The city of Northfield is discussing a 7.5 percent preliminary tax levy increase for 2020.
Northfield City Administrator Ben Martig said based on current figures, the levy increase would raise taxes $78 on a $200,000 home. The final increase amount will be based on numbers provided by Rice County in early September.
Additional discussion on the levy is planned with the City Council at the Sept. 10 budget work session. The preliminary levy has to be set on Sept. 17 and cannot be increased. The final figure is established in December.
Martig said the proposed levy increase is to keep services and staffing levels comparable to the previous year and includes new bonded projects (the 2019 street project: Third Street and northwest area, Spring Creek Road and street shop roof.)
“The increase is primarily due to some new debt costs related to this 2019 street project,” Martig said. “Also, our expenses are up 3.65% in the general fund, primarily due to elections and employee salary and benefit costs. However, other revenue is only up 1.9%, so the property tax levy is covering more of the expenses.”
Martig noted 61% of the general fund is personnel expenses.
“We believe our staffing levels are not meeting some of our expected service delivery, which is why there were numerous requests that would be in addition to the 7.5% levy should the City Council consider those,” he said. “If we increase staffing or pursue some other projects being explored, this amount would need to increase.”
Martig noted the city has built in savings based on trend analysis and project projections into initial budget numbers, so he expects the proposed levy to remain at that level if operations are kept similar to this year.
He said Northfield has relatively low city property taxes compared to similar cities. He added the city’s total tax levy is at approximately $9.3 million, versus the average of a dozen other cities who average $11.7 million. He said for the city to reach the average of the others, the property tax levy would need to increase 24.5%.
If the 7.5% increase is approved, the tax levy would rise to approximately $10 million.
Martig said the city’s tax rate is slightly higher than the average of comparable cities. He added analysis the city has undertaken shows that is driven by Northfield having less commercial and industrial tax value than other cities.
“If we see expansion of existing businesses or attraction of new business, the tax rate would lower,” he said.
Councilor David DeLong said he is in favor of approximately 3 percent levy increases at maximum, adding he does not pay close attention to preliminary tax levy numbers.
“It always comes in high, and then they drop their expectations,” he said.
He spoke against passing a 7.5 percent tax levy increase because most people did not receive that high of a salary raise. To him, taxpayers on fixed incomes cannot afford significant tax increases, and he noted Northfield Public Schools and Rice County are expected to increase taxes.
“Heck no,” he said when asked if he would support a 7.5 percent levy increase.
“We have to be conscious of our limitations, and there are limitations.”
Councilors Suzie Nakasian and Jessica Peterson White said the budget process was not far enough along for them to take a stance on a levy increase. Peterson White added that Administrator Martig has proposed setting the preliminary levy amount earlier in the year, something she believes is helpful.
She said she hopes any property tax increases are minimized, and she is excited the city is looking at alternative revenue sources she feels are progressive and sustainable, such as franchise fees and a possible local option sales tax. She said the local option sales tax could provide a sustainable way to fund certain recreation projects and community amenities.
Nakasian said there is a tendency for taxpayers to want minimal taxes while wanting substantial roadwork to be complete. She said the city has been accused of lavish spending, but in reality is funding essential budget items like police services. She added the relatively high recent levy increases came after several years of small hikes in the tax levy as officials did not then raise the levy for needed services.
Nakasian said there needs to be more economic development so the tax base can be spread wider. She spoke highly of the work Northfield Community Development Director Mitzi Baker is doing to spur that growth.