Anoka is planning a reduction in its city tax levy for 2013. This will be the fourth year for either a zero or negative increase in the levy.
But this will be the last year the city’s property taxes will be going down until 2016, if the city council goes with a plan created by city staff.
Budget discussions with the city council were kicked off Monday, Aug. 6 when City Manager Tim Cruikshank presented the staff’s big picture of the city’s finances over the coming years.
According to the plan, the city is looking to levy $23,000 less in property taxes in 2013, taking in a total of nearly $5.9 million from Anoka’s property owners.
On an average home valued at $127,000 a homeowner will pay $729 in city taxes, down from $743 last year – a $14 reduction.
This leads the way for more detailed budget discussions by the council throughout the month of August, en route to approving a preliminary budget and levy in order for it to be certified with Anoka County. The budget and levy will be finalized in December.
Cruikshank emphasized that the city’s budget goals include providing quality services with less resources. A $10.7 million general fund budget is being proposed, a 5 percent increase over 2012.
The city has $15 million in projects planned for the coming year, including the construction of a parking ramp in the Commuter Rail Transit Village, construction of the River Front Park trail, restoration work on King’s Island, the Mississippi River trail, 2013 street renewal as well as the completion of Castle Field and road and parking improvements along Greenhaven Road.
Plans beyond next year include levy increases of approximately 3.5 percent for 2014 and 2015. Staff are also proposing to use fund balances to get the city through until 2016, a key year for the city.
That is when the Anoka Enterprise Park’s Tax Increment Financing District will sunset, putting about $1 million in annual revenues back into the general fund.
Cruikshank is forecasting property owners could see a dividend in the form of a six to eight percent reduction in their city taxes that year. Although on paper taxes would increase because of those commercial taxes being paid as part of the TIF district coming back online.
In the meantime, the city will be using its reserves to bridge funding gaps and keep the tax increases small, he said.
“The good news is we have the fund balance reserves there to use for these purposes,” said Cruikshank. “Through good fortune and hard work we’ve had general fund surpluses.”
Councilmember Jeff Weaver asked if the city could give even more tax relief in 2013.
“Home values continue to go down,” said Weaver. “I’d love to see their tax bill go in the same direction.”
Cruikshank said it could, but then pay backs in 2016 would be affected.
Mayor Phil Rice said the city has limited options.
“The only other thing we could do is not to use reserves and levy more, but that’s not the answer,” he said.
Rice also added the concept of property taxes falling alongside home values is a flawed one – that the city needs to continue providing services despite those decreases in value.
Weaver said he is cautious about what will happen to funding the city receives from the state, in terms of local government aid and fiscal disparities.
“I don’t want us to get excited about doing good things and have somebody pull the rug out from under us,”said Weaver.
Finance Director Yager is projecting the city will receive $901,000 in local government aid from the state, the same amount as last year.
“We have a history of really reacting well and being proactive with what’s going on with the economy and the legislature,” said Cruikshank.
He said that employees will likely receive a modest salary increase next year, and at this time he is not proposing any reductions to staff.
Mandy Moran Froemming is at [email protected]