Ramsey’s tax levies will be higher in 2014, but its ability to receive new commercial tax revenue from a decertified tax increment financing district will help keep the tax burden down for property owners.
The levies cover general fund ($7,201,730), debt service ($1,240,828), Economic Development Authority ($121,783) and Housing and Redevelopment Authority ($207,802). This totals $8,772,143. These four levies were $8,185,481 in 2013.
The general fund budget of $9,750,135 is $543,702 less than it was in 2013.
The Ramsey City Council Dec. 10 approved the budgets and levies for the general fund, debt service and HRA on separate 6-1 votes with Councilmember Jason Tossey voting no both times. The HRA is technically a its own taxing authority, but it includes members of the council.
The EDA budget and levy were approved 5-2 with Councilmember Randy Backous joining Tossey in opposition. Although Backous is no fan of both the EDA and HRA levies and prefers more of these budgets be shifted to the general fund. Backous voted for the HRA budget and levy because he agreed with Finance Director Diana Lund’s new methodology that all city staff costs, including benefits, should be factored into the HRA budget rather than only putting a percentage of staff members’ salaries in this budget.
Lund estimated the city would receive about $540,000 in new revenue thanks to the decertification of TIF District No. 2.
Including all tax levies, Lund said the 2014 median value Ramsey home of $161,500 would pay $597.51 in city taxes. The 2013 median value home of $162,500 paid $619.67, so city taxes for this same property would decrease by $22.16, according to Lund.
Tossey felt the city should have used the decertification as an opportunity to lower the property tax burden even further.
“I’d like to see a decrease, not just meeting the tax capacity rate of the previous year,” he said.
What Tossey is referring to is that the tax rate for 2014 is 44.284 percent, which is 0.004 percent lower than 2013.
The $207,802 HRA levy is not included in the tax capacity rate. Lund said this means the HRA levy would not fall under levy limits the state Legislature has put in place.
Lund said the HRA levy is listed under the “other” portion of the property tax statement and is included as part of the rebate you can write off.
According to Councilmember Chris Riley, the big reason the levy is increasing in 2014 is because the debt service levy will be $1,240,828 next year compared with this year’s $644,918. After the city refinanced the municipal center debt, it was able to levy $492,629 in 2013. This amount will increase to $1,018,063 in 2014. Payments are slated to increase slightly each year until it maxes out at $1,256,006 in the final payment year of 2031.
Riley said the decertification of the TIF district will offset the increased debt service costs in 2014.
“Our goal was to keep a steady tax and that’s what we did,” Riley said.
Backous said, “Whether homes go up in value or down in value, the homes are there. They need to be protected, have roads in front of them, having city staff to take care of the administration of the city.”
Jim Bendtsen was the sole speaker during the public hearing and asked if the proposed roads franchise fees the council has yet to vote on was included in the budget.
Lund said it was not included.
There is $500,000 set aside for roads maintenance, which is similar to the budgets of 2011 and 2012 and about $170,000 higher than what it was in 2010. The roads budget was $1,327,500 in 2013 because the city received one-time funding for roads projects.
According to Lund, a new part-time IT staff person will start right away. A new part-time office assistant and two new police officers will come on board March 1, 2014. One will be replacing a retiring officer.
In addition, seven interns for the administration, community development, engineering, building and police departments will start when needed, according to Lund.
Councilmember John LeTourneau said as a “first-timer” to the process of being involved in developing a city budget, he saw that this is something that is continually evolving throughout the year and up to the last minute.
“I do have this amazing appreciation for the complexity of the process and how all this comes together,” he said.
The general fund levy the council approved Dec. 10 is $159,000 less than it approved in September. Anoka County requires all taxing jurisdictions to adopt preliminary levies by mid-September so it can calculate estimated property tax statements before December public hearings.
Tossey is happy city staff figured out a way to cut $159,000 from the budget after the council requested it, but the fact that staff was able to accomplish this in two weeks shows him that more cuts could be found.
The council wished to keep the same tax capacity rate as last year, he said. When final valuation estimates and thus the tax capacity rate did not come in as good as anticipated, cuts needed to be made to the budget, Tossey said.
“We didn’t work from what we needed. We worked from a number and then adapted to that number,” he said. “We can continue to do that more if we did it in two weeks.”
Backous said although he would support the general fund budget and levy, he said, “I have to agree with Councilmember Tossey that it is disturbing that $159,000 just popped out of thin air in two weeks. Why wasn’t that found sooner?”
LeTourneau said the $159,000 did not just pop up out of thin air. When there is a shortfall, you have to give up something, he said.
Mayor Sarah Strommen said there were things given up.
“There have been a number of factors that have occurred recently that led to that savings,” she said. “The hiring of our economic development manager at a (pay and benefits) step lower than we anticipated in the budget, the resignation of a police officer is going to allow us to replace them at a lower step, the number of employees that opted out of health insurance were more than we anticipated.”
EDA and HRA budgets
About three-quarters of the HRA budget and half of the EDA budget are used to pay a portion of city staff’s salary and benefits for the time they spend working on issues financed in this areas.
The city owns property through its HRA and pays $48,000 annually for the parking lot maintenance agreement.
Some areas of focus for the EDA next year will be redevelopment opportunities in the area of 167th and Highway 47 and at the old municipal center site. Staff will handle some issues, but the EDA budget includes $45,000 each year for miscellaneous consultant contracts.
The council in recent years has been decreasing how much comes from these budgets. The EDA budget has ranged from $106,466 to $128,050 between 2012 and 2014. It was $245,326 in 2010 and $287,880 in 2011, mostly because the city spent more on consultant contracts.
The HRA budget ranged from $547,035 and $757,324 between 2010 and 2012, but is now at $207,802 for 2014. The HRA budget used to include a $15,000 monthly fee for the Landform contract to bring developers to The COR, according to Lund, who said the contract ended March 31, 2012.
Backous believes the HRA has got away from what its purpose should be.
“This HRA has really been perversed into a development-type vehicle when it’s really supposed to be for housing redevelopment and blighted areas,” Backous said.
Eric Hagen is at [email protected]