East Grand Forks officials are considering a relatively large property tax increase to pay for large- and medium-scale projects they’ve set aside in prior budget cycles.
City administrators on Tuesday presented to City Council members a preliminary 2022 budget that would lean on an 8% increase in property tax revenue. City leaders are set to formally consider that levy on Tuesday, Sept. 21. In prior years, they’ve settled on 5% increases.
An 8% larger tax levy would increase the city’s property tax revenue from a budgeted $5.71 million this year to $6.17 million in 2022 -- a $457,000 increase. A 5% levy increase would bring in $285,000 more than this year, according to documents supplied to council members at Tuesday’s council meeting and another one in July.
That additional money would mostly pay for projects that city staff have agreed to set aside to trim expenses in earlier budgets, such as equipment for the city’s police and public works departments and maintenance work on some parks buildings, according to City Administrator David Murphy.
“It’s always better to get it done now than later,” Murphy said. “It never gets less expensive to fix things.”
An 8% increase to the city’s property tax levy doesn’t necessarily translate to an equal increase in residents’ property taxes. That’s because the city sets a figure for total property tax revenue and then county administrators determine how much each property owner needs to pay in order to collectively hit that mark. That means that a larger or more valuable tax base could help raise the $6.17 million the city would ask for if council members agree to the 8% levy increase.
Setting a preliminary levy that high would give city staff an idea of how much it would raise residents’ property taxes because Polk County administrators would do a sort of dry run of their tax process at that rate.
“This would give us a little room to see how it would affect properties,” Finance Director Karla Anderson told council members.
In prior years, Eastside administrators have estimated that 5% increases to the city’s property tax levy have meant 2-3% increases to residents’ property taxes.
The state requires cities to set preliminary property tax levies by the end of the month. East Grand Forks officials are set to certify a final number, which can only be equal to or lower than the preliminary figure, this winter after a state-mandated “truth in taxation” hearing.
Parlaying state grants into federal
In related news, council members didn’t object to a proposal to roll a state-level grant into a federal one to fix up LaFave Park.
City administrators have applied for a grant from the Greater Minnesota Regional Parks and Trails Commission that would pay for 75% of a $1.28 million plan to build new boat ramps at the park and repave some streets there, among other renovations. The city would be on the hook for the remainder.
If the commission awards the grant, East Grand Forks Parks and Recreation Superintendent Reid Huttunen believes that money could count as the local portion of an even larger grant from the U.S. Economic Development Administration, which, if awarded, the city could then use to pay for a multi-million-dollar “master plan” to improve the park.
In short, it could mean the city would be able to parlay the approximately $384,000 it needs to put up for its share of the state grant into as much as $6.4 million from the feds, a figure that’s considerably higher than the approximate $2.5 million wish list of park improvements laid out in the master plan.
The deadline for the federal grant is March 20, 2022, and the city typically hears back about the commission’s grant in February, Huttunen told the Herald. The next step, he said, is updating the LaFave master plan to include current cost estimates. It was first drafted in 2019 and has only been updated in pieces since then.
The money for the federal grants comes from the $1.9 trillion American Rescue Plan Act, which set aside $750 million to help travel, tourism and outdoor recreation -- segments of society that were shut down or nearly shut down during the coronavirus pandemic. Of that, $240 million has been set aside for the grant program to which the city plans to apply.
Huttunen said city staff asked about angling for a grant to help pay for renovations to the baseball diamonds at Stauss Park or the slate of upgrades to a pair of city-owned ice arenas, but said those projects were ineligible.