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Majority of Minnesota city preliminary tax levies proposed increases

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Wednesday marked the deadline for many Minnesota cities to turn in their 2016 budgets to the state, and this year East Grand Forks wasn't among those running down to the wire.

The City Council passed the final version of the budget last month, which included a 25 percent increase to the city's property tax levy—the total amount of money raised from those taxes.

Usually, levy increases have a tendency to shrink between their preliminary and final versions, as it did last year when the council voted to cut the increase from 10 to 5 percent, but the increase this year remained as proposed.

Though the council proposed the highest levy hike in years for East Grand Forks, it wasn't the largest proposed among cities in Minnesota this year, according to data collected by the state Department of Revenue. Twenty-two others initially proposed levy increases higher than 25 percent.

The cities' final levy figures won't be available from the state till later this year, but preliminary levies provide some insight into growing needs.

"When cities put together even their preliminary numbers, they're working off needs that they have," said Bradley Peterson, a lobbyist for the Coalition of Greater Minnesota Cities. "So as you're shaving that number down to get to your final, there are needs that are not being met and set aside for the year."

The coalition is an advocate for 87 member cities located outside the Twin Cities metro area, including East Grand Forks, Crookston and Thief River Falls. All but 12 of the coalition's members had initially proposed an increased tax levy.

Overall, 666 of Minnesota's 852 cities proposed preliminary tax increases totaling $106.8 million.

Preliminary levies are considered a starting point for public discussion, Peterson said. Once a levy receives preliminary approval, it cannot be raised but can be decreased.

Generalizing the need for increased property taxes among cities can be difficult, as reasons can vary from city to city.

"Every community kind of has its own story," Peterson said.

The double-digit increase in East Grand Forks raised eyebrows among residents and won't cover everything the city looked to finance next year—a 33 percent increase would have been needed for that.

The reasoning behind the large hike was a complex one spanning years of the city dipping into its reserves to compensate for rising expenses, decreases in government aid and other ripple effects from the Great Recession.

Peterson said it's likely a number of cities are still recovering from the recession, during which they held off on purchasing capital, such as city vehicles, or cut staff through attrition.

"Those are things that, during the Great Recession, cities, rather than laying people off, tried to hold those wages and benefits relatively flat," Peterson said. "And now, there's some catch up that's being done."

The largest increase by percentage in the state was sought by Gillman, a town of just more than 200 people near St. Cloud. As submitted, Gillman's preliminary tax levy for 2016 would be $60,593—a 146.4 increase from the previous year's levy.

East Grand Forks' proposed levy change lead cities in the state's six northwestern counties.

Thief River Falls was not far behind at a 20 percent increase, which it ultimately passed as its final levy.

Within the six-county area, the average proposed increase among cities was 5.6 percent.

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