All indications are that the Governor and Legislators are questioning where the additional funding for local governments went and why property taxes are going up instead of down. Our support organizations like the Coalition of Greater Minnesota Cities and the League of Minnesota Cities are telling us to contact our legislators to tell them our stories so they can understand, but I suspect that the issues are too diverse and complicated from city to city for anyone to understand.
You have to take into consideration where we came from and where we are going to even begin to understand. Major cuts in the largest funding source for many cities in Minnesota resulted in cuts in services, unfunded mandates and the inability to keep up with inflation. In short, there wasn’t enough money to do what we needed to do. Many cities chose to ignore basic needs like maintaining their public infrastructure let alone the other things that the public wants like parks, recreation and libraries.
In Morris it is no different. The additional money we received from the 2013 Legislature comes in the form of Local Government Aid (LGA) and we have taken massive hits in this funding source since the State started having budget problems. A major step backwards took place at the end of 2008 and the level of funding has been flat ever since then. As the major funding source for City expenditures, the loss of aid, and subsequent freezing of the aid level, forced the City to relook its priorities. Part of that relook was the recent decision to ask property owners to pay for a part of the cost of rebuilding roads in front of their properties.
Where did our money go then and what will I tell the Governor and our Legislators? The answer is two parted. First, we are holding taxes down. Second, we are being cautious about making cuts in revenue sources because what the State gives, the State can take away. We don’t want to take any steps backwards that we can’t get back. The skeptic in me makes me think that some legislators had this in mind when they voted to give us more aid.
Holding down taxes is accomplished by freezing the tax levy. This is what we did for 2014 tax collections. The amount of money we will collect in 2014 for taxes will be exactly the same as 2013. However, this levy includes the addition of a bond issue levy for the West 9th, 10th and 11th Street project. The total amount of that levy is $65,000, but we absorbed it into the levy for collection next year. Otherwise, taxes would have gone up by about 5%. To make the adjustment, we used some of the additional money we got to reduce the City’s General Fund and Library Fund tax levies. They will both use LGA to help balance their budgets.
The State gave us an additional $153,526 for 2014 and we didn’t use all of it to balance our budgets and freeze the levy. Approximately $60,000 was left over and in the final budget proposal to the City Council I will recommend that it goes to the City’s Capital Outlay Fund for equipment…more specifically a new snow blower for clearing streets. This is a one-time purchase that does not need to be funded each year and for me it is the best way to use additional money that doesn’t commit us long term. In 2014, that extra $60,000 will be used to balance the following year’s budget and hopefully we can freeze taxes for one more year. Keep in mind costs go up to include costs for wages and benefits for our employees. This is the largest part of our operating budget.
When I opened my mail a couple of days ago, I received my notice of proposed property taxes for 2014 from the county auditor. I was surprised to see the numbers. I have a modest house valued at $109,600 and will receive a market value reduction of $27,400 lowering the taxable market value of my house to $82,200. My total tax bill for 2013 is $1,477. The proposed tax bill for 2014 is $1,340. This is a reduction of 9.2%. The County, City and School District taxes are all going down. I suspect that some of this is due to a slight reduction in the value of my house from last year, an increase in the valuation of farmland for taxes and the addition of new properties in the city.
Our greatest challenge is the costly process to maintain our infrastructure and the City Council will need to continue the discussion on this issue. There is a major debate going on in Minnesota on how to fund things like roads, water, sewer and other things our citizens need to live, work and play in our cities.