City Center debt, general fund increases drive property tax hike
Forest Lake residents in 2014 will pay a city tax levy that is $875,520 higher than this year’s.
The City Council on Monday approved the levy of $8.04 million and a 2014 general fund budget of $9.26 million by a 3-2 vote.
Of the 12.2 percent levy hike, $276,835 is for a general fund levy increase of 4.1 percent. The rest is for debt service on the Forest Lake City Center, the $18.6 million public safety and city hall project currently under construction.
The owner of a house currently valued at the city’s average of $180,700 will be levied $763.79 next year, up from $694.82, assuming a 6 percent change in market value from 2013 to 2014.
That increase in market value, combined with a healthy amount of new construction driving up the tax capacity, limited the city tax rate to a climb from 43.5 percent to 44.5 percent.
City Center debt
The entire City Center debt service levy will go toward interest in 2014. Projected surplus project funds will go toward mitigating a levy increase in 2015, Finance Director Ellie Paulseth said. Starting in 2016, she added, the expiration of a tax increment financing district will significantly increase the tax capacity and thus reduce future debt service levy amounts for the project.
“We’re hoping that if we play our cards right and if the stars all align, we won’t really have to increase taxes again for the City Center levy, for at least awhile,” Paulseth said.
The final City Center debt service payment is scheduled to be levied in 2033.
General fund increases
Several factors combined to increase the general fund levy by 4.1 percent. More than a quarter of the increase is due to a shift in surface water management dollars. The city leaned on fees for that line item this year in an attempt to keep the levy flat from 2012.
A cost of living adjustment in the salaries and wages of city workers is another contributor to the general fund increase. As 2014 is an election year, $36,575 is budgeted for election costs. Also, the city is responsible for a quarter of the salary of the third school resource officer position added this school year. Other contributors include a $30,000 tax abatement used to attract Custom Mold & Design to Forest Lake, building maintenance at the Forest Lake Senior Center, and increased demand for road salt due in part to the city’s acquisition of North Shore Trail from Washington County.
Each of the general fund’s departmental budgets rose: general government by 5.6 percent, public safety by 3.7 percent, public works by 6.0 percent and culture and recreation by 8.4 percent.
A balanced budget is planned, meaning general fund reserves would remain at $4.91 million.
Though the council set the preliminary levy in August and debated little during a hearing on the proposed final levy Dec. 9, Councilmen Mike Freer and Ben Winnick voted against the levy.
“Are we receiving the best value for that money that we’re spending for our citizens? That’s where my big concern is,” Winnick said.
Winnick elaborated when asked for specifics by Councilwoman Molly Bonnett.
“I think if you look at the proportion of where we’re spending the monies, I think citizens are getting a little bit of the short end,” he said.
Winnick advocated the council taking the lead on budget planning, “rather than having it pushed on us, pre-set, and the five of us sit and quibble over minute details of the budget.
“It takes the focus off the big picture,” he said.
Mayor Chris Johnson said the big picture looks fine to him.
“I think we have some real good things going on in the city,” he said. “I think we have some good ideas for the future. I think we’ve identified some areas that we can look at next year. Generally, stepping back, I do think the big picture is a good picture. We still have one of the lower tax rates in the area.”
City Administrator Aaron Parrish encouraged council members to bring ideas regarding the budget for 2015 to a workshop for that purpose in May. The council could also start the process at its regular January workshop, Parrish said.