The Free Press, Mankato, MN

November 30, 2013

State aid stabilizes taxes in N. Mankato

By Dan Linehan

---- — NORTH MANKATO — Think of property taxes like a three-legged stool: they’re a combination of levies set by your city, county and school district. So, any analysis of your property taxes should take this three-part format.

Here’s how the trifecta shakes out for North Mankato residents:

The city’s levy is stable. The county’s levy is up as much as 9.5 percent, but the rapid rises in farmland value will blunt that increase. The school district’s levy is dropping, though that’s more than offset by the referendum voters passed in November.

All told, homeowners in North Mankato whose homes don’t increase in value should see slight increases in their property taxes.

City holds the line

For the third time in 10 years, North Mankato’s levy will not change; it was preliminarily set at $5.4 million and cannot be raised before it’s finalized next month.

The 2014 budget’s primary purpose, according to a memo from City Administrator John Harrenstein, is to demonstrate “a plan is in place resolving the systemic fiscal issues leading to the (credit) downgrade.”

The city took a different strategy to resolve those issues — especially concerning the payback $3.2 million of internal loans — than were suggested by a consultant it hired.

The consultant recommended raising the levy by $100,000 next year (a 1.8 percent levy increase) to help pay back those internal debts. But the city has decided against raising the levy and will pay back those debts in an estimated 10 years instead of four.

That decision, combined with a state aid increase of $200,000, has allowed the city to maintain a zero levy increase. Thanks to a 1.1 percent tax base increase, a home with a stable value will actually have a slightly smaller North Mankato tax next year.

County land values rise

In that respect, the Nicollet County levy is similar. The tax rate is decreasing, but that’s thanks more to the rising tax base — due to valuation increases on farmland — than to levy restraint. The county also got an increase in state aid, in this case of about $260,000.

The preliminary levy increase is 9.5 percent, though that could decline.

The increase is something of a catch-up after several years of low increases and the use of reserves, County Administrator Ryan Krosch said. The average levy increase from 2010 to 2013 was 2.7 percent.

“Rather than put additional strain on reserves, we want to do a little catchup with our levies,” he said. “We’re hoping it won’t be felt because values are increasing.”

As recently as August, the county was planning on a smaller increase.

“We were under the assumption that levy limits would put a great deal of constraint on our ability to levy,” Krosch said.

But a more recent state analysis of levy limits showed the county had more freedom to levy.

The bottom line, according to Krosch, is that the total county tax rate is declining.

Schools cut levy

The final leg of the tax stool in North Mankato, Mankato Area Public Schools, is reducing its levy by 5.9 percent, to $16.5 million. Increases to per-pupil state aid are largely to thank, said Jerry Kolander, business director for the schools.

For a $150,000 home, that tax cut is about two-thirds as much as the increase for the $69.5 million referendum voters approved in November. In other words, the school portion of taxes is rising slightly because the referendum cost, at least for a $150,000 home, is a little larger than the tax cut.

North Mankato budget hearings City of North Mankato: 7 p.m. Dec. 2, City Hall, 1001 Belgrade Avenue Mankato Area Public Schools: 5:30 p.m. Dec. 3, Mankato, Intergovernmental Center, 10 Civic Center Plaza Nicollet County: 6:30 p.m. Dec. 5, St. Peter, Nicollet County Government Center, 501 South Minnesota Avenue