City Council members are set to approve the city budget at the next council meeting after settling on a 14 percent tax levy hike Monday night.

An Austin property owner with a home valued around $103,000 will see a tax increase of approximately $43 in 2012 due to the proposed increased tax levy, according to Finance Director Tom Dankert.

Council members settled on the 14 percent tax levy hike after more than two hours of budget discussion. The city faces a $1.3 million budget reduction in 2012 due to Local Government Aid being frozen at the lower, 2010 level. The levy makes up for some of the lost state funding.

“I can’t put together a budget for you that’s balanced unless we increase our revenues or cut spending,” Dankert said to council members at the Monday work session. “The message we’ve gotten from department heads is, ‘Folks, we’re tapped out.’”

Along with the property tax increase, the 2012 budget includes cuts from the prior year to the city’s capital outlay and contingency funds; capital outlay and contingency are used to pay for building maintenance and upgrades and emergency expenditures, respectively. One vacant position in the street department will remain open for another year, saving the city roughly $70,000.

However, the budget includes funding to fill another street department vacancy; someone holds the position temporarily but will be hired full-time and receive benefits under the budget proposal. Funding was also included to hire a children’s librarian at the Austin Public Library. The librarian position has been vacant for two years, and Library Executive Director Ann Hokanson said she is in desperate need of more staff.

“We’re one of the libraries in the area that has fewest staff per capita,” she said. “We need a children’s librarian to be able to provide the service the people in our community expect us to provide.”

“People don’t stop walking in the door if you cut services …,” she added.

City Council members were able to lower the proposed levy amount by one percent since their last meeting two weeks ago. They voted to approve a plan Monday that will save $38,000 annually by shifting more of the cost for Austin Public Schools liaison officers to the school district. The school district will pay for 83 percent of the cost of the officers, which reflects the amount of time the officers spend in the schools.

Council representatives expressed frustration during the budget talks, especially when they were deciding whether to hire a children’s librarian and a street department employee full-time.

“The task at hand here is certainly difficult,” council member Steve King said. “I’m having a hard time saying we can’t hire in the library and street department, but I’d have a harder time deciding in a year from now to cut a librarian or street position.”

Janet Anderson, council member-at-large, urged her fellow representatives to be careful not to “purely consider dollar amounts” when considering hiring for a vacant position.

“These are resources that are being used, that are in demand,” Anderson said.

Much of the conversation revolved around Austin’s property tax history. The city is ranked as having the third lowest property taxes in the state for a city with more than 2,500 people, according to a state auditor’s report. Mayor Tom Stiehm questioned how long the council is going to allow Austin to have one of the lowest tax rates while also cutting city services to the bare minimum.

“It’s about quality of life,” Stiehm said.

City Council members are scheduled to vote to approve the proposed budget at a meeting on Tuesday, Sept. 6. Under Minnesota law, the city’s tax levy cannot be increased after Sept. 15; however, council members can vote to reduce the levy after then

2012 Budget Work Session Vote

Yes: Janet Anderson, Jeff Austin, Steve King, Brian McAlister

No: Roger Boughton, Judy Enright, Marian Clennon,