The Cannon Falls City Council approved a levy reduction of 3% for 2014 at its December 3 meeting.
The total levy approved was for $2,171,075, down from $2,238,425 last year.
Combined with an estimated higher tax capacity, residential, commercial, and industrial taxes are expected to be lower in 2014.
Since 2009, the Council has kept the levy steady or lower. In 2009, the levy was $2,354,915.
The overall tax levy is made up of the general levy and the debt levy. For 2014, the general levy is at $1,771,175, down from $1,775,125 last year. The general levy had reached $1,962,924 in 2009, but has been trending lower since then. The debt levy drops from $463,300 in 2013 to $399,900 in 2014.
Higher expenses for 2014 include $14,750 for elections due to it being an election year; last year election expenses were $450. City administration budget went from $480,450 to $499,950. The information technology budget is up from $68,750 to $79,800. Police budget goes up from $826,795 to $844,035. Public works goes up from $856,010 to %884,125. Engineering goes up from $27,000 to $36,000.
Library expense budget goes up from $397,005 to $403,905. Recycling goes up from $66,200 to $78,600. Cable budget goes from $48,250 to $58,200. Park board budget goes from $25,000 to $40,000. Economic Development budget goes up from $116,400 to $147,450. The Economic Development budget had been receiving funds from Tax Increment Financing Districts in the industrial park, which are expiring.
Lower expenses for 2014 include Mayor and Council dropping from $30,025 to $29,625. Legal expenses were budgeted lower at $71,000 from $77,000. Government buildings budget is reduced from $76,500 to $74,000. Cannon Valley Trail budget was reduced from $162,940 to $158,920. Fire department drops from $218,594 to $203,469.
City administrator Aaron Reeves said big budget items include a $70,000 increase in transfers to the Capital Funds to help cover some capital projects or purchases that have been deferred. Reeves said most departments are seeing agreed upon employee salary increases. Health insurance costs actually came in about 2 percent lower, a savings of $51,900 due to reforms in health insurance pricing. The city will spend $5,000 on a salary review by an outside firm. This was part of the negotiated agreement with the Unions when salaries were frozen during a previous contract negotiation.
Reeves budgeted a savings of $20,00 in reduced sales tax. The State said cities no longer have to pay sales tax. Reeves said actual savings may be $30,000 to $40,000 but wanted to be conservative until he sees how the new numbers actually come in.
On the revenue side, the State is sending the City $616,241 in Local Government Aid in 2014, up from $469,740 last year. Invenergy, in its scheduled payments in lieu of a break on property taxes, will pay the city $517,360, up from $507,500 in 2013. Reeves has miscellaneous revenue (licenses, permits, grants, return on investments, and other items) increasing from $498,906 to $540,236.
The levy taxes cover 43 percent of the budget, LGA covers 21 percent, Invenergy covers 18 percent and miscellaneous revenue covers 18 percent.
In addition to the 3 percent reduction in the levy, Reeves is estimating that the tax capacity of the city will increase from 65.163 to 75.142, which will help lower taxes. The County had severely lowered assessments on commercial, industrial and residential properties in recent years to reflect the collapse in the real estate market. Those assessments generally are now stabilized or moving higher, said Reeves. That rate had been 60.94 in 2009 and has trended higher since then.
Reeves said some new properties have been added to the tax rolls which also helps spread out the tax burden and the TIF properties are now added to the tax roll, which also helps spread the burden.
The sewer and water funds are self sustaining, which helps the general city fund, said Reeves. Council member LeRoy McCusker had suggested the city reduce its reserves and help lower sewer and water bills, but his suggestion gained no traction.
Reeves presented estimates from financial consultant Ehlers and Associates on expected city tax impacts. A $150,000 residential property with homestead status could see city taxes drop from $948 to $822. A commercial/industrial property valued at $500,000 could see city taxes drop from $6,951 to $6,027. An apartment complex valued at $300,000 could see city taxes drop from $2,818 to $2,444.