A homeowner of a median valued house in Baxter would see a $15 increase in city taxes if the proposed budget is adopted later this month.

City council and staff members met in an informational meeting Monday, Nov. 30, to provide options for public feedback and present another overview of the proposed budget and tax levy for the coming year.

Finance Director Jeremy Vacinek said early indications are running a little better than it previously looked because sales tax revenues remain strong. With the pandemic, there was uncertainty in how people would respond in terms of purchasing decisions. While sales tax hasn’t felt the effects of the pandemic, the lodging tax is another story with those receipts showing the change.

The city is proposing a total levy of $7,256,500, an increase of $376,900 — or 5.5% — from 2020.

Proposed tax levy impacts

Looking at a selection of properties for 2021 compared to 2020, assuming there is no valuation change on the estimated market value — an estimate of what the property is worth.

Property estimated value City taxes Percent change Dollar change

Home $76,000 $259 1.7% $4

Home $175,000 $871 1.7% $15

Home $250,000 $1,335 1.7% $22

Commercial/Industrial

$500,000 $5,249 1.7% $88

Looking at the overall tax bill, which includes other taxing districts and the school referendum, Vacinek said all those properties, without a change in valuation, would see an overall decrease in their taxes of $6 for the $76,000 home value, a decrease of $9 for the $175,000 home, a decrease of $12 for the $250,000 home and a decrease of $208 for a commercial property.

When property values go up, that typically means more equity and an increase in what the property can be sold for, but that also can mean an increase in the calculation for taxes.

Baxter looked at changes on those same select properties and calculated the 2021 property tax levy based on an average increase of 3.52% for residential properties and an 8.90% increase in market value.

This is what those same properties would have for taxes after an average value increase in 2021 compared to 2020 and the proposed 2021 taxes.

Property value 2021 Proposed Percent change Dollar change

City taxes from 2020 from 2020

Home $78,675 $275 8.2% $21

Home $181,160 $909 6.2% $53

Home $258,800 $1,389 5.9% $77

Commercial/Industrial

$544,500 $5,754 11.5% $593

Valuation versus taxes

As is typical of such sessions, questions invariably came not from the spending choices or the budget the city council is planning but from queries based on how individual properties are valued, either with increases or decreases. Those valuation questions are referred to Crow Wing County and the assessor’s office. Property owners receive a letter from the county in the spring with the property valuation, based on sales of similar properties in the area, and time is provided to dispute or question those values and there is a court option if property owners disagree with the county’s assessment or methodology.

Mayor Darrel Olson, who formerly worked in the county assessor’s office, said in the past assessors attempted to make appointments with property owners and when there wasn’t a response, they would check the outside of the property, make an estimate and look at sales within Baxter. If the state finds the assessors are not on target, an increase can be imposed across the board. Olson said the increases they’ve had were based on sales being higher than assessments. Residential properties have been going up while the commercial properties experienced decreases. Individual assessors are typically responsible for 3,000 to 5,000 parcels.

Olson said it is really important to pay attention to those valuations in the spring. If they aren’t challenged, and he said the county staff is good to work with in showing how they came to their numbers, but by the time the process moves to taxation, the door is kind of closed at that point.

So with valuation not within the city’s control, what are drivers of the budget? Spending.

Where does the city’s revenue come from?

Baxter does not receive local government aid so the tax levy is the main contributor to the city’s coffers at 50.8% of revenue, followed by sales tax revenue at 20.1%, special assessments 10.7%, tax increments at 4.7%, and remaining contributors of lodging tax, licenses and fees all come in between 4% and less than 1%.

So unlike an individual budget that is often dictated by what the wages are first in terms of spending, the city budget looks at it’s expenses, what services its residents expect, and then prepares a tax levy to bring in those dollars combined with its other revenue streams.

Baxter’s expenditures divided by function have 28.7% going to debt service, 22.2% to public safety, 19.3% to general government, 9.3% to community development, 9.1% to parks, 7.2% to public works, and 4.2% to capital projects/equipment. So three-quarters of the budget goes to general government, debt service and public safety.

Baxter’s net tax capacity, while dipping with the effects of the Great Recession, have been steadily climbing since 2015. The preliminary net tax capacity for the city for 2021 is $12,788,499 and the preliminary tax capacity rate is 56.744%.

Spending highlights

Breaking expenditures down further highlights what are drivers for spending in each department in the proposed 2021 budget.

• $2,286,700 to the police department.

• $1,053,400 to parks and ground maintenance.

• $980,700 to streets and street lighting.

• $408,100 to administration.

• $486,700 to finance.

• $356,100 to fire protection.

• $337,900 to general government.

• $100,000 for miscellaneous street improvement, repairs and maintenance.

• $65,00 for city hall maintenance.

• $49,500 for a columbarium in the city cemetery.

• $40,000 for contract plowing and $90,000 for salt and sand.

• $32,700 to recreation programs.

• $28,200 in animal control contracted services.

• $28,000 for fuel for police.

• $18,400 to The Center in Brainerd serving senior citizens.

• $18,400 for squad car maintenance.

• $9,300 for 650 hours of seasonal parks maintenance staff.

• $8,000 to Fourth of July fireworks.

• $5,330 to Central Minnesota Initiative Foundation.

• $5,000 funding for K-9 program.

More information of each department with expenditures and highlights explained is available at the city’s YouTube channel with the council budget meeting which can be accessed at https://bit.ly/3qkXohJ

The council received comments from incoming council member John Ward, who heard from residents regarding valuations. Justin Barrick questioned a 70% increase in the streets department and he asked what was driving the increase, specifically if the cost of salt and sand increased that much.

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Administrator Brad Chapulis said salt has increased and they would look into the figures and go over those with Barrick before the Dec. 15 meeting. Barrick also voiced a concern with seasonal park attendants who sit in a chair and play on their phone while working, especially at Whipple Beach. Barrick questioned the value of having a park attendant during the weekdays and said they should wear something that indicates they are an employee or have a sign so people know they are there for questions.

Olson said those were good comments and the council would take them seriously.

Next steps

The council will meet again in regard to the budget on Dec. 15. The council reported it welcomes comments from residents and property owners and people are welcome to send in questions by email.

Comments from the public may be sent via email at comments@baxtermn.gov or mail at Baxter City Hall, 13190 Memorywood Drive, Baxter, MN 56425.

Renee Richardson, managing editor, may be reached at 218-855-5852 or renee.richardson@brainerddispatch.com. Follow on Twitter at www.twitter.com/DispatchBizBuzz.