12/6/2012 9:19:00 AM Taxation hearing sparsely-attended
as council holds spending for years
by DENISE MARTIN
Fewer than 10 people were in the council chambers for last week’s North Branch taxation hearing. The staff explained details of the preliminary levy that the city council adopted in September, at a 1.6 percent increase from 2012. The city council adopts a final 2013 levy at its meeting this Monday, December 10. Finance Director Richard Hill explained the ups and downs of the last several years of North Branch levy. He advised that budget decisions aren’t always simple.
When council decides to trim the budget by not purchasing equipment or vehicles, there is an increase in expenses for repairs, which he said is, “a natural function” of the decision to reduce capital acquisitions, so every budget choice has its tails. North Branch spends the greatest share of its tax dollar on police-- which Hill estimates at about 35 percent of budget. Administration is 24 percent and public works needs about 21 percent of the city budget. But, then there’s debt service. Hill said, “The city is addressing what council put into place in the early 2000’s.” The levy is only going up because payments on city debt (redevelopment projects, purchases) encumbered years ago, had been structured to start to balloon later. Financing was predicated on hopes that development growth and land values would stay strong. That didn’t materialize. Out of every $1 a North Branch homeowner paid in 2012-- 10 cents went to public safety, and 9.8 cents to debt service.
(The county and school receive about 69 cents from a residential tax $1 bill.) Five cents went into general government and 4.7 cents into public works with a little over one cent for North Branch parks and cultural items. Hill showed that over the last six years the city’s contribution to debt service and to cover tax abatement incentives has “well more than doubled.” And, yet, by trimming staff and enacting other budgeting cuts, starting in 2009, North Branch has trimmed 15 percent from “key expenses” in its general fund, Hill explained. In 2008 actual General Fund expenses were $3.7 million and as projected for the 2013 budget they are $3.134 million. For 2012 this was $3.107 million.
The bottom line is that even though the action expected December 10 will adopt and cover a 1.6 increase just for debt service, for an “average” North Branch home taxes in 2013 will go down, about one percent. Hill said if the property value stays at $150,000 and isn’t adjusted for 2013-- the CITY taxes for a house which were $741.31 will be $730.71. For a $200,000 home tax bill the tax next year (with no value change) will be $1,378 and in 2012 it was $1,381. Commercial property owners are taxed under a different tax calculation formula, using a different rate. Commercial and industrial sites will see an increase. According to the information at last week’s hearing a $600,000 commercial parcel paid $6,489 in CITY tax and will pay $6,635 at the 2013 tentative levy. An $800,000 commercial parcel goes to $9,002 from $8,793.