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Taxes could rise in 2008 BRAINERD
CITY COUNCIL Staff Writer Taxes in Brainerd could be on the rise in 2008.
At a budget workshop Monday, the consensus among the majority of Brainerd City Council members present was that in order to maintain the services the city provides, the city's tax rate will more than likely have to be increased.
Based on a tax capacity of $8,241,083, the 2007 tax rate of 42.68 percent generated about $3,509,000 in tax dollars. If that same tax rate was applied to the estimated 2008 tax capacity of $8,490,532 it would generate about $3,818,796, or an increase of $309,030.
However, city department heads have requested $4,164,822 in needs, and city officials said it would take a tax rate of 46.8 percent to pay for the requests, or cuts of $346,026 from the 2008 budget in order to maintain a flat tax rate in 2008.
Instead, council members said they preferred a tax rate of 44.68 percent, which is the amount recommended by City Administrator Dan Vogt. At that tax rate and with $125,865 in cuts already identified by Vogt and Finance Director Theresa Goble, the balance remaining to be cut from the 2008 budget would be $56,161.
Vogt noted that a tax rate of 44.68 percent would equate to an increase of about $20 for the city's portion of the taxes on a $100,000 home, $30 for a $150,000 home and $40 on a $200,000 home.
The council took no action on its preliminary levy Monday. The preliminary levy has to be adopted by Sept. 15. Once adopted, the preliminary levy can be lowered but not raised.
"As much as I'd like to stay course, I do see the need that we have to look at some kind of increase," council member Bonnie Cumberland said. "At least in the beginning, knowing we can't raise it later but can lower it at some point in time."
Council President Kelly Bevans noted that with a projected $400,000 in salaries alone for 2008, if the city kept the tax rate the same as in 2007 the city would be in a deficit of close to $100,000.
Council member Kevin Goedker was the only council member present in support of keeping 2008's tax rate the same as it was in 2007. He had hoped the city might actually be able to lower its tax rate in 2008. While he conceded that won't happen, he said the city has had to make large cuts before and he believed it was possible again for 2008.
Council member Bob Olson was absent from Monday's workshop.
While in favor of a 44.68 percent tax rate, council member Mark O'Day asked staffers to determine how deep cuts would have to be to accommodate a flat tax rate.
Vogt described the 2008 budget as a "status quo" budget because of limited additional resources with the exception of two new police officers, which are offset by revenues, and increases already anticipated in employee wages and benefits.
Preliminary information from the Crow Wing County Auditor's office shows that the estimated 2008 increase in market value is about 3.6 percent, or $25,889,800, and an increase in tax capacity of 3 percent, or $249,449. Comparing to 2007, which saw about a 10 percent increase in both tax capacity and market value, shows that market increases have slowed substantially, Vogt said in a memo to council members. He also noted that if the Legislature convenes a special session to consider a tax bill, the city's local government aid could increase.
After setting a preliminary levy by Sept. 15, the council's truth in taxation hearing is tentatively set for Dec. 10, with final adoption of the 2008 budget tentatively set for Dec. 17.
MATT ERICKSON may be reached at matt.erickson@brainerddispatch.com or 855-5857.
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