Mixed reactions on local budgetsMix one part plummeting revenue, a dash of declining state aid plus a property tax levy bump — what do you get? Some unhappy Newport taxpayers.
By: Jon Avise and Toni Lambert, South Washington County Bulletin
Mix one part plummeting revenue, a dash of declining state aid plus a property tax levy bump — what do you get? Some unhappy Newport taxpayers.
The Newport City Council approved a 2010 budget and property tax levy on Thursday that will shrink general fund spending, but could still mean a hefty increase in city property taxes for Newport homeowners.
A projected 13.4 percent drop in general fund revenue next year — due in large part to a huge cut in Local Government Aid dollars from the state — forced the city to levy $190,000 more in property taxes than 2009, much of that in the form of a one-time special levy to cover the loss of state aid, Newport officials said.
Expenditures will decrease almost 4 percent under the approved budget, to $2.61 million. But less state money in Newport’s coffers means the city will ask for more from residents.
For a home valued at the city average of $218,000 in 2009 that experiences the Newport average 8.5 percent decrease in property value, the 2010 budget means a $111 increase in taxes paid to the city.
“It’s been a tough year,” Mayor Tim Geraghty told roughly 20 irritated residents who attended a tax hearing during Thursday’s city council meeting. “We’re going to spend less in 2010 than in 2009 … but it all comes down to (providing) basic services.”
The approved levy is $10,000 less than the amount allowed by the state, a figure proposed by Geraghty. Council member Pauline Schottmuller voted against the budget, saying the city should levy the full allowable amount to ensure continuation of core city services.
Residents who spoke at Thursday’s hearing, though, expressed disbelief that their city tax bill will rise while their property value falls. As one resident put it: “At a philosophical level, this feels wrong.”
Without the tax hike, Geraghty said, cuts “would be very harsh.”
Already, city officials have trimmed from the budget, eliminating the economic development director position and budgeting for one fewer police officer.
Another huge projected state budget deficit of $1.2 million could mean further cuts in state aid money that flows into Newport and, consequentially, more cuts from Newport’s budget.
Geraghty said he’s concerned the city could see its last LGA payment unallotted by Gov. Tim Pawlenty in a move echoing December 2008, when the city lost $100,000 in aid.
“I’m frustrated that it’s constantly being cut,” Geraghty said in an interview. “But I have to look at it from the governor’s position. He’s trying to fill a $1.2 billion gap.”
Bills down in Cottage Grove
Cottage Grove City Council members approved a $12.79 million 2010 general fund budget and property tax levy last week that avoids serious cuts in staffing and services, won’t dip into the city’s budget reserves, and will lower slightly most homeowners’ city tax bill.
The 2010 budget OK’d 4-1 last Wednesday represents a 3.5 percent decrease in spending from 2009, a cut necessitated, officials said, by $589,000 in state aid lost in 2010 and declining property tax revenue.
Heading into budget deliberations this summer, city council members said their goal was to see property taxes paid by residents drop equivalent to the citywide average decrease in property values.
The average Cottage Grove home value fell 5.8 percent, according to the Washington County Assessor’s Office. Property tax bills won’t fall that far — but a home valued at the city average of $221,600 that experienced the average 5.8 percent decline in value would pay roughly $45 less in city property taxes.
“I know it was a difficult time,” Cottage Grove Mayor Myron Bailey said last week. “We did everything we could to keep the numbers as low as we possibly could.”
And the city, he pointed out, did better than most: Cottage Grove’s 2.3 percent property tax levy decrease is the largest drop in Washington County, according to figures in a Minnesota Department of Revenue study based on proposed levies adopted in September.
Newport’s levy will jump more than 10 percent. Woodbury’s more than 3 percent. Forest Lake and Hugo are the only other Washington County cities with property tax levies that will shrink in 2010 versus ’09.
St. Paul Park taxes stay constant
The St. Paul Park City Council approved its 2010 budget Monday night, 5-0, along with a property tax levy of 1.27 percent.
That means homeowners should not see any increase in the city portion of their 2010 property taxes, according to city administrator Kevin Walsh. “Some homeowners may even see a decrease depending on the valuations placed on their property.”
The 2010 budget includes $2.46 million in expenditures, a 4.1 percent increase over 2009.
Property taxes fund 49 percent of projected expenses with the remaining balance funded by using cash reserves and other revenue sources such as Local Government Aid, license and permit fees and charges for other services, according to a report from the city.
The second of two 2009 Local Government Aid payments is due at the end of December, according to Mayor John Hunziker. He is concerned about the potential loss or decrease in that money in light of comments by Gov. Tim Pawlenty last week.
“We’ll just have to see where everything shakes out with the state and take it from there,” Hunziker said. “We can probably make some adjustments later on, but I don’t know where they will come from.”
Walsh said the governor has until Dec. 31 to take away Local Government Aid. “If he makes that decision in December, the city will have an opportunity to update its tax levy in January,” Walsh said. “We’ll have to wait and see what happens.”