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Baxter sets preliminary levy with 2.37 percent increase

BAXTER - A proposed property tax levy increase of 2.37 percent for 2016 was approved Tuesday by the Baxter City Council. The council unanimously approved a preliminary property tax levy of $5,734,600 for an increase of $132,700 compared to 2015. ...

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The council unanimously approved a preliminary property tax levy of $5,734,600 for an increase of $132,700 compared to 2015. Renee Richardson / Brainerd Dispatch

BAXTER - A proposed property tax levy increase of 2.37 percent for 2016 was approved Tuesday by the Baxter City Council.

The council unanimously approved a preliminary property tax levy of $5,734,600 for an increase of $132,700 compared to 2015.

Of the proposed levy, $1,126,000 is for the debt service levy, unchanged from last year, with $4,608,600 for the city's operating levy.

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FACTBOX

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  • Individual results will vary but based on valuation changes on classifications in the past, the city illustrated the potential tax implications with a residential property.
  • Residential property value $175,000.
  • Include an average 5.36 percent increase in property value based on preliminary data.
  • Based on this data, the 2016 city portion of property taxes on this residential property would increase from $818 to about $882, a $64 increase or 7.9 percent increase.

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Based on initial data collected earlier this year, $14.9 million in "new construction" from building projects in the city is generating an increase of $193,622 of tax capacity. If the city deducts the estimated new construction for tax-increment financing districts - the net new construction is about $10 million, meaning a net tax capacity of about $126,848.

The TIF districts allow a developer to keep the tax increase for a set time period to offset development costs before it flows to the city. The TIF districts may be used to encourage redevelopment so those costs, perhaps with demolition of an existing building, are able to compete with bare ground construction costs or to allow apartments with below-market rental rates for some units, including units for homeless people to transition into housing.

Revenues

Baxter is seeing an increase in construction projects. The numbers for 2016 represent an increase from 2015 when new construction amounted to $9.1 million creating $116,409 of tax capacity. Historically, money from new construction tax capacity has helped to offset levy increases with new money coming into the community.

The city reported based on its current tax capacity rate of 53.281 percent and the estimated additional net tax capacity of the $126,848 from new construction, an additional $67,586 in revenue for the city will be generated.

In other revenue, the city's retail strength is seen in its collection of the local option sales tax and motor vehicle excise tax. The city expects to collect an increase of $70,000 in local options sales tax compared to 2015. The 2016 total local option sales tax revenue is forecast to be $2.3 million. The city expects $130,000 from motor vehicle excise taxes in 2016, an increase of $20,000 compared to 2015. The sales tax collection fund with sales and excise taxes brought in total revenues of $2.42 million in 2014, $2.39 million in 2015 and is expected to bring in $2.5 million in 2016.

Budget

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Budget drivers for the city include personnel services. For employees, the city had 39 full-time equivalents in 2014 and 41 for 2015. No change is planned in staffing levels for 2016.

Fire protection costs through a contract with the city of Brainerd rose 5.24 percent compared to 2015. The proposed fire service costs for 2016 are $313,300, an increase from $297,700 in 2015 and $279,895 in 2014.

More detailed numbers are expected later this month as the city gets the estimated tax capacity information.

Jeremy Vacinek, Baxter finance director, provided budget numbers using preliminary data and the estimated changes in valuation from 2014 to 2015 by property classes. For residential properties, estimated market values are rising, but commercial and industrial properties saw a slight decrease.

Estimated property valuations in Baxter show:

  • A 5.36 percent increase in residential valuations.
  • A 3.63 decrease in commercial/industrial valuations.
  • A 4.57 percent increase overall in existing valuations.

Next steps

The council set the preliminary tax levy as part of its consent agenda Tuesday without discussion. They previously went over budget drivers during an Aug. 25 work session. With these preliminary numbers, future budget sessions are scheduled. Tuesday's action stands out as once a preliminary budget is approved it can be decreased, but cannot increase.

The city council must certify the preliminary levy by Sept. 30. Baxter expects to meet in a council work session at 6 p.m., Oct. 7, to review the proposed budget and five-year capital improvement plan. If necessary, a second council budget work session is slated 6 p.m. Oct. 20.

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The final budget will be submitted to the city council Nov. 20.

A public information meeting is planned 6 p.m., Nov. 24, to review the budget and property tax levy. Members of the public are invited to speak on the topic.

The council is expected to adopt the 2016 final budget, levy and capital improvement plan at its Dec. 1 meeting shortly after 7 p.m.

RENEE RICHARDSON, associate editor, may be reached at 218-855-5852 or renee.richardson@brainerddispatch.com . Follow on Twitter at www.twitter.com/Dispatchbizbuzz .

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