At this point, the Andover City Council is budgeting for a 3.29 percent property tax levy increase in 2014, but it could reduce it when the final 2014 budget and levy is approved in December.
Minnesota state law dictates that taxing entities such as cities must certify a preliminary levy to their home county by mid-September so that the county can prepare and mail estimated tax statements to property owners before December public hearings held at government meetings. The caveat is a final levy cannot be higher than the preliminary levy approved in early September. It can remain the same or be lower.
“We have to start somewhere,” Councilmember Tony Howard said. “I challenge us at this (council) table and staff to reduce it as far as we can and do the best job possible for the residents of Andover.”
The council last increased the levy between 2009 and 2010 when the gross city levy bumped up from $10,593,520 to $10,856,299.
The council maintained the levy in 2011 and then approved a levy decrease to $10,631,299 in 2012, which was the same amount as the 2013 levy.
Councilmember Mike Knight believes Andover is one of the leanest operating cities around. The budget includes an additional maintenance worker to keep up with maintenance of additional parks, notably the 40-acre park under construction on the northeast corner of 161st Avenue and Tulip Street, and roads in new developments.
“It’s gotten to the point where if we’re going to maintain our services and take on new infrastructure, improved efficiencies will only go so far,” said City Administrator Jim Dickinson.
Dickinson said there are still a lot of variables that could change the budget from increased building activity to finding out what will and will not be sales tax exempt government purchases starting in 2014. Dickinson said whether Andover employees get a cost of living raise in 2014 has yet to be discussed.
The city could also get more concrete information on property valuations. The county is estimating Andover could see a 2.03 percent overall taxable market value reduction in 2014, which is much better than what the city went through in 2012 with a 10.84 percent reduction. For property owners, even though their property values have been going down, they could still pay higher taxes if their values did not go down as much as others.
The currently proposed 2014 Andover property tax levy is $10,980,675. It comprises the general fund levy to cover operational expenses ($7,572,641), the debt service levy to cover bond issues ranging from equipment purchases to paying the city’s share of the Andover YMCA/Community Center construction costs ($2,071,066), and a capital projects levy ($1,336,968).
Andover will get Local Government Aid from the state for the first time since 2002, Dickinson said. The additional $74,655 will be used for road projects.
Dickinson said the council sets budget goals every year. They include not having a debt service levy higher than 25 percent of the overall levy and keeping the fund balance at 45 percent or greater of next year’s projected expenditures.
Both goals are being met with this projected budget. The debt service levy is 18.86 percent of the total levy and the fund balance percentage is 50 percent. Cities have these high fund balances to cover expenditures during the first half of the year before property tax revenue the county collects starts rolling in.
Although Councilmember Sheri Bukkila said the city is at a disadvantage of setting its following year budget without knowing what the state Legislature will do, she does not want to see a 3.29 percent levy increase.
“I’m hopeful to see a reduction by December,” Bukkila said. “I’ve been around long enough to see that after we set the levy, the Legislature comes through with a bunch of things after the fact that we didn’t anticipate and that we had to figure out with the funds we had allocated.”
Councilmember Julie Trude said there is uncertainty with how much building there will be, which brings revenue into the community through license and permit fees.
“The uncertainty is we had a good year with home construction, but we don’t have a lot of vacant lots,” Trude said.
According to a 2013 budget update Dickinson gave to the council at its Aug. 27 workshop, Andover by the end of July had collected 119 percent of its projected license and permit revenue and 86 percent of its charges for services revenue that it had projected for all of this year.
“We’ve been keeping things going, bucking the trends on building activities and projects, but we’re not always going to be building a Walmart or close to 100 homes,” he said.
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