NORTH MANKATO — A combination of city, county and school property levies will likely mean slightly higher taxes for North Mankato residents in 2020, but increasing property valuations mean some residents could pay more than local governments are estimating.
North Mankato residents will see a slight decrease in the city portion of their property tax bills thanks to new market value growth over the past year, but school district and county tax portions are set to slightly increase.
All that’s assuming homeowners won’t have their property values change — an unlikely event, given that Nicollet County assessed residential properties earlier this year. Most properties will likely go up in value, but those increases may not be as much as county officials first thought.
The city of North Mankato’s levy will increase by 1.6% to about $6.7 million, but the city’s tax rate, which officials use to calculate property taxes, will decrease by 1.4%. That’s lower than the 0.6% rate decrease city officials projected in September, due to county-level fluctuations in assessment values.
Kevin McCann, North Mankato’s finance director, said those values likely won’t get set until the end of the year as county officials take property sales, homestead factors and other factors into account.
“The growth of property values and new construction was greater than the amount of the tax levy increase,” McCann said. “That’s why the rate is essentially going down greater than we thought.”
A home valued at about $200,000 will have a tax decrease of about $17. A business valued at about the same price will get a tax decrease of about $48. An industrial business in upper North Mankato valued at about $3.5 million will get a $967 tax decrease.
Despite the tax rate decrease, the city will still net about $111,000 in new funding.
Early estimates from Nicollet County officials showed North Mankato’s market value has grown about 3.1%, or about $37.5 million, over the past year. New construction, additions or remodels have brought in about $20.6 million in new tax base growth.
North Mankato’s proposed 2020 budget will include more spending on health insurance, a new part-time street department employee, slight raises for the North Mankato City Council that won’t go into effect until 2021, a 0.5% food and beverage sales tax and about $4.7 million in infrastructure and capital project spending.
The North Mankato City Council will review the 2020 budget and its tax impact at its Dec. 2 meeting and approve the budget on Dec. 16.
Property owners in North Mankato, along with those in Eagle Lake, Skyline, Madison Lake and adjacent rural townships, will contribute 1.3% more revenue to Mankato Area Public Schools in 2020 — $366,000 more than the $27.8 million collected this year.
State per-pupil aid is the largest revenue source for the district. When combined with property taxes, that aid will push the total general fund revenue to $108.4 million — a 4% increase, said Tom Sager, director of business services for the district.
About a quarter of that increase reflects achievement integration aid the state is providing to districts with a particularly diverse student population. Student enrollment growth drives most of the rest of the increase in the general fund revenue, which is largely established by a funding formula set by the Legislature.
“The total levy is driven by many variables, not the least of which is the number of students,” Sager said, noting that rising enrollment brings the need for more teachers, supplies, busing and other services. “... The state formula acknowledges that and allows the levy to increase.”
Personnel expenses — which make up 82% of the district’s general fund budget — are the biggest cost driver in the budget.
“We’re in the learning business,” Sager said. “The work that needs to be done needs to be done by people.”
Along with pay raises for staff, the cost of benefits — particularly medical plans — continues to push up costs.
“The ongoing expense related to insurance is a challenge for all organizations these days,” he said.
Nicollet County will likely stick to a 5.25% tax levy increase for 2020 to cover increasing health insurance costs, wage increases and 3.5 new staff positions in its health and human services and technology departments.
County officials say the tax levy would raise just over $23 million with the remainder of the budget funded by state and federal funds and fees.
The taxable market value in the county has gone up $111 million this past year, with 35% of that new construction, much of it in North Mankato. In the county, most homes, commercial and residential properties are likely to see their taxable values increase next year while farmland values will be flat.
Of county taxes paid, 52% will come from residential properties, 33% from ag land and 15% from commercial industrial property taxes.
For a home valued at $150,000 that has no market value increase in 2020, the additional taxes would be $8 next year. A similar home that sees a 5% value increase will pay $53 more in taxes.
Commercial/industrial properties, which are expected to see about a 6% value increase, and are valued at $530,000, would pay $389 more in property taxes next year.
Most farmland taxes should remain unchanged.
Staff writers Mark Fischenich and Tim Krohn contributed to this story.