WHITE BEAR LAKE — September is preliminary tax levy time. The amount approved by cities this month can be lowered but not increased when the levy is finalized in December.
That rule induced City Council to amend the levy proposed at last week's meeting by $200,000, thus raising property taxes collected in 2022.
At the end of the night, the preliminary levy adopted by council was $8,080,000. Last year's property tax levy was $7,370,000. The 2021 levy includes a 4.7% increase for operating expenditures and 2.2% for new debt service.
Of that proposed amount, $7,000,000 supports the general operating fund and $855,000 services debt, most of which comes from bonding to fix the city's streets over the last four years.
The financial hit on the owner of a median value home, $260,300 for the 2022 tax year, is $548 in city property taxes. Last year, a median value home was $256,000 and taxed $467. City taxes would be $15 less under the original proposed levy amount of $7,880,000.
The reasoning behind the added $200,000 has to do with fund transfers that support the engineering department. In a memo to council, City Manager Ellen Hiniker explained that the department needs financial help.
Currently the proposed budget reflects a $725,000 transfer out of the construction fund into the general fund to support engineering operations. In the past, when higher interest rates provided more revenue to the construction fund, it was able to support the department. A reduction in those earnings plus lower License Bureau income has resulted in significant revenue losses.
The construction fund, according to the memo, supports pavement rehabilitation and miscellaneous sidewalk and street maintenance projects.
To achieve a healthy long-range fund balance, staff recommended reducing the general fund's dependence on the construction fund by boosting the levy another $200,000.
Hiniker noted at the Sept. 28 council meeting that the increased levy also helps support the following:
• Fire department staffing. The city eventually hopes to hire six firefighter/paramedics for one more full-time response crew. The new budget allows for two hires.
• Salary and benefit adjustments. Included are 3.25% employee raises. The new city manager's salary was adjusted to market rate. Personnel costs account for almost 80% of an $814,000 increase in expenditures.
• Technology enhancements. No specifics provided.
Council Member Kevin Edberg supported the amended levy amount, noting that long-term, paying for infrastructure is the city's most important issue.
"Over a decade ago, our city had challenging times, and there was a lot of pressure on the general fund. A decision was made to transfer $750,000 from the construction fund to the general fund to avoid increasing the tax levy. When we had interest earnings, there was no harm to that," Edberg said. "Those days are long gone, and we are forced to re-acclimate ourselves to a different reality.
"This diminishes our resources for doing projects," he continued. "Some we can still bond for but some are not bondable and depend on the construction fund.
"It's time to unwind what may have been a temporary solution 15 years ago," Edberg said. "Now is the right time to add to the levy. It's like a mortgage down payment."
Council Member Dan Jones reminded that council that "if something catastrophic happens between now and December, we don't have to do this." He's referring to the fact the levy can be lowered before final council approval.
Despite the increase, White Bear Lake’s tax levy remains second-lowest per capita among communities in the state with a population between 20,000 and 30,000, when combined with local government aid.
The preliminary levy now goes to the county to calculate property tax statements that are mailed mid-November. The truth in taxation hearing is scheduled for 7 p.m. Tuesday, Dec. 14, at City Hall.