Local taxes on the rise


(10/21/2019)

by CHRIS ROGERS

Taxes are going up. That is the case for most local governments in the area as Minnesota cities and counties approved preliminary 2020 property tax levies late last month. The hikes ranged from Stockton’s zero-percent levy increase to a 7.34-percent increase in St. Charles. Local governments could still reduce next year’s tax levy before the end of this year.

Split vote approves Winona County levy

A 3-2 vote approved Winona’s preliminary 4.3-percent levy increase late last month, with commissioners Marie Kovecsi, Chris Meyer, and Greg Olson supporting the hike and commissioners Steve Jacob and Marcia Ward opposing it.

Ward has made a point to vote against every property tax increase in recent history and was not about to change. Pointing to the high number of local citizens making sacrifices to afford taxes on fixed incomes or low wages while Winona County did little to trim its $52-million budget, Ward said, “I can’t, in my right mind and my right stance and my right feelings for my citizens, tell them, ‘Let’s make it a great day to live in Winona County by raising taxes 4.3 percent.”

Jacob praised the work of county staff to tighten the county’s budget. However, he said he could not support increasing taxes while the county’s cap on feedlot size limited the growth of the farm economy. He offered to support next year’s tax increase if other commissioners would endorse a reconsideration of the feedlot cap.

Jacob did not get any takers. Because farms make up a relatively small portion of the county’s tax base, raising the feedlot cap would not lead to a significant increase in the county’s property tax base or a significant boost to its economy in general, Meyer contended. She, Olson, and Kovecsi have supported the feedlot cap for environmental reasons and because they believe it protects small farms.

Olson criticized Jacob’s offer as political horse trading and said Jacob and Ward had not provided a realistic alternative to the unpopular but necessary tax increase. “I’ll be the bad guy and vote for the levy increase that will allow our county to operate,” Olson stated. “I can safely say there’s not one person at the table who wants to raise taxes. It’s easy to say, ‘No, let’s not do this.’ It’s not easy to find solutions,” he said.

As the County Board took a formal vote on the preliminary levy late last month, funding for the Winona County Soil and Water Conservation District (SWCD) became the main point of contention. Every year, the county provides a total of around $630,000 in funding to a wide variety of outside organizations such as the Winona County Fair, the Winona County Historical Society, food shelves in Winona and St. Charles, and local libraries. In its effort to limit tax increases in recent years, the County Board has generally frozen funding increases for these outside organizations. The board continued that freeze for most organizations this year, with the exception of the SWCD.

Earlier this fall, the County Board agreed to increase its allocation for the SWCD by $5,000 to a total of $128,000. It was significantly less than the $194,000 the SWCD asked for, but Jacob and Ward argued against giving the district more. Jacob reasoned a $5,000 increase made sense since the SWCD had recently absorbed the duties of another organization the county had been supporting with $5,000 a year. Meyer and Olson went along.

Then, on September 24, Meyer said she had received a call from SWCD Board Chair Leo Speltz. Speltz said that without the full funding request, the SWCD might have to cut staff, Meyer reported. “He changed my mind,” Meyer said. She proposed giving the SWCD another $12,000 — or $140,000 total.

Jacob pushed back. The SWCD has a healthy reserve fund, its board made its own decision to hire more staff, and Speltz’s call to Meyer was a “backdoor” request for more funding, circumventing the normal budgeting process and encouraging other organizations to do the same in the future, he argued.

Ward echoed that sentiment, “I find that problematic — Soil and Water coming in and telling us through one commissioner … I think we’re opening the door to every other agency to say, ‘Hey, I need more money. Give it to me.’”

Olson argued that not approving funding increases was tantamount to cutting funding for outside organizations, because the organizations’ revenue remains stagnant while inflation drives up costs. He, Meyer, and Kovecsi voted to approve the increased funding and the preliminary tax levy hike.

County administrator Ken Fritz said the board could increase its funding for the SWCD without raising the levy more than the already-proposed 4.3 percent because between now and December, he and his staff would be able to find $12,000 in savings somewhere in the budget.

Local cities approve preliminary tax hikes

After initially proposing an extraordinary tax levy hike of nearly 15 percent, the St. Charles City Council shaved its preliminary levy increase for next year down to 7.34 percent. “Initially we were at about 15 percent with everything that folks wanted, and we said, nope, we don’t need all of this. So we made some decisions,” St. Charles City Administator Nick Koverman explained.

“The primary brunt of our increase is that we took out a small street bond,” Koverman said. The city borrowed $650,000 to fix up local streets, and the council had to raise taxes in order to start making annual payments on the debt next year. Koverman said the loan payment accounted for a five-percent levy hike — the majority of next year’s preliminary increase. The bond was necessary because the city’s annual budgets for street repairs just were not keeping up with the city’s needs, he explained.

Koverman added that because of the city’s fast-growing tax base, the actual tax rate paid by property owners should not change much next year. However, St. Charles’ tax base growth consists of both new construction — which spreads out taxes among more taxpayers — and inflation in existing property values — which means the same taxpayers pay higher taxes because their properties are worth more.

Nevertheless, having a growing tax base is a good place for a city to be. “Certainly we’re fortunate to be in that position,” Koverman stated.

On the opposite end of the spectrum, the Stockton City Council approved a zero-percent preliminary levy increase for next year. Taxes are not going up in Stockton. How is that possible? “We’re pretty careful with how we spend our money,” Stockton City Clerk Beth Winchester said. The council is also relying on reserves to balance the city’s budget. In fact, Winchester said that next year the city has budgeted to spend around $200,000 in reserves — double its $100,000 tax levy. Asked if the city could continue relying on reserves to balance its budget, Winchester said, it should be able to for at least the next couple years because the city has roughly $600,000 in the bank.

In Goodview, the City Council approved a 6.6-percent preliminary tax increase. “That obviously will go down when we certify [the final levy] in December,” Goodview City Administrator Dan Matejka stated. “Our practice has been to set a preliminary levy a little higher to provide us some wiggle room between September and December,” he added. Matejka said nothing in particular was driving up next year’s budget. He noted that although the city got a nice increase in local government aid from the state legislature, that funding increased was wiped out by the elimination of the state’s small cities assistance funding. “The goal here is to get it as close to zero [percent] as possible,” Matjeka said of the final levy increase, adding, “I think it’s possible. I don’t know if we’ll be able to get down all the way to zero, but I would not be surprised if we could get it somewhere down to that two percent range in the worse-case scenario.”

The Altura City Council approved a preliminary one-percent levy increase.

In Rollingstone, the City Council set the preliminary levy at $188,000 — a five-percent increase over last year. “If anything it’s the purchase of the school building,” city clerk Jamie Hengel said of what was driving up next year’s budget. The city of Rollingstone recently purchased the former Rollingstone Community School.

Lewiston set its preliminary levy increase at 6.8 percent.

In one of its most conservative preliminary levies in recent history, the Winona City Council approved a 2.8-percent levy increase for the city, including the Winona Port Authority.

Staff from the cities of Elba and Minnesota City were not available before press time.

Chris@winonapost.com

 

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