The city’s tax burden for Austin residents will be lower than expected in 2001, thanks to a budget certified at $50,000 less than initially projected.

Thursday, November 30, 2000

The city’s tax burden for Austin residents will be lower than expected in 2001, thanks to a budget certified at $50,000 less than initially projected.

The median Austin homeowner with a home assessed at $59,900 should expect a property tax increase of $10 to $12 as a result of new figures announced at the City Council’s Truth In Taxation meeting on Wednesday. The increase is lower than the $15 to $16 originally proposed.

Austin residents already have received in the mail their 2001 assessments with the higher tax rate calculated. On those statements, the first column of the assessment is the 2000 tax burden. The second column is the increase because of spending. Because of the city’s certification of a $150,000 tax increase as opposed to $200,000, the second column will decrease by $6 for the same median homeowner.

To calculate the new rate, residents should multiply their property’s market value by the tax class rate, which is 1 percent for the $59,900 median. Finally, the amount is multiplied by the mill rate, which is a combination of city, state and school district rates. This amounts to a rate of 94 cents on the dollar. Therefore, the total 2001 median tax burden will be $564 for the $59,900 median home in Austin.

City Finance Director Tom Dankert explained that city employee costs comprise almost 60 percent of the budget total. They also contribute to the revenue in the form of risk management payments, such as health insurance.

An additional revenue source comes from the state of Minnesota. The state has directed tax dollars to Austin this year with an increase of 3.84 percent. Dankert stressed that for every $1 Austin citizens are paying to the state, they are getting $2 back in funding for the city. Without this state money, the tax burden for Austin residents would include an extra $100,000 or the budget would have to be cut by that amount.

An effective source of city revenue has been Austin Utilities. Yet if deregulation occurs and NSP or another supplier puts Austin Utilities at risk, the city will have to take immediate steps to preserve the revenue it brings.

The $150,000 tax increase means that budgeted amounts will be decreased proportionally. In other words, while an increase of 9.2 percent was expected overall, 6.9 percent actually will be budgeted across the board.

The general fund, which pays for pubic safety, administration, park and recreation and the mayor and City Council. will receive about $40,000 more than was originally expected.

The library has requested an additional staff person, with funding specifics uncertain at this time. With the change in budget, the library will receive $3,000 less than expected.

With a tax increase being discussed, it was expected that more would have been in attendance for Wednesday’s meeting. Those in attendance only included Councilmen-elect Pete Christopherson and Wayne Goodnature and three residents.

Two residents spoke of their tax increases this year during the meeting. It was quickly discovered that one complaint was because of county and school district tax increases, and the other was because of county property assessment.

The 2001 tax levy was certified in a 6-1 vote, with Third Ward Councilwoman Gloria Nordin voicing the only opposition.

"The extra $50,000 could perhaps be used for health insurance," Nordin said, "since we seem to have needs in that area."

The council will officially approve the budget and tax levy at a 5:30 p.m. meeting on Dec. 4.