King: Property tax hike may be inevitable after LGA slash

Austin City Council members have some tough decisions to make Monday night.

The city faces a $1.3 million budget reduction in 2012 due to Local Government Aid being frozen at the lower, 2010 level. A 15 percent tax levy increase was proposed to compensate for some of the reduction in state funding. The proposed increase equates to an additional $45 per year tax hike on a home valued at $105,000, according to Finance Director Tom Dankert.

Council members will weigh the pros and cons of implementing a 15 percent tax levy increase, cutting services or a combination of both.

Many council members have indicated a tax hike might be necessary because the city’s budget is already trim.

“The city of Austin is already operating extremely lean,” council member Steve King said. “I wish I could be more positive … to make it all seem more palatable and reasonable, but I’m not certain we can cut anymore and still provide core services to the citizens of Austin.”

King said there is no option but to increase the levy because of “the hand we have been dealt from the state of Minnesota and the pledge of no new taxes that has come from Washington and St. Paul over the course of the last decade.”

Janet Anderson, council member-at-large, echoed King’s thoughts about the state government.

“It is frustrating to see and hear comments from Minnesota lawmakers who are expressing pride in not raising taxes,” Anderson said. “… they should know that property taxes will go up as a direct result of what happened to resolve the state shutdown.”

According to Anderson, the best way to address the city’s budget issues is a “common sense balance” of increased revenue and cuts.

As part of the budget discussion, council members are tasked with deciding whether to fill a vacant librarian position that has been left open for about two years. Although the position has been budgeted for in previous years, funding issues have caused it to remain open. Another position in the street department is waiting to be filled, too. Someone holds the position temporarily, but he would receive benefits if hired permanently.

Council member Judy Enright thinks it’s best to hold off on filling the vacant slots.

“At this time, I do not feel we should hire for the vacant librarian or street department positions that are currently in the budget,” she said. “I feel both positions are important and needed, but I do not want to hire people and then at some point have to look at more state funding cuts over the next two to four years, where we may have to look at personnel cuts.”

Council member Roger Boughton also said he would consider holding off on hiring for the two positions, depending on how much money it would save and how it would affect Austin long-term.

Boughton indicated he is interested in exploring how much revenue could be generated if the Austin Fire Department charged for vehicle extrication or if the city of Austin chose not to be a member of the Coalition of Greater Minnesota Cities.

As for a 15 percent levy increase, Boughton isn’t quite sure.

“I would love to have us hold the budget increase to single digits,” he said.

Consolidating more services with other area governing bodies to save money has come up in previous City Council work sessions. City staff have negotiated with the Austin school district for the district to pay more costs associated with the two liaison officers at Ellis Middle School and Austin High School, according to a memo sent to Mayor Tom Stiehm and City Council from Dankert and City Administrator Jim Hurm.

Enright said further options for consolidating services need to be explored.

“The city currently has numerous collaboration agreements and projects …,” Enright said. “Since these relationships are strong and solid, we will need to look at even more ways we can all work together to sustain the quality of life Austinites enjoy.”

Unless council members want to hold a special session to continue budget talks after the Aug. 15 meeting, they must decide on a proposed 2012 budget and tax levy by the end of the night Monday. City Council will then vote to approve the plan at a meeting on Sept. 15.

Under Minnesota law, the city’s tax levy cannot be increased after Sept. 15; however, council members can vote to reduce the levy.

City Council will vote on the final 2012 budget and levy in early December.

—All quotes in this story were sent to the Herald via e-mail.