MAHTOMEDI — Thanks to complicated tax formulae, nearly everything can increase while taxes decrease.
The market value of residential housing in Mahtomedi increased slightly from 2019 to 2020, but the city tax on that median value home decreased during that same period.
The city's 2020 general fund revenues and expenditures are proposed to increase 2.55% from the 2019 budget, with budgeted revenue and expenditures of $6.3 million.
That is the take-away from the proposed 2020 annual budget, as presented by Finance Director Scott Schaefer at the Sept. 17 Mahtomedi City Council meeting.
After a public hearing on the preliminary 2020 general fund budget, during which the public provided no commentary, council unanimously certified the preliminary 2020 levy to be submitted to Washington County by Sept. 30 for review.
The proposed 2020 general fund tax levy is $3.3 million, a 3% percent increase from 2019.
Debt service decreased by 0.7% to $1.499 million, and the PERA contribution increased by $26,000; added together, the special levy total is $1.525 million. Council passed a resolution canceling the debt service and PERA tax levies and adding them to the general fund levy, which amounts to a proposed total city levy of $4.8 million ($1.525 million plus $3.3 million). This amounts to a 1.8% increase from 2019.
Increases in revenue for the city in the upcoming budget will come from licenses, fees, permits and intergovernmental revenue. A 3.65% decrease in street improvement expenses in the amount of $19,600 will also help out in the favorable column.
The largest sources of revenue for the city are property taxes at 77% of the pie; current services at 11% and licenses, fees and permits at 4%.
Expenditures will increase as administration costs go up by $29,300, or 5%; parks expenses will rise by $47,000, or 10%; police services by $50,000 or 12%, and fire protection by $50,000 or 10%.
The largest expenditures for the city are public safety at 29% of the pie; debt service at 24%; general government at 19% and public works at 11%.
Meanwhile, the median value home in 2020 increased in market value to $343,900, a 5% increase: that same home was valued at $328,100 in 2019. However, the 2020 proposed tax for that median value home will be $1,220 in city taxes, compared with $1,246 in 2019, or a 2% decrease.
With all these increases in the budget and in the tax levy, how is it possible that the city portion of the property tax bill is decreasing?
The city was helped out by a 24% increase in monies it receives through the state’s Fiscal Disparity program, a tax-base sharing program in which all metro cities participate. All metro-area cities contribute; those cities found to be disadvantaged in their tax base receive a portion of the funds contributed. “Mahtomedi received money this year, so that helps,” Schaefer said.
Additionally, new homes in the city added to the housing stock, and that has also helped, Schaefer said. More people to pay the bills lightens the load for all. Growth in the city increased taxable market values by 8%. As a result, the local tax rate decreased by 7%, going from 38% to 36%.
The proposed 2020 levy must be certified by Washington County by Sept. 30. The city may lower but may not increase the amount of the proposed certified levy when it adopts its final 2020 general fund budget and certifies its final tax levy in December.
As part of the budget process, council scheduled the Truth in Taxation public hearing for 7 p.m. Tuesday, Dec. 3.
Council also scheduled a public hearing for the 2020-2024 Capital Improvement Plan at 7 p.m. Monday, Nov. 4.
In late December, after final adjustments, the finance director will submit the final levy to the county.
"I'm still staggered at how much it costs to do things," Councilman Steve Wolgamot said, “and I've been on council for a few years now. The things the city does are essential to do. That's a sign of a government being responsible long before I got here."