The city held its annual Truth in Taxation hearing on the proposed operating budget and tax levy for 2019 Tuesday evening at City Hall.

Under Minnesota statute, the city is required to hold a public hearing on the matter to allow residents to hear where the city will be spending their tax dollars for 2019. The hearing also allowed for citizens to ask questions and have concerns addressed by the council.

City Administrative Services Director Tom Dankert gave the presentation.

Proposed expenditures for 2019 are $34,937,000, broken down as:

• Public Safety – $7,141,298
• Enterprise Funds – $6,556,569
• Internal Service Funds – $5,358,378
• Streets and Highways – $3,747,968
• Capital Improvements – $3,611,000
• Parks and Recreation – $3,012,485
• General Government – $2,103,701
• Capital Outlay/Contingency – $1,512,000
• Library – $1,205,809
• Tax Increment Funds – $248,833
• Economic Development – $202,743
• Recreation Programs – $88,503
• Fire PERA – $4,000

In 2018, the city adopted a tax levy of $5,941,000. The proposed tax levy for 2019 is $6,873,000, a $932,000, or 15.69 percent, increase. That amount is broken down as follows:

• General Fund – $4,588,861
• Capital Projects Fund – $1,276,000
• Library Fund – $968,139
• Port Authority Fund  – $40,000

The tax levy is assessed to property taxes, with property values determined by the Mower County Assessor’s office.

“Valuations and our tax levy are in essence what creates your taxes on your statement, but a lot of it is driven by the actual value of your property,” Dankert said.

In 2018, residents who owned a home valued at $100,000 paid on average $378 in property taxes. A 15.69 percent increase in the 2019 tax levy would add $60 annually to that total.

The tax levy portion of the hearing drew the most questions from those in attendance, particularly as to what prompted the increase.

Dankert explained that the main portion of the levy was $500,000 expected for the implementation of the results of the compensation and classification study that is currently being conducted. The study, which cost $35,000 budgeted in 2018, was authorized after the city lost employees to other cities that paid better and because of the low number of applicants and long vacancies for other city positions.

“This is intended to try to look at the comparables; what are the cities paying, what are the municipalities paying to ensure that you’re in line with other municipalities,” Dankert said.

The $500,000 is an estimated value for the potential results. The council’s decision to budget $500,000 for the study��s implementation without knowing the solid figure drew criticism from Austin Chamber of Commerce Director Sandy Forstner, who has expressed concern over the rise in the tax levy over the past few years, calling it a “pretty marked trend.”

“I would expect all members of the council would not want to pay bills before services are rendered,” he said.

Another expense covered by the tax levy is a $200,000 housing initiative, which the council hopes will provide additional housing options for those who work in Austin but live outside the city.

“We have employers whose  employees are living outside of Austin,” Dankert said. “We’d prefer to have them in town spending their tax dollars here.”

The remainder of the proposed tax levy consists of contractual pay increases for employees.

Dankert said the amount of Local Government Aid (LGA) the city received played a role in the tax levy. The city received only a slight increase of $11,000 in LGA this year, not nearly enough to help offset foreseeable expenses.

“The council recognizes that we have raised taxes, and as far as I’m concerned, and the council people I’ve talked to, we are determined to keep them down as close to cost of living as we can next year,” Mayor Tom Stiehm said. “We have to pay these taxes too, but when we make decisions on city stuff, we have to ask what is the best thing to do for our city.”

Despite some concerns, attendees came away with a better understanding of the budget and the budgeting process. Some expressed gratitude to the council and Dankert.

The council voted to place a resolution to adopt the proposed tax levy and budget to its next regular meeting on Dec. 17. Once adopted, the city will then certify the 2019 tax levy with Mower County and the State of Minnesota on Dec. 18.

For more information on the 2019 proposed tax levy and operating budget, visit http://www.ci.austin.mn.us/Administration/2019TNT/2019TNT.pdf.