Brainerd’s 2021 property tax levy will increase 1% over 2020, the city council decided Monday, Dec. 21.

The $6,133,163 levy is an increase of $159,126 but will decrease the city’s tax rate and may decrease taxes for some property owners while raising them for others.

With the 1% levy increase and a reported 9.1% increase in residential estimated market value for 2020, a resident with a home previously valued at $120,000 would see an annual increase of about $28.70 for the city portion of their property taxes.

With the 2% increase in estimated market value for commercial properties, owners with businesses previously valued at $363,500 would see an annual property tax decrease of about $308.53.

The city’s tax rate will decrease from 79.33% in 2020 to 73.21% in 2021. The tax rate is the percentage of the tax capacity paid by property taxes. 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.

RELATED: Brainerd residents give no input on tax levy, council to certify budget Dec. 21 The council will likely approve a 1% levy increase for 2021.
Council members voted 4-3 on the measure, with Gabe Johnson, Kelly Bevans and Kevin Stunek opposed.

While Johnson has historically advocated for the lowest possible levy to keep a balanced budget — which is an increase less than 1%, Bevans cited concerns with funding for the Brainerd Lakes Area Economic Development Corp. as the reason for his opposition, noting Brainerd has historically contributed more to the organization than both Baxter and Crow Wing County.

RELATED: Baxter approves preliminary tax levy increase of 5.5% The preliminary tax levy can be decreased before the final one is set before year's end, but cannot be increased.
“I’ve asked every year why we get charged so much more, and every year it doesn’t get answered,” Bevans said. “... I’m not suggesting the money isn’t worth it or BLAEDC isn’t worth it. That’s not my argument. The argument is why we keep giving them so much more than Baxter and Crow Wing County without at least some justification.”

From 2008-2020, Brainerd contributed $947,550 to BLAEDC, while Crow Wing County’s contribution was $599,025 and Baxter’s was $322,825. In 2020, however, BLAEDC’s largest contribution was a combination of funding from the Crow Wing County HRA and Crow Wing County, which amounted to $87,000. Another $78,500 came from Brainerd and $32,000 from Baxter.

Over the last seven years, Baxter has increased its funding each year by between 3-7% and will increase by 9.8% from 2020 to 2021. Brainerd has increased its annual contribution by less than 1% a year over the past seven years and has agreed to no increase over the next three years.

RELATED Another decrease: Brainerd 2021 tax levy shrinks further ahead of public hearing Residents will have the opportunity to weigh on the 2021 budget and tax levy during a public hearing Monday, Dec. 14.
In Brainerd, BLAEDC is funded through the city’s Economic Development Authority. During the last EDA meeting Dec. 11, board members voted to decrease its 2021 payments to the city from $32,500 to $30,000 and decrease Brainerd’s 2021 contribution to BLAEDC from $78,500 to $60,000.

Other contributors and their 2020 payments were: Breezy Point ($2,750), Crosslake Economic Development Authority ($10,000), Jenkins ($1,000), Nisswa ($2,750), Pequot Lakes ($10,000) and the Cuyuna Regional Economic Development Incorporation ($25,000).

Bevans said during a phone interview Tuesday, Dec. 22, he can’t justify spending so much more than other entities without knowing if Brainerd’s benefit from BLAEDC is worth that much more.

“It’s not a matter of whether BLAEDC is worth $80,000 or not. I think they might be. It’s a matter of why are we paying two and a half times what Baxter’s paying?” Bevans said during a phone interview Tuesday, Dec. 22. “The ‘why’ must be either justified — even if it’s just in your own mind — or we’ve got to stop. And my argument is … show me how, show me why.”

RELATED: BLAEDC hires Tyler Glynn to lead organization Glynn was chosen after long-time executive director Sheila Haverkamp resigned late last year to help adults battling addictions.
Tyler Glynn, who took the reins as BLAEDC executive director earlier this year, said during a phone interview Tuesday he was not involved in the finances until this year but calculated the 2021 rates on a per capita basis. Those rates have not yet been finalized.

“The council had asked the city staff to review the amount that was paid and make adjustments,” Glynn said.

Bevans emphasized his support for BLAEDC Tuesday and said he is frustrated with other city council members for approving the funds with no questions asked.

Being so new to the executive director job and starting during a pandemic, Glynn said he is still getting a grasp on everything and would be happy to sit down and talk with Bevans at some point to discuss concerns. Bevans said he hopes there can be a formula developed that works for everybody.

RELATED: Brainerd tax levy likely to decrease from prelim numbers A proposed 2% increase in the 2021 tax levy over 2020 would still mean lower property taxes for many residents..

In the budget and levy

The levy accounts for about 39.1% of the city’s roughly $14.3 million budget. The largest portion of revenue (41.1%) comes from intergovernmental sources, like local government aid and grants received to run the transit department. The rest of the revenue comes from: services and fines (8.6%), Brainerd Public Utilities (4.7%), licenses and permits (2.8%), miscellaneous (1.9%) and other taxes (1.8%). The miscellaneous category includes interest and donations.

Funds collected from the 2021 levy will be distributed as follows:

• Public safety, about 34.3%.

• General fund (city operating costs), about 15.5%.

• Capital fund, about 12.3%.

• Transit, about 9%.

• Street and sewer, about 7.8%.

• Parks, about 6.9%.

• Debt services, about 6.7%.

• Other, about 5%.

• Road maintenance, about 2.6%.

Money in the “other” category funds things like the Brainerd Public Library, the Northland Arboretum and The Center.

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