While the 2022 Faribault preliminary property tax levy approved Tuesday by the City Council is 5.83% higher than the current levy, the tax rate, a better gauge of taxes from year to year, is dropping.
The drop, though small — .25% — will make a difference when taxes come due next May.
If the levy is approved as is, city taxes on a $175,200 residential property — the median home price in Faribault — would drop by $2.41, according to figures presented Tuesday to the City Council by the city’s Finance Director Jeanne Day. But if the county has valued that property 5% higher, the city portion of the owner’s tax bill would rise by almost $48 next year. An increase in valuation would up the amount by $97.78.
A commercial property worth $1 million would see a $30 reduction in its city tax bill should the levy remain unchanged, but a 5% increase in its valuation could mean an increase of about $232. A 10% increase would add $493 to the current amount due.
The levy increases are mainly due to increased personnel costs, according to Day.
Of the nearly 592,300 levy hike, $478,200 is for personnel: healthcare and cost of living increases required in contracts the city has with its unions. The preliminary levy is $10.75 million, a figure which could drop before final approval in December, but by law cannot increase.
The problem seems that there are few places to cut. No additional personnel are included in the 2022 budget, though more overtime is anticipated in 2022 by the Police Department ($5,383) and the Community Development Department plans to spend $7,536 on an intern in 2022.
Parks & Recreation Director Paul Peanasky, like so many other employers across the nation, is losing good employees to higher-paying jobs, and requested a $2 per hour pay increase for seasonal Parks & Rec workers. That request will tack on about $100,000 onto next year’s spending plan.
The city’s tax capacity — Faribault’s property tax rate multiplied by its estimated market value of all taxable properties in the city — has grown by almost 6.1% to $20.5 million in the last year.
Last year’s approved levy was 4.2% higher than in 2019. Between 2017 and 2019 levy increases were north of 6%. In 2019, the increase was about 8.5%.
The council also approved levies for the Economic Development, and Housing and Redevelopment authorities Tuesday.