A 2 percent levy increase likely in Andover

The Andover City Council is on the verge of approving a 2 percent tax levy increase at its Dec. 17 meeting, but the total amount would still be slightly less than levies seen in 2010 and 2011.

Councilmember Julie Trude said people expect local government to maintain good roads, parks and police and fire protection and these things are not cheap. She does not want Andover to get into the situation the city of Ramsey is in where it is contemplating an $8 monthly franchise fee on both electric and natural gas bills to pay for roads maintenance.

“The city does have aging infrastructure,” Trude said. “We’ve been enjoying the bubble of growth. People living here got the benefit of the new people coming and not needing their roads done and not needing playgrounds replaced.”

The city’s total levy in 2014 equals $10,843,925. Approximately 68.57 percent of this is for the day-to-day operational expenses, while 19.1 percent will be used to pay off the debt for a number of things such as the Andover YMCA/Community Center, open space purchases, construction of Fire Station No. 3 and equipment purchases, and 12.33 percent will be for the capital projects/watershed levy.

Only one couple came to a Dec. 3 public hearing on the proposed 2014 levy and budget and their question was one councilmembers said they have heard from many residents in recent years. Their home’s market value went down by a half-percent, but their city taxes went up about 7 percent.

City Administrator Jim Dickinson offered to look at their tax bill and explain the specific situation, but in general, the reason some folks would see greater than a 2 percent tax increase for their city taxes is because some property values did not go down as much as others or could have increased.

Despite the fact that Andover added close to 150 new housing units in 2013, next year’s taxable market value for the whole community will still be 2.33 percent lower than it was this year, according to Dickinson, who said this factors in commercial, industrial and residential.

“The good part for them is their value dropped very little in comparison to others in the city of Andover,” Dickinson said.

“The bad part about that is everything is proportionally done when the taxes are allocated so if your value didn’t go down as much as others, that’s where you’re seeing the increase.”

Mayor Mike Gamache said the city has made cuts to the budget when it is able to. The $10,843,925 proposed levy for 2014 is $12,374 less than it was in 2010 and 2011. The council in 2012 decreased its levy by $225,000 to $10,631,299 and kept this same amount in 2013.

Gamache said in last five years the city has had layoffs and furloughs for staff. There is a 2 percent cost of living pay increase in the 2014 budget.

The sheriff’s office will provide the same level of service, but its contract with Andover will increase by 2.82 percent to $2,818,132 because of a 2 percent union wage increase, a state directed employer Public Employees Retirement Association contribution increase and a health insurance increase.

The Affordable Health Care Act and use in Andover’s own group for health insurance is affecting health insurance costs for the city, Dickinson said.

However, he said that a reduction in health insurance forecasts as well as gas and electric costs and property and auto insurance estimates being lower are big reasons why the proposed 2014 levy that the council will vote on Dec. 17 is $136,750 less than what the council preliminarily approved in September.

What this means is Andover residents will pay lower city property taxes than what was listed on the statements the county mailed out before the December public hearing.

“We’re one of the leanest operating cities in the metro,” Councilmember Mike Knight said.

About 79 percent of Andover’s 2014 revenue will come from property taxes. The next biggest contributors are charges for services (7 percent), intergovernmental revenue (6 percent) and licenses and permits (3 percent).

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 roads projects. This falls under intergovernmental revenue.

One thing impacting the levy increase is the city refunding the bonds for the community center in 2012, according to Dickinson. While this is a big reason for the debt service levy increasing in 2014, Dickinson said the city will save around $4 million over the long term by this refinancing.

The city annually looks at refinancing debt, but Dickinson said there is no good opportunity to do so this next year.

Councilmember Sheri Bukkila said she does not like any increase, but the council has tried to do gradual increases, rather than have years with dramatic spikes.

“The last thing you want to see is a 10 to 15 percent increase if we haven’t planned appropriately,” Bukkila said.

 

Eric Hagen is at
eric.hagen@ecm-inc.com

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