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Marshall Council sets 2019 budget, levy

MARSHALL — The Marshall City Council approved a 2019 budget and levy on Tuesday, although in the process it triggered discussion about Marshall’s city tax policies.

In three separate votes, council members voted 5-1 to approve the 2019 budget, a levy of $6.78 million, and a 2019 capital improvement plan. But after pointing out that Marshall’s city average tax rates have been going up in recent years, council member Glenn Bayerkohler said the council should consider creating guidelines setting a limit on the rate.

Other council members and city staff disagreed with that idea. A tax rate limit wouldn’t be workable, because rates are affected by too many factors outside the city’s control, they said.

The levy being recommended at Tuesday’s council meeting was $6,785,471, which would be an increase of 6.43 percent from 2018. Marshall City Administrator Sharon Hanson said the levy factors in a 4.67 percent increase in Marshall’s tax capacity, and a 1.76 percent levy increase.

“The impact on the tax rate overall was minimal,” Hanson said.

The 2019 budget includes about $12.06 million in revenues and $12.18 million in expenditures, with $121,732 expected in reserve spending.

Hanson said there were two main influences on the recommended levy for next year. One influence was that Local Government Aid for Marshall has been flat — it’s currently at levels less than what the city received in 2002, she said. Infrastructure work in Marshall had an influence on the proposed levy. General fund spending for Marshall has been relatively flat and had “minimal” influence on the levy, she said.

The recommended levy would work out to a property tax increase of $12 a year for the average residential property in Marshall, and an increase of $85 a year for the average commercial property.

Bayerkohler said he was concerned about how Marshall’s tax capacity and tax rate have changed over the past several years.

“You would think as our tax capacity goes up, our tax rate would actually go down,” due to economies of scale, he said. Bayerkohler said Marshall’s tax rate had been around 49 percent in 2009, but “In recent years it’s jumped up to 54 and 55 percent as an average tax rate.”

“That, to me, is not a good sign,” Bayerkohler said. “I’d like to see the council pass a guideline … that we would like to keep the city of Marshall tax rate at 50 percent or below.” The city already has similar guidelines for maintaining reserve balances, he said.

Council member John DeCramer said he had reservations about Bayerkohler’s idea. He said the city’s levy reflects what the community’s needs and desires are at that point in time. Some expenses, like road maintenance and snow removal, can vary depending on conditions.

“I really hesitate to put any kind of guidelines in there on an average, because there is no city that is an average. We’re all over the place.”

Hanson and Marshall Mayor Bob Byrnes also talked about factors influencing the city levy from year to year. Those factors included things beyond the city’s control, like changes in different types of property values, and actions like the state’s 2003 unallotment for Local Government Aid.

“It’s really difficult to set a benchmark when the other benchmarks are being moved by outside forces,” Hanson said.

Byrnes said the city budget and levy process has been going on for some time, and included council work sessions.

“It’s a little troubling to bring up a new proposal on the evening that the tax levy is on the agenda,” Byrnes said. He also emphasized that the net levy increase being proposed was 1.76 percent.

“Tax rate is one measure. But the more important measure is what am I actually going to pay, and how is that compared to what I paid this past year?” he said. “And the answer to that is 1.76 percent, average over all the classifications, recognizing there are differences in classifications depending on the valuation of the property, and the type of property that it is.”

“I’m not proposing we adopt the 50 percent rule tonight,” Bayerkohler said. “I’m saying it’s something we should be looking at.”

“I think the public has a right to hear these comments,” Bayerkohler said.

In three separate motions, the council took action on the 2019 budget, the levy, and the 2019 capital improvements plan. Each motion passed 5-1, with Bayerkohler casting the dissenting vote each time.

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