Bill
Levy Authority
School District 26.5% 26.1%
Pine County 30.8% 30.6%
City of Sandstone 40.5% 41.2%
Special Taxing Districts % %
TOTAL % 100%

6. KEY STEPS IN THE PROCESS
Step 1. The County Assessor determines the EMV for each parcel in the City, then calculates the exclusion if eligible. This determines the TAXABLE Market Value. Step 2. The Legislature sets the formula for tax capacity. Minnesota Classification Rates: Examples - a. Residential Homestead First $500, % Over $500, % b. Commercial – Industrial First $150, % Over $150, % c. Rental Housing 4 or More Units 1.25%

7. KEY STEPS IN THE PROCESS – continued
Step 3. The County Assessor calculates the tax capacity for each value of property in the City – based on values from Step 1 and tax capacity from Step 2. Step 4. The City Council adopts a preliminary levy in September. Step 5. After a public meeting, the City Council adopts a final levy in December. Tonight is the public meeting. The final levy will be adopted at the December 20th Council Meeting. Step 6. The County Auditor divides the final levy (determined by the Council in Step 5) by the City’s total tax capacity (determined in Step 3) to determine the tax rate. The auditor multiplies this tax rate times each property’s tax capacity to determine the City tax for each property.

8. Measures of Property Value
Measures used for Individual Parcels
1. Estimated Market Value (EMV)
Basic starting point
Equal to the local assessor’s estimate of the true market value (fair selling point) of a parcel of property
State Department of Revenue monitors the assessment (assessing) practices.
2. Taxable Market Value (TMV)
The Homestead Credit was replaced with a Market Value Exclusion, this results in a reduction of the value of the homestead that is subject to tax.
This Exclusion affects each homeowner independently.
For homes valued at less than $76,000, the exclusion is equal to 40% of the homes EMV, for homes valued between $76,000 and $413,800, the exclusion is $30,400 minus 9% of the value over $76,000. The ending result is the TMV.

9. Example: Homestead Residential
EMV 91,000
- 76,000 to figure the exclusion
=15,000
x 9% = 1,350
30,400 – 1,350 = 61,950 TMV
61,950 x 1% = Tax Capacity

10. Tax Capacity Number
The Tax Capacity Number is calculated for each property based on the Taxable Market Value times (x) the Classification Rate.
The Classification Rates vary among types (or classes) of Property.
The Net Tax Capacity Value for all taxable properties within the City limits of Sandstone are:
Tax Capacity Value $525,803
Projected Tax Capacity Value $574,330*
The above numbers indicate that the Total Market Value for properties within Sandstone are projected to increase.
Sandstone’s Net Tax Capacity breakdown: 27.56% Homestead
24.77% Non-Homestead Residential
0.86% Farm/Ag
35.82% Commercial/Industrial
10.99% Other
* The 2018 figure is proposed and won’t become certified until February, 2018.

11. The Proposed General Fund Levy is $0.00
General Fund Expenses
The General Fund pays for all City Services as outlined below. The services provided are those most commonly associated with City government and include:
General Government
City Council and Advisory Commissions
Administration, Financial & Legal Services
Licensing & Elections
Planning/Zoning
Buildings & Grounds
Some Economic Development
Public Safety
Police/Sheriff
Fire
Code Enforcement/Building Inspections
Civil Defense
Animal Control
Public Works
Street Maintenance
Snow Removal
Street Lighting
Engineering
Culture & Recreation
City Celebrations
Parks
Library
Miscellaneous
Contract for Services
Cemetery
Contingencies
The Proposed General Fund Levy is $0.00

12. Proposed 2018 General Fund Expenses
GENERAL GOVT/ADMIN = (43.1%) City Council, Advisory Commissions, Financial, Administration, Legal Services, Licensing, Elections & Planning & Zoning, Animal Control, Code Enforcement, Building & Grounds
POLICE PROTECTION =(11%) Pine County Sheriff’s Department Contracted Services
FIRE DEPARTMENT = (16.5%) FD Operating & Capital Improvements
PUBLIC WORKS = (22.1%) Street Maintenance Operating, Snow Plowing, Engineering, Street Lighting
CULTURE/RECREATION = (4.1%) Parks, Library, City Celebrations
ECONOMIC DEVELOPMENT = (2.2%) Abatements, Professional Services, Marketing
MISCELLANOUS = (1%) Contract for Services, Cemetery Operating, and Contingencies

