Proposed 4% levy increase up for discussion at Dec. truth and taxation hearing
Though a few unknowns still linger for Brainerd’s 2020 budget, city council and staff members will use a 4% tax levy increase as the basis for a truth and taxation hearing Dec. 9.
The council set the preliminary 2020 levy at a 4% increase in September, with three council members opposed to that high of an increase. The levy number can be decreased but not increased for the final levy. During a budget workshop Monday, Nov. 25, Council President Gabe Johnson reaffirmed his desire to see the final levy at a 2-2.5% increase.
Finance Director Connie Hillman said, theoretically, the council could decrease the levy by $10,000 and still have a balanced budget for 2020, but that would mean a much higher increase in 2021. She said the city can expect about $50,000 less in permit fees in 2021 after an influx of permit fees this year with the Brainerd School District’s large building projects. Hillman also estimated an increase of nearly $373,000 for personnel costs in 2021, which would necessitate a levy increase of 6.32% just to cover those costs.
“We’re just trying to find a way to avoid those peaks and valleys in our levy,” she said, noting significant fluctuations in the levy over the past 10 years. The tax levy decreased in 2011 and 2012, remained the same in 2013 and then shot up to 12.6% and 10% increases in 2014 and 2015, respectively.
Johnson said he would still rather see a smaller increase of about 2-2.5% in 2020 and then about a 4% increase the following year, pointing to the city’s local government aid allocation for 2020, which increased by about $235,600 from 2019.
“Its primary purpose is to give local property tax relief,” Johnson said of local government aid funds. “So not only are we not giving local property tax relief at a 4% (increase), we’re taxing an unnecessarily high amount of money from our citizens. It’s just not showing good faith and working together with our other government partners.”
Council members Jan Lambert, Kelly Bevans, Dave Pritschet and Tad Erickson said they would be OK with a 4% increase.
Council member Dave Badeaux said 4% is fine to use for the truth and taxation hearing, but he would like to see the final levy lower. Badeaux, Johnson and Sue Hilgart — who resigned from the council in September before moving out of state — voted against the 4% increase in September. Erickson filled Hilgart’s vacancy and was not on the council at the time.
Estimating the impact
Because of an overall increase in estimated market value for city properties, the city’s tax rate is projected to decrease in 2020. That means some property owners would see a decrease in property taxes even with a 4% levy increase.
With a 4% levy increase, a property owner with a home valued at $120,000 would see an annual property tax reduction of about $5.29, provided the property value remains unchanged in 2020. A business valued at $363,500, would see an annual property tax decrease of $34.62 under a 4% levy increase.
Hillman said she presents numbers at the truth and taxation hearing as if property values are unchanged from 2019-20, though if they do increase, taxpayers would likely see an annual increase under a 4% levy increase.
Behind the numbers
Total expenses for 2020 are estimated at about $14 million, roughly a 3.71% increase over 2019 expenditures. Reasons for the higher costs include one new police officer starting in March, a new machine to separate sand and salt during street cleaning, increased employee health insurance rates, increased funding to Sourcewell for assistance on the city’s Riverfront Project, and a 2.5% increase in the library’s budget to pay to the Kitchigami Regional Library System.
Non-property tax revenues in 2020 are expected to total about $8.1 million, or a 6.5% increase over 2019 because of the increased local government aid funds and permit revenue from school district projects.
A couple items still up in the air in the coming years are changes to Memorial Park and the possibility of a children’s museum in Lum Park.
The city is working with Widseth Smith Nolting to redesign Memorial Park to add in amenities it will lose when its contract with Mill Avenue Park expires in 2021. The final cost has not yet been determined, nor has the council acted on a proposal to buy the parking lot at Memorial Park from owner Mike Higgins. Council members will discuss that issue further at their next council meeting.
Brainerd’s Lum Park is one of two finalists for the Region Five Children’s Museum, which would likely have costs to the city if built here. Johnson said the museum board has already inquired about Brainerd levying tax dollars to help pay for schematic designs of the park, though neither the cost nor the timeline have been determined.
The parks board will discuss both Memorial and Lum parks at its meeting Tuesday, Nov. 26, and will likely have more information for the council on those items before the final budget needs to be approved.
The council will have a truth and taxation public hearing at 6 p.m. Dec. 9, at the Crow Wing County Historic Courthouse. Time will be allotted for public input on the levy.
The council plans to approve the final levy during its regular council meeting Dec. 16.