Growth adds to city's tax pinch

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Wondering why your property taxes are going up?

If you live in Alexandria, you can blame some of it on growing pains.

The city’s overall expenses are set to increase about 10 percent next year, according to information presented at Monday’s truth in taxation hearing.

Here are some of the main reasons why:

• The city is hiring two more police officers and two new part-time employees – one in the park department and one in the street department.

• The city is increasing its debt retirement payments by $220,000, primarily to cover new bond payments for the waterline extension into the “phase II” annexation area in Alexandria Township.

• The city is increasing its payment to the Alexandria Lakes Area Sanitary District by 10 percent, from $377,650 to $417,154, to help cover the costs of an expansion of the treatment plant.

Those factors – all related to growth – helped bring the city’s proposed 2009 budget to just over $9.55 million.

The city plans to increase its tax levy 7.39 percent to about $4.52 million, the maximum amount set by the state Legislature.

The increase didn’t generate much heat at Monday’s meeting. Only five people from the public showed up.

One resident said his father experienced “sticker shock” when he opened his property tax notice and saw an overall increase of 41 percent.

It turned out, however, that the main reason for the spike was the fact that his father moved into an assisted living facility and his property was reclassified as non-homestead – a factor that could almost double the amount of property taxes, said Mayor Dan Ness.

Another resident who spoke, business owner Ed Rooney, told the council that the local real estate market will put the city in more of a financial squeeze because property values, especially on the commercial side, are decreasing.

“Commercial property isn’t selling,” Rooney said. “No one wants to buy because they think the value will go even lower.”

The lower property values will cut into the city’s tax base, which may force cutbacks in the future – a challenge that Ness said the city is trying to prepare for.

“There will be pain to be shared,” Ness said.

The city’s budget would be in tougher shape if revenues were declining but the city expects them to increase 13 percent next year, from $4.58 million to nearly $5.2 million.

Major increases on the revenue side include:

• $381,000 in additional local government aid from the state.

• $42,000 more in Runestone Community Center revenues.

• $35,000 extra in franchise fees.

• $35,000 more in delinquent taxes.

• $20,000 in fines and forfeitures.

• $26,000 in payment in lieu of taxes from Alexandria Light and Power.

• $15,000 in interest earnings.

Overall, the tax pain of the city’s budget is not as bad as last year when the levy jumped 17.6 percent.

To get the budget within the state levy limit, the city directed city staff to reduce their initial proposed budgets by about $115,000, according to City Administrator Jim Taddei.

The budget generally reflects a 3 percent average increase in employee wages, according to Taddei. The exceptions are with park department employees and selected department heads.

As was the case in 2008, those salaries were increased more than 3 percent over the next two years to match salaries in comparable cities, Taddei said. Park department employees will receive a 9 percent increase in their pay in 2009.

The budget reflects several major improvement projects planned for next year, including:

• Replacement of the floor and refrigeration system at the RCC.

• Reconstructing Dakota Street in the industrial park.

• Overlaying South Broadway from 22nd Avenue to 34th Avenue.

• Constructing a bike path along Geneva Road from McKay Avenue to Birch Avenue. This project, however, may be delayed, Taddei noted.

• Buying a pickup truck and tractor mower for the park department.

• Buying two squad cars for the police department and replacing its radio communications with a digital system.

• Buying a front-end loader and asphalt zipper for the street department.

All these capital improvements are subject to city council approval and available federal, state or city funding.

The city’s budget committee includes Mayor Dan Ness, council member Harvey Weisel, Taddei and ex officio staff Marty Schultz, assistant administrator and Jane Blade, finance director. They set the preliminary budget after interviewing about 20 individuals and organizations.

The council did not take action on the budget. That’s scheduled to happen during its regular meeting on December 8.

Tags: alexandria, tax, levy, growth, truth, in, taxation, hearing