City passes max 13 percent levy hike

Published 10:54 am Wednesday, September 7, 2011

After three failed motions to approve a city tax levy increase, the fourth time was a charm.

Austin City Council members passed a 13 percent tax levy increase on a vote of 3-2 Tuesday night.

According to Finance Director Tom Dankert, an Austin property owner with a home valued at about $102,000 could see a tax increase of approximately $36 in 2012 due to the proposed increased tax levy. However, Dankert said the increase per home will vary due to the elimination of the state’s market value credit program.

Email newsletter signup

“The state’s market value credit that they now have changed will impact (the tax increase) differently for lower valued homes, which would have lower increases, to higher valued homes, which would have higher increases,” Dankert said.

When levy discussions began in early August, the proposed levy increase was 15 percent. However, that number was whittled down to 14 percent when the council decided to leave open a vacant street department position.

At Tuesday’s meeting, council members agreed to lower the levy one more percentage point — about $38,000 — by not replacing a librarian who has been working part-time and is being phased into retirement. To keep the library running at nearly the same staff level, more hours will be dispersed among other part-timers.

According to Dankert, the 13 percent levy increase is “what city staff feels is necessary to maintain” the services the city offers. He said a further reduction in the amount of the tax levy would require City Council to cut services further.

Council member Jeff Austin suggested lowering the levy to 12 percent by eliminating the city’s membership with the Coalition of Greater Minnesota Cities, a lobbying group that charges about $46,000 a year in membership fees. However, council member Steve King disagreed with Austin’s proposal and said the lobbying power is important in such difficult financial times.

“Thirteen percent sounds drastic, but I think what we have here is a fairly responsible budget under the circumstances,” King said.

Council member Roger Boughton suggested lowering the levy to nine percent and letting city staff figure out what to cut. That option was voted down 3-2.

Boughton said the council needs to consider the county’s levy and the referendum for a new school when deciding what to set the city levy.

“I would caution all of us to not forget we are only one-third of the tax bill,” Boughton said. “That’s a significant tax increase across the board for the members of our community.”

Dankert said the tax levy discussion will continue at City Council work sessions until December in an effort to lower the levy further.

“Citizens will have to give input on what they think is a fair tax levy … and suggestions for revenue enhancements or expenditure decreases,” he said.

Although the levy cannot be increased after Sept. 15, council members have the option to lower it before Dec. 5, when the council is tentatively scheduled to pass the final budget and tax levy. The city’s Truth in Taxation meeting, when Austin residents can discuss the city’s 2012 budget and tax levy, is scheduled for Nov. 29.