Higher home values, higher property taxes

WHITE BEAR LAKE — It's tax levy time again.

State statutes require municipalities to certify a preliminary tax levy to their county in September of each year. The preliminary levy is used to develop property tax statements mailed by the county to property owners mid to late November.

City Council OK'd the $6.9 million proposed 2019 tax levy, collectible in 2020, at its Sept. 10 meeting. The levy funds just over half of the city's general fund operations, as well as a portion of its debt obligation.

The levy amount is $563,000 higher than last year, which accounts for a $482,000 increase in the general fund budget and $81,000 increase in debt service for the 2019 street reconstruction bond.

The general fund pays for public safety (almost half the expenditures), public works, engineering, parks, planning and code enforcement and general governmental expenses. The general fund is one-third of the city's entire budget but has the most impact on the levy.

Expenditures are budgeted at $11.9 million for the general fund in 2020, an increase of $587,500. A major portion of the increase, or 83%, is due to personnel costs — things like health insurance, worker's compensation and a 3% wage increase. A new police officer is also budgeted next year.  

Impact on property taxes

Overall, property values increased 6.9% in White Bear Lake, and totaled $189 million in market value.

As Finance Director Kerri Kindsvater pointed out, the growth in residential property value increases a homeowner's tax liability.

On average, home values increased 9.3% with some homes jumping 17%.

Median home value for 2020 is $243,100, $20,600 higher than last year. In the case of a median home, the city tax is $467.10. 

That’s only $7.18 more than what a home of that value would have paid in 2019, Kindsvater noted in a memo to council.

In 2019, a median value home paid $413.54 for the city’s share of property taxes.

The accompanying table compares a median value home and annual city tax for the last 10 years. Note that in 2016, the median value home was still $1,750 less than in 2011 as the market continued to recover from the recession. Since 2016, median value has increased by $58,400, or 32% over a four-year period.

Apartment and commercial/industrial properties also saw market value growth; however, the percentages are lower than the residential increase. Apartment values rose 1.8%, which is below the Ramsey County average of 6.9%. Commercial/industrial valuation increased 8.66%, which is greater than the county average of 4.66%.

Statewide tax levy comparison

The city’s 2019 per capita tax levy liability of $248.71 ranked lowest among communities statewide with populations between 16,000 to 37,000. The impact of the preliminary tax levy would increase the per capita levy to $270.77. Depending on the tax levy adopted by other cities, White Bear Lake should remain either lowest or second lowest among comparable cities in 2020. In 2019, Willmar was second to last among the 46 cities listed. Red Wing was first in per capita levy.

A truth in taxation hearing is scheduled Nov. 26 at City Hall. The hearing gives residents and businesses opportunity to provide input on the budget and proposed levy. The final 2020 budget and corresponding levy will be adopted at the Dec. 10 City Council meeting.

Before adopting the proposed levy, City Council was reminded that the preliminary tax levy can be lowered when the final levy is adopted, but it cannot be increased.

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