Marshall considers setting $7M levy
MARSHALL — Next week, the Marshall City Council will be considering a 2020 levy of more than $7 million. But while that would be an increase of just under 4% from 2019, Marshall city staff said it could have been higher.
The city’s proposed 2020 budget makes use of increases in state aid funding, city reserves and revenue from sources like the municipal liquor store to help lower the levy, said Marshall City Administrator Sharon Hanson.
Hanson and Marshall City Assessor David Parsons gave a report on the city’s proposed 2020 levy and budget on Tuesday night, as part of Marshall’s annual “Truth In Taxation” hearing.
The city is proposing a $7.056 million levy for 2020.
“This particular year, we’re proposing a 3.99% increase,” Hanson said. That would translate to a city property tax increase of $9 on a house valued at $100,000, or an increase of $35 on a house valued at $300,000.
“I think, overall preliminary levy increases for the state were about 7.5%, so we’re quite lower than the statewide average” for cities, Hanson said.
“We have made some changes from the (Marshall) preliminary levy,” which the city council set in September, Hanson said. One change was that the city would put off hiring a proposed additional employee in the street department.
A city can set a final levy lower, but not higher, than its preliminary levy.
City staff said Marshall’s tax capacity value for 2019-20 was about $12.427 million.
“Think of this as your gross tax capacity. We’ll need to subtract any Tax Increment Financing or any other programs like that to get your net tax capacity for 2020,” said Marshall city assessor David Parsons.
After making those adjustments, Marshall’s tax capacity is $12.172 million, an increase of 1.03% over the previous year, Hanson said.
Hanson said about half of city taxes are paid for by commercial and industrial properties, and residential homesteads pay about 33%. Tax rates for commercial and industrial properties are higher than for residential properties, Hanson said. “So when we have growth and new construction, it’s really important to see that business, commercial and industrial growth. It really helps lower our tax rate or moderate the tax rate,” she said.
Hanson also went over the proposed city budget as part of the Truth In Taxation hearing.
“The increase in Local Government Aid was extremely helpful,” with the city receiving about $115,000 in new revenue from the state of Minnesota. The increase brought Marshall’s LGA back to 2002 levels — without it, the levy would be 1.4% higher, Hanson said. But even through the increase was helpful, Hanson said LGA funds still hadn’t grown to keep up with the pace of inflation.
Hanson said other factors also had an impact on what the 2020 levy would be. The city will be using a larger amount of revenue from the municipal liquor store, to help keep property taxes lower.
Hanson said the city is budgeting to transfer $300,000 from the liquor store into the general fund in 2020. She said the city also expects to use about $160,000 in reserves, “Again, in efforts to keep the 2020 levy low.”
“We included $250,000 for debt reduction in the 2020 levy,” Hanson said.
City debt reduction was something Marshall residents had raised concerns about, said council member James Lozinski.
“A lot of our levy increase is being driven by what the community wants,” Lozinski said.
Other expenditures that will have an impact on the city budget and levy include cost-of-living increases for employee pay, and increases in library, Economic Development Authority and snow removal funding.
“I believe at the end of 2018 we were about $70,000 overbudget in snow removal,” Hanson said. It remains to be seen how well the city’s 2019 snow removal budget will fare, she said.