East Grand Forks leaders are scheduled to consider their spending plan for next year and the tax increase that would help pay for it.
City Council members on Tuesday, Dec. 10, will consider a proposed budget for 2020 and a planned 5% increase to city property tax revenue. The budget, as presented in meeting materials, would spend about $180,000 from the city’s reserves, which have swelled to more than $6 million and are beyond the limit set in a 2011 fund balance policy. The city took in $588,000 more than it spent in 2018, and the general idea for 2020 is to spend some reserve cash to avoid a larger property tax hike.
“We’re being intentional about using part of that surplus from the previous year to hopefully hold the line on taxes in the current year,” said Mayor Steve Gander.
The property tax increase doesn’t necessarily mean that individual property owners will owe the city 5% more next year, though. Minnesota cities set specific dollar amounts they’ll levy in property taxes -- East Grand Forks is set to be $5,442,241 next year -- and counties work back from that number when they collect them. City and Polk County staff anticipate a slightly larger tax base in East Grand Forks, and that larger base would account for at least some of the increase.
Documents supplied to council members at a Nov. 26 meeting indicate that, of four sample homes whose tax statements the city tracks, the highest increase would be $49 dollars on a home valued at $229,000 -- a 3.18% increase. A sample commercial property valued at $329,000 would owe another $151 -- a 10.86% hike. City staff are aiming for 2% to 3% increases for individual homeowners.
City staff pared down department heads’ budget requests by about $60,000 since August, when initial estimates put the city’s projected expenses about $241,000 higher than its projected revenue after the 5% property tax bump.
Some of the funding requests that didn’t make the cut are a new police SUV and a large riding mower.
The 2020 budget is distinct from East Grand Forks leaders’ concurrent consideration of a new sales tax. City voters approved a 1% sales tax in 2016, and the city uses the proceeds from that to pay back the loan it took to renovate a public pool. The tax is set to expire in less than a year, which means the city could ask voters to approve another one that could pay for a range of hoped-for projects, including all or part of a $24 million plan to add a second rink to the East Grand Forks Civic Center and turn the VFW Memorial Arena into an all-season fieldhouse. The city is soliciting residents' opinions about those projects.
The Minnesota Legislature and Eastside voters would both need to OK a new sales tax.