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Levy increase impact lower due to larger property base

By Staff | Nov 8, 2015

So, how is a nine percent increase in the 2016 Blue Earth property tax levy actually only a three percent increase?

That is exactly the question Blue Earth city administrator Tim Ibisch tried to explain to the City Council during a work session on the budget and levy held last Monday night.

Ibisch explained that the property tax base, which is the total value of all land and buildings in the city limits, has increased by 6.2 percent.

“So if we raised the tax levy by six percent, it would have no impact on people’s property tax,” he said. “Someone who has a home with a tax value of $100,000 paid $624 in city property tax this year, and it would stay the same for next year.”

The City Council had set a preliminary tax levy increase of 11 percent back in September, anticipating lowering it, possibly to three percent, before the final levy is set in December.

“After meeting with department heads we have trimmed the budget and the levy increase would now be down to nine percent,” Ibisch said. “And a nine percent increase would actually just have a three percent impact on property owners.”

The city administrator added that the city tax on that $100,000 house example would be raised to $642.72, or $18.72 higher than this year.

And, that increase would mean an additional $76,000 in revenue for the city budget.

Ibisch also pointed out that Blue Earth’s tax rate is one of the lowest for towns in Faribault County.

He then went over the proposed 2016 budget, and answered several questions from the council members.

One area the council asked about was the street fund, which was decreased significantly from last year.

Ibisch explained that he moved the amount of the street fund that pays off the debt for all the street projects into the debt service fund itself, where he thought it belonged.

“It is what the levy monies in the street fund was intended to do,” he explained. “Pay off the debt. So it is working just as it was intended to do.”

Another item questioned on the budget was an increase in the HRA funds from $9,000 this year, to $34,000 next year.

“This is for some possible house demolitions we see coming in the next several years,” Ibisch said. “We project as many as 20 houses that will need to be demolished. Five are in the last year of their tax forfeiture time limit.”

The City Council asked Ibisch if there were any places to still trim the budget and get the property tax levy increase down below the nine percent level.

“There are always places to cut,” he said. “I can meet with the department heads again and see where we can trim some more.”

The council will take another look at the budget at the work session that will be held before the next regular meeting on Nov. 16.

In other matters at last Monday’s meeting, the City Council:

Accepted the high bid of three bids for renting out the farmland surrounding the Blue Earth Municipal Airport.

High bid was for $39,325, or $250 per acre, for three years. The successful bidders were David Anderson and Charles Anderson.

Agreed to make a donation to the Faribault County Historical Society in the amount of $3,810.89 which includes reimbursement for electrical use at their buildings around town.

Passed two resolutions allowing Sunday growler and Sunday off sale sales at the request of Oswald Brewery.

Passed two more resolutions dealing with the way permission to build fences on properties is handled. It will now be handled more like a variance if the fence is to be built within three feet of a property line.