The Free Press, Mankato, MN

December 8, 2012

St. Peter homeowners to see slight property tax increase

By Mark Fischenich
Free Press Staff Writer

ST PETER — Taxes are rising slightly for average St. Peter homeowners, aided by relatively modest levy increases by local governments and by the property tax shift caused by legislative changes and rising farmland values.

The owner of a $150,000 St. Peter home will see a tax bill just $10 higher in 2013 than what was paid this year.

The St. Peter City Council is keeping its levy increase below the inflation rate once again — a 1.8 percent bump for 2013 after keeping its levy flat this year and inching it up 1 percent in 2010.

So the levy increase is averaging less than 1 percent a year in recent years, even as city services have been maintained at traditional levels, said Finance Director Paula O’Connell.

“We’re happy to have it where it is, keeping it steady for our customers,” O’Connell said.

The $37,500 in additional tax revenue will go mainly to inflationary increases in city costs, particularly health-care premiums.

“We saw a 5 percent increase in our health,” O’Connell said. “Other than that, we’re doing good.”

The city is taking on some new debt to purchase a $535,000 fire truck, but it’s also prepaying about $250,000 of the debt obligation for the St. Peter Community Center.

The St. Peter Public Schools levy increase was preliminarily set at 3.26 percent in September, and the final levy approved by the School Board on Dec. 17 will likely be close to that level, said Supt. Jeff Olson.

Like the city, the district is paying off some bonded debt as part of next year’s budget — which drives up the levy a bit but will save taxpayers $60,000 to $70,000 in the long run, Olson said. The health and safety budget is also rising a bit, covering a variety of health-related building improvements such as asbestos removal.

The 3.26 percent hike would follow a 1 percent increase this year.

“We’re just trying to hold it as level as we possibly can,” Olson said.

Keeping up with the inflationary increases in health benefits for employees is always a challenge. Those premiums increased 5 percent this year and are project to rise as much as 9 percent in 2013.

New contracts with district employees will be negotiated next spring, which will impact the 2014 budget. Actions at the state Capitol in the spring also will be closely watched as the new DFL-dominated Legislature, working with Democratic Gov. Mark Dayton, crafts a new two-year state budget.

And the district is projecting steady enrollment growth of 1-2 percent a year for the next decade. Those factors are the ones that drive school budgets and school levies the most.

“What does the state do? What does enrollment do? And what does compensation do?” Olson said. “Those are the three big things.”

Nicollet County’s 3 percent levy increase is driven largely by inflationary increases in county costs plus three additional employees in the sheriff’s office and one in the Social Services Department, said Bridgette Kennedy, the county auditor and interim county administrator.

But the tax impact is largely being felt by farmers because of changes in property tax law made more than a year ago by the Minnesota Legislature and because of fast-rising valuations of agricultural land coupled with falling valuations on homes. The two factors combined to shift the tax burden away from average- to lower-valued homes and toward ag land.

The shift shows up in the county portion of a St. Peter homeowner’s tax bill because the county has a large amount of agricultural land in its tax base whereas the city has virtually none.

“The ag community is paying a bigger share of the taxes compared to the prior years,” Kennedy said.