The St. Michael city council set the city’s 2019 preliminary tax levy last week, but thanks to an expanded tax capacity, city administrator Steve Bot said property owners will not see an increase unless their property values rise.
The new levy amount of $6,877,420 is $574,000 higher than last year for a 9.1 percent increase. The city reached this number by starting with last year’s levy and adding money for the following expenses:
-$200,000 to fund annual bond payments for the city’s new public works storage building. More on this later in the article.
-$80,000 to fund rising asphalt prices for their paved street maintenance overlay program. Bot said prices rose by 30 percent.
-$50,000 to fund infrastructure bond payments
-$50,000 to fund increasing public works equipment repair and replacement needs
-$60,000 to fund public safety increases for the city’s police and fire budgets
-Two staffing promotions and one new hire for parks and building maintenance
-Benefit and wage adjustments for city staff
The levy also includes a $43,990 transfer from the general fund to pay off additional debt. Council considered levy options with a smaller transfer amount or no transfer amount, which would have reduced the levy to an 8.99 or 8.4 percent increase, respectively.
Ultimately, council chose to use this specific figure for the transfer because it was the highest dollar amount they could levy without the average St. Michael homeowner seeing an increase. The average home in the city is currently valued at $257,300.
“Thanks to new growth, expanded tax capacity and increasing values, if your value is not increasing on an average St. Michael home you’d generally not see an increase on your city taxes even with the levy increase,” Bot said.
Councilmember Keith Wettschreck said he would only support the $43,990 fund transfer if it went towards debt service, and most other members agreed. Bot said the city is still paying off their $9 million share of the Highway 241 expansion project, and this would allow them to pay it off more quickly.
“I think the city has enough debt that we need to take care of that,” said councilmember Nadine Schoen.
Councilmember Tom Hamilton was the only member to vote against the levy proposal, saying he’d prefer a smaller or no transfer amount since homeowners will likely see their values rise and therefore experience a tax increase.
“The value of my house goes up, but I’m not going to sell my house,” Hamilton said. “So I’ll still be paying more.
When there’s an increase this size in the tax base, it feels like there’s some responsibility to create some efficiency,” he continued.
However, Mayor Kevin Kasel disagreed, saying he does not want to see the city get into the same negative financial situation as Wright County. Wright County will be raising its levy at least 17 percent for next year, though they have not yet officially set the levy.
“Wright County is where they are because they failed to capture that increment increase in available tax revenues,” he said. “It might look good today, but growth creates demands on infrastructure, service and other needs. If you don’t capture that now, it will be twice to three times as much later on, and all at one time.”
Kasel said that Wright County decided it would be preferable for homeowners to see small reductions in taxes than for their government to plan correctly for future needs, and he said that dedicating this additional revenue toward the city’s bond and debt now would free it up for future options down the road.
The council approved the levy by a vote of 5-1, with Hamilton dissenting.
New Storage Facility
The city’s new public works storage facility is a $2.8 million dollar building that the council approved last year. They sold a bond to pay for it and will be levying to pay the debt service on it for the next 20 years. Bot said the building will house the city’s public works and parks equipment, and he said it will help the equipment last longer and make the city more efficient.
For instance, Bot said their current building does not allow them to leave plows on, so city staff must undress and redress the plow equipment each snowfall. He said the new building will have an attached wash bay with an underbody truck wash, which he said will extend the equipment’s life through better maintenance.