Govermental Revenue Sources

Fiscal Year 2024

Property Taxes

The City relies on property taxes for approximately 55% of the total Governmental Funds revenue, supporting such functions as general government, public safety, public works, and culture and recreation.


The City’s goal is to provide exceptional services to its citizens at an affordable price. With the recent development activity, the City is starting to see growth in its tax capacity. The City has seen over 5-17% increases in its tax capacity over recent years. Current and recent levy increases are related to investments in the City’s workforce, infrastructure and technology.


Other Taxes

This includes the City's franchise tax and tax increment collections. There have been some significant TIF districts created in recent years which has resulted in the City’s TIF revenues increasing. Some of the new TIF districts created include Costco, Bosch warehouse, CDI, KAMP and Ascend, the new riverfront development. The economic development TIF districts will continue for 8 years and the redevelopment TIF districts will continue for 25 years. Once the TIF districts end, the City gets the benefit of the added tax capacity at that time.


Licenses and Permits

The State of Minnesota, through various statutes, allows cities the authority to engage in certain regulatory activities in the interest of the overall community. Cities may charge license and permit fees as a means of recovering the cost of regulation. Liquor licenses and building permits are examples of revenue collected by the City for licenses and permits. Building permits continue to be the single largest revenue source in this category.


Permit revenue has been rebounding. The increase has been related to commercial, industrial, and residential activity. One of the City’s large growth areas in recent years has been in the multi-family housing projects. Owatonna has also outpaced several of our neighboring communities in the rebound of single-family home construction in recent years.


Intergovernmental Revenue

Intergovernmental revenue consists of grants and aids from Federal, State, County and the local school district governments. The City’s primary source of intergovernmental revenue comes from the state and includes Local Government Aid (LGA). LGA represents approximately 21.8% of total governmental revenues.


Intergovernmental revenues often times includes several federal and state aid street projects. The City routinely explores all available funding opportunities and has historically been successfully at obtaining grants.


Charges for Services

Charges for Services include user charges for the recreation department, Tennis Center, Brooktree Golf Course and the Aquatic Center. Golf course and aquatic center revenues can be impacted by weather each year. These tend to be a bit erratic from year to year. In addition, engineering fees for services provided by City engineers on construction projects and for the oversight of the waste water treatment facility are significant revenue sources for the City. Annually, the City performs a thorough review of its fees during the budget process.


Special Assessments

The City charges a portion of the cost of improvements back to the benefitting property owners. The collection of these assessments is used to pay the principal and interest on the bonds. Property owners repay their assessments over varying periods of time such as 5, 7, or 10 years. The number and size of construction projects completed can vary from year to year. The City is sharing in a larger portion of the costs to lessen the impact to the property owners being assessed. City, State, and Federal Governments all struggle with funding their infrastructure projects.


Fines & Forfeits

Parking fines and court-imposed fines comprise the majority of this category. Parking fines are collectible 100% by the City. Court-imposed fines are processed through the state and remitted to the City on a monthly basis. Court-imposed fines have rebounded slightly following a gradual decline in recent years. Parking fines were reviewed and increased.


Interest Earnings

Interest is earned on the investment of City funds. All cash is pooled for investment purposes and the interest earnings are allocated to the various funds based on their cash and investment balances.


Miscellaneous

This category may contain any combination of the following: rent or sale of properties, refunds, donations, grants, and insurance recoveries. The budgeted amounts include rentals of various City property (i.e. West Hills buildings, airport land, and park facilities) and anticipated donations