The city of Austin’s annual budget remains heavily dependent on local government aid.

That’s one key message Director of Administrative Services Tom Dankert voiced during Tuesday’s annual city truth in taxation meeting in City Hall.

“We are very dependent on the state of Minnesota to continue the local government aid program to keep our taxes at the rate they are and our services at the rate they are,” Dankert said.

Of the city’s $15.9 million 2017 budget, just under $8 million will come from LGA.

“Half of it comes from the state of Minnesota,” Dankert said. “So if the state of Minnesota for some reason changes the allocation of dollars they put into local government aid, that has a severe impact on the city of Austin.”

LGA funds go into the general fund to offset operational costs. It’s remained a much-discussed issue, as the 2016 tax bill vetoed by Gov. Mark Dayton because of several errors — many due to its late passing by the Legislature — would have included an additional $20 million for LGA.

During the meeting, Dankert outlined the city’s 2017 budget and its levy, which is set to increase by 9 percent from about $4.9 million in 2016 to $5.3 million.

A 9 percent levy increase could mean an additional $30 to $40 a year for an average home’s taxes. Dankert has said most won’t feel the full 9 percent tax increase. New construction and growth is accounting for about 1.8 percent of the increase.

That means most properties would see a roughly 7.2 percent increase if their values remained the same.

Employee costs are a driving factor in the 2017 budget, as Dankert said the goal was to keep city services the same in 2017 as in ’16.

“On the expenditure side, most of our cost is people cost,” he said.

The city only added a half position by taking a worker from part time to full time, but much of 2017’s increase — about 7 percent, according to Dankert — is coming from a roughly 3 percent raise for staff.

The city projects $15.9 million in total expenditures for 2017, with about $6.4 million coming from public safety, $3.7 million from streets and highway, $2.7 million from parks and recreation, $2.1 million from general administration, $746,000 from capital outlay/other and $206,000 from economic development.

Dankert showed several tax statements, with the names and personal information removed, to give examples of how the 9 percent increase is affecting tax statements. On one, a property’s valuation decreased by 16 percent, so the city taxes decreased 10 percent. On another a valuation went up 10 percent, so city taxes increased 18 percent.

“As the value goes up, your taxes will go up higher than the average person,” Dankert said.

On a property where the value remained the same, the city taxes increased by about 7.22 percent.

“When valuation doesn’t change, here’s what our 9 percent levy increase, how it hit a citizen who didn’t have a value increase on their property,” Dankert said.

Turnout

About seven members of the public attended the meeting — two of which were media and one being Austin Area Chamber of Commerce Director Sandy Forstner — but none voiced public comments.

Still, city staff say the turnout was higher than normal.

“I must admit we have more people here than we’ve ever had,” Dankert said of the turnout.

“Which isn’t too many,” Mayor Tom Stiehm replied.

A few attending spoke to Dankert before or after the meeting about concerns over their tax increases, which Dankert attributed to changes in their property value.

Stiehm joked during the meeting about a huge spike in his property value. However, his house was totaled in a 2014 fire and they rebuilt on the site, so Dankert noted such an increase would be expected essentially going from a bare lot in 2015 to a lot with a house.