12/13/2012 10:49:00 AM CF commercial/industrial tax up 5.3% despite lower levy
by Ken Haggerty
Despite a city of Cannon Falls levy that will be down about 1.3 percent from 2012, commercial and industrial property owners will see taxes go up about 5.3 percent in 2013, in large part due to about a 15 percent decline in the valuation of residential property in the City.
The Cannon Falls City Council approved the 2013 budget at its December 4 meeting and was briefed on projected tax impacts by city administrator Aaron Reeves.
"A 15 percent reduction in residential property values is a big reduction to have to deal with," said Reeves. Reeves said the total net tax capacity of Cannon Falls with the new assessments was down about $200,000 (6.25 percent), from $3.2 million to $3.0 million. The total city tax rate goes from 70.92 percent to 74.66 percent. From 2007 to 2011, tax capacity rates ranged from 60.8 to 64.4.
Reeves presented some expected city tax impacts by type and value. Residential homestead property with a taxable market value below $150,000 will see a city tax decrease. For a $150,000 residential property, it would be down .8 percent ($7). For a $100,000 residential property, it would be down 6.7 percent ($38).
A $250,000 home would see a city tax increase of 3.1 percent ($53). For a $350,000 home, the increase would be 4.7 percent ($115).
Commercial/industrial and apartments/non-homestead residential properties will all see a 5.3 percent city tax increase. For a commercial/industrial property with a $300,000 taxable market value, that would mean a city tax increase of $196. A $750,000 property would see city taxes go up $533.
Reeves said the County assessments usually trail the market by over a year and thinks that by next year, these assessments should be showing signs of stability.
Property taxes also took a hit last year when the State changed the homestead credit formula.
Reeves also said that the city has seen some new residential building and some new commercial/industrial construction this year (Banks Outdoors, Cannon Powersports, Gemini, Lorentz Meats) and that more is coming down the pipe (Molenaar clinic, World Food Processing, Casey's General Store). He said this will also help improve the tax capacity situation in the city.
The total levy was $2,238,425. $463,366 of that is debt levy. Taxes are projected to cover 47 percent of general fund revenue. Invenergy pays property taxes, but also makes payments that are made in lieu of higher property taxes. Those payments cover 18 percent of the general fund. Local Government Aid from the State is expected to cover 17 percent. Other revenues cover the remaining 18 percent.
Council member LeRoy McCusker questioned if the City needed General Fund reserves of 57 percent. Reeves said the State recommends 35 to 50 percent. Reeves said with the State budget in such constant flux over the last few years and the economy still soft, he has erred on the conservative side. McCusker said the Council should look hard at that number next year.