An increase of 4% over this year puts Brainerd’s preliminary 2021 tax levy at just over $6.3 million.

Brainerd City Council members unanimously agreed to set the preliminary levy at $6,315,337 during their meeting Monday, Sept. 21. This amount can be lowered but not raised when the final budget and levy are adopted in December.

Council President Gabe Johnson, who consistently advocates for fiscal conservatism, said he supported the motion as a starting point but would ideally like to see the final levy increase closer to 0%.

“As of right now, as a preliminary levy, it’s a perfectly fair number,” Johnson said.

Finance Director Connie Hillman told council members during a budget workshop last week they could technically reduce the property tax levy by $10,000 to create a balanced budget.

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Mayor Dave Badeaux — who doesn’t vote on council decisions except in the event of a tie — echoed Johnson’s sentiments.

“I think it’s a good starting point, but I also want us to make sure that we are trying to get as low as possible and that we’re actually allocating money to things,” Badeaux said. “Just the idea of having extra money, I’m not usually a huge fan of. So let’s make sure that we’re looking at the budget and having a process for where those funds are going to go.”

With the 4% increase, some property owners will see a decrease in 2021 taxes. Those with a home valued at $120,000 would see an annual property tax decrease of about $34.01, while those with commercial property valued at $363,500 would see an annual decrease of about $234.77. The tax estimates are based on a projected 9% increase in the city’s tax capacity for 2021. While the city’s total tax capacity will not be known until later this fall, Finance Director Connie Hillman said the 9% increase is based on preliminary data from Crow Wing County and her own estimates.

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 value 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 as a whole 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 4% levy increase in 2021 would decrease the tax rate to 75.73%, which Johnson was a big proponent of during the last budget workshop. At the time, he said Brainerd’s 2020 tax rate is too high for a city of its tax capacity.

“So if we can get that down to 75, 72, 70(%), we are more competitive than equally sized towns across the state,” he said at the workshop. “... We have another opportunity this year to lower it down without being too aggressive to make us have to jack it back up again next year.”

Expenditures

Under the proposed 2021 budget, expenditures are estimated at about $14.29 million, an increase of $158,976 — or 1.12% — over 2020.

Expected changes in spending for 2021 include:

• An additional temporary engineering employee to help with a street condition analysis, estimated at about $8,100.

• Wage increases for staff members eligible for step changes on the wage grid.

• Parks director and police chief retirements.

• Police officer hirings. The budget accounts for 27 officers, with only 21 staff now. The budget assumes two more will be hired before the end of the year, two will be hired on March 1 and two will be hired June 1.

• A $30,000 decrease in the city’s contract with Crow Wing County for facility maintenance.

• A $37,569 expense to contract with a building official who has a state delegation agreement, meaning the city can issue permits and conduct inspections for building projects overseen by the state.

• Reorganization of the community development department, estimated at about $2,500.

• A 10% increase in workers compensation insurance.

• A 10% increase in auto/general/liability insurance.

• Parks department repairs and maintenance, including professional tree removal and roofing/shingling of various buildings.

• An increase in the amount transferred to the fire capital fund, part of which is realized in a debt levy reduction.

Capital fund

The proposed budget includes about $1.3 million for the city’s capital fund in 2021. Of that, $469,000 comes from the parks department’s capital fund, which includes: money for professional tree removal, roofing/shingling of various parks facilities, updated playground equipment at Triangle Park, a redesign of Memorial Park (including $100,000 in matching funds for a splash pad) and new maintenance equipment.

Other notable 2021 capital expenditures for the city are $544,912 for garage/parking updates at city hall, following the building’s extensive remodel this year, and $50,000 for a zoning code update. The council also budgeted $50,000 for the same purpose in 2020, estimating the total cost to be about $100,000. The council learned Monday the preliminary estimate for zoning code update services is about $90,000.

Revenues

Total revenues are estimated at about $8.14 million, a decrease of $5,009 — or 0.06% — from 2020.

Expected changes in the 2021 revenue include:

• A $100,000 decrease in building permit revenue from 2020 due to the high volume of Brainerd School District projects this year.

• An increase of $112,735 — or 2.5% — in Local Government Aid funding.

• A projected decrease in revenues from Baxter and Nisswa for prosecution services based on the contract agreement.

• A projected decrease in court and parking fines based on recent numbers.

Public hearing

The city council will have a budget public hearing at 6 p.m. Dec. 14 at city hall before approving the final 2021 budget and levy. Property owners will be able to address the council with input regarding the levy at that time or have until then to send written feedback to the city.

The meeting will also be livestreamed on YouTube, and members of the public will be able to participate virtually via WebEx. Details to access the meeting via WebEx will be available closer to the date of the meeting.

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