13. GENERAL FUND EXPENDITURES City of Sandstone 2018 Budget Comparison Summary
GENERAL GOVERNMENT
Budget 2017
Proposed 2018
+/- Difference
Administration/Elections/Finance
$ 316,754
$ 336,340
$ 19,586
Planning & Zoning
$ 52,350
$ 12,200
$ (40,150)
Legal Services
$ 31,000 $
Building/Grounds
$ 70,766
$ 72,350
$ 1,584
Total General Government
$ 470,870
$ 451,890
$(18,980)
PUBLIC SAFETY
Pine County Sheriff’s Dept
$ 117,845
$ 133,000
$ 15,155
Fire Department
$ 194,412
$ 197,693
$ 3,281
Code Enforcement/Bldg Insp
$ 30,275
$ 31,500
$ 1,225
Animal Control
$ 1,550
$ 1,200
$ (350)
Total Public Safety
$ 344,082
$363,393
$ 19,311

14. GENERAL FUND EXPENDITURES City of Sandstone 2018 Budget Comparison Summary - continued
PUBLIC WORKS
Budget 2017
Proposed 2018
+/- Difference
Engineering
$ 15,000 $
SD Maintenance/Operating/Safety
$ 279,146
$ 237,000
$ (42,146)
Street Lighting
$ 28,000
Total Public Works
$ 322,146
$ 280,000
$(42,146)
CULTURE & RECREATION
Budget 2017
Parks Operating
$ 43,102
$ 45,030
$ 1,928
Library
$ 5,000 $
Total Culture & Recreation
$ 48,102
$ 50,030
$ 1,928

15. GENERAL FUND EXPENDITURES City of Sandstone 2018 Budget Comparison Summary - continued
ECONOMIC DEVELOPMENT
Budget 2017
Proposed 2018
+/- Difference
Abatement
$ ,320
$ ,000
$ 13,680
Marketing
$ ,500
$ ,520
$ (980)
Miscellaneous Economic Development
$ ,600
$ ,120
$ (15,480)
Professional Services
$ ,000
$ ,000 $
LESS EDA LEVY
$ (9,080)
$ (9,000)
$ (80)
Total Economic Development
$ 58,340
$ 55,640
$ (2,700)
MISCELLANEOUS
Budget 2017
Cemetery
$ 11,605
$ 11,590
$ (15)
Total Miscellaneous
$ (15)
TOTAL EXPENDITURES
$1,255,145
$1,212,543
($ 42,602)

16. Proposed 2018 General Fund Revenues
PROPERTY TAXES = (0 %) Current Ad Valorem Taxes, Delinquent, Penalties & Mobile Home Taxes
INTERGOVERNMENTAL = (87.6%) LGA (Local Govt. Aid), State Fire Aid, and PERA Aid Payment
CHARGES FOR SERVICES = (4.9%) Zoning & Subdivision Fees, Assmt Searches, Fire Dept
MISCELLANEOUS = (4.1%) Interest, Rents, Court Fines
LICENSES & PERMITS = (3.4%) Bldg Permits, Rental Licenses, Animal Licensing, Antenna/TV Licenses, and Liquor and Beer Licensing

17. GENERAL FUND REVENUES City of Sandstone 2018 Budget Comparison Summary
TOTAL REVENUE SOURCES
Description
Budget 2017
Proposed 2018
+/- Difference
General Property Taxes $ $
Licenses & Permits
$ ,450
$ ,550 $
Intergovernmental Revenue
$ 1,088,183
$ 1,122,777
$ 34,594
Charges for Services
$ ,300
$ ,600
$ (3,700)
Miscellaneous Revenue
$ ,900
$ ,200
$ ,300
TOTAL REVENUE
$ 1,224,833
$ 1,258,127
$ 33,294

