With some last-minute budget adjustments, Brainerd city staff will present a 2021 levy increase of 1% over this year for the upcoming public hearing.

Council members approve a preliminary levy 4% higher than 2020 in September, but several elements of the budget were still unknown at that time. During a workshop Nov. 30, the council agreed to lower that to 2% when presenting the budget and levy to citizens during a public hearing scheduled for Dec. 14.

More finalized numbers have since come in, including wage adjustments and employee benefit elections.

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Finance Director Connie Hillman said during the council meeting Monday, Dec. 7, staff realized recently they did not take into account the transfer of state aid funds from the construction fund to the street and sewer fund to pay for a new maintenance position, which was approved in February and increases the city’s revenue by $91,000.

After city employees completed 2021 benefit elections, Hillman reported a decrease of about $29,500 in the city’s expenditures over 2020.

Another $20,500 was added to expenditures, though, to account for five police employees in the Law Enforcement Labor Services and Teamsters unions eligible to move to step 7 of the city’s wage scale in 2021.

With the new numbers, Hillman said the council could technically decrease the 2021 levy by 1.99% and have a perfectly balanced budget. That amount was previously 0.7%. And with a 1% increase over 2020, the council would still get the same benefits as the previous 2% increase discussed, including a decrease in the city’s tax rate and in property taxes for some residents.

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The decrease in tax rate and property taxes is based on a projected 9.5% increase in the city’s tax capacity for 2021.

The tax capacity for each property is based on the taxable market value, which equals the property’s estimated market value minus any tax exemptions, deferrals or value exclusions — like a homestead market exclusion. To determine the tax capacity, the taxable market value is then multiplied by the property’s classification rate, which is set by the state and differs based on how the property is used — residential, commercial, agricultural, etc.

Brainerd’s tax capacity for 2020 was $7.73 million, after steadily increasing from $7.07 million in 2016. The 2020 tax rate was 79.33%, the percentage of the tax capacity paid by property taxes. The 1% levy increase would decrease the tax rate to 73.21% for 2021.

Council President Gabe Johnson, who consistently advocates for fiscal conservatism, said he would rather see the levy decrease if that is what’s needed for a balanced budget but ultimately supported the measure. Other council members previously cited several unknowns in the year ahead as reasoning to support a levy increase.

Public hearing

The council will have a virtual public hearing on the 2021 budget and levy at 6 p.m. Monday, Dec. 14, at city hall to give residents and opportunity to weigh in. Citizens can also call into the meeting via WebEx at 1-844-992-4726, with access code 146 327 1564. For further questions, call 218-828-2307.

The council can approve the final 2021 budget either at the end of the public hearing or at its next regular meeting Dec. 21.

THERESA BOURKE may be reached at theresa.bourke@brainerddispatch.com or 218-855-5860. Follow her on Twitter at www.twitter.com/DispatchTheresa .