Businesses feeling major pinch from tax increases

Published 10:14 am Wednesday, December 5, 2012

Commercial property still affected by new appraisals

As the county board works toward finalizing its 2013 budget and levy, many business owners are still smarting over changes to property values and taxes.

“I think it is affecting quite a few businesses in the community,” said Pam Reistad, president and manager of Austin City Employees Credit Union.

The county board will hold its annual Truth in Taxation meeting at 6 p.m. Thursday to discuss the budget and potential 8.8 percent tax increase for 2013.

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Commercial property, and especially agricultural property, will both make up a higher portion of the tax base.

But for commercial properties, tax increases aren’t only due to budget needs.

Many property owners already saw large value increase after the county hired Vanguard Appraisals for $250,000 to reassess all commercial property in the county because of discrepancies in old values.

The new values, though hotly contested by business owners, were approved earlier this year, and will go into effect in 2013.

Double whammy

To Jeff Carney, owner of Carney Auto and City Car Wash, the mix of tax hikes and new values feels like commercial property owners have gotten a double whammy, and some business owners see it negatively affecting the business community.

“You’re driving small businesses out of town,” Carney said.

The taxes in Mower County, according to Carney, could cause some businesses to consider going to communities like Rochester or Owatonna.

Carney’s City Car Wash was damaged in a fire in March, and he said the high taxes in the county made him ponder whether it was worth rebuilding in Austin. However, the site reopened last week.

Carney said his businesses in the county saw “a substantial increase” from the reappraisals and pending tax hikes.

Along with his Carney location in Austin, he also owns the location in Blooming Prairie. Even though the properties in Mower and Steele counties are similar, Carney said, he pays almost double the taxes in Mower County.

“You can tell that the city is just out of whack,” he said.

Over time, Carney argued recent increases could play a substantial role.

“I see business in Austin gradually dwindling,” he said.

For small business owners like Lou Beckel, tax hikes and value changes aren’t easy to swallow.

“When you’re a private enterprise, it’s really, really hard on you,” she said.

At Lou’s Forever Framing, there are no employees to cut; it’s just Beckel, so curbing expenditures can be difficult.

Beckel said the recent reappraisals and tax increases make it feel like the community is not supporting small business.

“They want to put you out of business, it feels like,” she said.

County commissioners are discussing additional relief for taxpayers, as they have indicated they’ll likely use some of the county’s roughly $13 million in undesignated reserves to soften the blow of tax increases. At the last county board meeting, Commissioner Jerry Reinartz said he supports using reserves, as do many other commissioners.

“We owe it to our citizens of Mower County to levy as little as possible. … I feel that any levy reduction has to include some use of our reserves,” he said.

Few options

For Carney and Reistad, the Vanguard reappraisals caused much concern, but left property owners with few options.

Like many other businesses, Reistad and others at the credit union felt Vanguard valued properties too high, and they felt efforts to research and work Vanguard officials to lower their values were futile.

Reistad and Carney don’t plan to attend Thursday’s Truth in Taxation meeting because of sour experiences trying to appeal the Vanguard assessments.

After multiple appeals, the county board eventually adjusted the credit union’s value, but not as much as Reistad had hoped.

To Reistad, taxes aren’t the only burden business owners are facing.

Reistad, president and manager of Austin City’s Employee’s Credit Union, said tax increases are continuing to put a burden for people who are seeing their income stay stagnant, if not decreasing.

“Definitely the costs keep going up … but the income for businesses is going down because of the economy,” she said.

She said property taxes at the credit union have increased by more than 20 percent.

If taxes keep going up and income doesn’t improve, Reistad argued, the business community will feel the pinch.

“It really does affect the businesses with the way the economy is,” she said

Reistad said the credit union is not alone.

The public can make big strides to help small business owners like Beckel by shopping locally.

“People need to support their local businesses,” she said.

If shoppers don’t buy local even for small purchases, Beckel said, local businesses could be gone when people truly need them.

Reistad noted budget challenges aren’t limited to one group. She said government officials, residents and business owners must find balance to navigate the tough times.

“I know it’s a struggle for everyone,” she said. “It’s a struggle for the state, it’s a struggle for the county and it’s a struggle for the businesses.”

Truth in Taxation meeting

6 p.m. Thursday in the county board room of the Mower County Government Center.

County board regular meeting

1 p.m. Thursday in the county board room of the Mower County Government Center.

On the agenda:

• The board will discuss the 2013 budget and levy ahead of the Truth in Taxation Meeting.

• The board will award bids for rehabilitation work on the Roosevelt Bridge. The bridge spans the Cedar River on Fourth Street SE between Fourth Avenue and Sixth Avenue.