18. Calculation of 2018 Proposed Levy
Budget 2017
Proposed 2018
General Fund Levy $
Debt Service Levy
$ 113,292
$ ,550
Abatement Levy – Kettle River
$ ,000
Capital Improvement Fund Levy
$ 233,320
$ 340,062
Wild River Levy
$ 120,000
$ 100,000
TOTAL GROSS LEVY
$ 469,612
$ 531,612
LESS EXCESS LGA
$ (57,304)
OTHER INFORMATION
Total Tax Levy
$ 469,612
$ 474,308
Taxable Net Tax Capacity Value
$ 525,803
$ 574,330
City Tax Rate
89.314%
82.585%
EDA Operating Levy
$ 9,080
$ 9,000

19. Impact on Taxpayers
If the proposed 2018 Budget is adopted, the City will direct Pine County to collect $483,308 from City taxpayers to help pay for Capital Improvements, Debt Service, and Wild River. A portion of the proposed tax levy will fund the EDA (Economic Development Authority).
The EDA was established to market the community’s economic resources to expand the tax base beyond the single family residential sector.
The EDA levy portion is $9,000 and is included in the $483,308 Net Tax Levy.

20. TAX IMPACT – RESIDENTIAL
TMV 1/2/2017 Taxable Market Value
2017
2018 No Change in Value
Difference 2017 to 2018
No Change
2018 City Tax with Inflation Value of 5%
$ 30,000
$ 268
$ 248 $
$ 260
$ 50,000
$ 446
$ 413 $
$ 434
$ 74,200 $ $ $ $
$117,400
$ 1,049
$ 970 $
$ 1,018
$143,300
$ 1,280
$ 1,183 $
$ 1,243
$172,800
$ 1,543
$ 1,427 $
$ 1,498
$233,200
$ 2,083
$ 1,926 $
$ 2,022
$250,000
$ 2,233
$ 2,065 $
$ 2,168
$300,000
$ 2,679
$ 2,478 $
$ 2,601
For taxes paid, the above figures are calculated with the Taxable Market Value exclusion, if eligible. Houses valued above $413,800 receive no exclusion. The above numbers are calculated with no change in the market value of a homestead property. A column with an inflation factor of 5% was added.

21. TAX IMPACT – COMMERCIAL
TMV 1/2/2017
Taxable Market Value
2017
2018 No Change in Value
Difference 2017 to 2018
No Change
2018 City Tax with Inflation Value of 5%
$ 75,000
$ 1,004 $
$ -75
$ 976
$ 100,000
$ 1,339
$ 1,239
$ -100
$ 1,301
$ 150,000
$ 2,009
$ 1,858
$ -151
$ 1,951
$ 200,000
$ 2,902
$ 2,684
$ -218
$ 2,818
$ 250,000
$ 3,795
$ 3,510
$ -285
$ 3,685
$ 300,000
$ 4,688
$ 4,336
$ -352
$ 4,552
$ 400,000
$ 6,474
$ 5,987
$ -487
$ 6,287
The above numbers are calculated with no change in the market value of
a commercial property and also a column with an inflation factor of 5%.

22. Tax Increase Factors 1. Change in individual assessed market value.
The market value of other properties in your taxing district may change.
Your tax bill is intertwined with your neighbors’ tax bill.
If the market value of a property increases more or less than the average increase or decrease in a taxing district, the taxes on that property will also change.
Real Estate Market Inflation/Deflation.
Possible change in property classification.
Property improvements not previously taxed.
The City, County, and/or School District budget and levy may change.
Special assessments may be included in your property tax bill.

23. 2018 Proposed Levy TOTAL LEVY $ 483,308
General Government Levy Fund $
EDA (Economic Development Authority) Levy $ ,000
Debt Service Levy $ ,550
Wild River Levy $ 100,000
Capital Improvement Levy $ 340,062
LESS EXCESS LGA $ (57,304)
TOTAL LEVY $ 483,308
PROPOSED LEVY INCREASE 1%
TAX RATE % (Year 2017 tax rate was %)