Falls proposes 3-percent levy increase

The levy may be reduced prior to its final adoption in December.

Falls City Councilor Cynthia Jaksa, who also serves as the chair of the city’s Finance and Legislation Committee, said the proposed 2012 budget has been set at $12.7 million. This year’s budget was set at $12.5 million. Monday’s action on the proposed levy and budget was unanimous, she said.

Local government aid paid to the city by the state was cut by $283,000 for 2012, she said.

“If LGA hadn’t been cut, our revenues would have been equal to expenditures for 2012,” she said. That LGA cut, she said, represents 14 percent of the levy.

“If we were going to recover that, we would have raised the levy 14 percent,” she said. “That was never a serious consideration.”

In deciding on the levy increase, councilors weighed the effect of the state’s elimination of the market value homestead credit, which Jaksa said is “already putting an increased burden on the people in town.”

Under the MVHC program, Jaksa explained that property owners with a home valued less than $400,000 received a credit on their individual property tax statement, reducing the property tax they owed.

The state provided to the local government the money — $180,000 for International Falls — that it did not collect through taxes because of the credit.

Now, she said, the formula has changed to tax properties at a lesser value and so the state will not provide the money to the governments. Instead, other properties — non-homesteaded properties — will see higher taxes to make up the difference, said Jaksa of the complicated tax system.

“The $180,000 will come to the city; we didn’t realize a cut, but it shifted from the state to non-homesteaded property owners,” Jaksa explained.

Meanwhile, the city will use some of its reserves to help fund the budget, she said, adding that the city has reserve amounts that exceed the state’s requirement.

The 2012 budget shows an additional $200,000 in the ambulance budget, she said but noted that the additional costs will be offset by new ambulance revenue.

Additional spending in 2012 will come in the form of capital improvements, she said.

In prior years, she said the city cut the budget and cut improvements.

“Changes in operating costs take time, through attrition and restructuring,” she said. “But to turn on a dime, like we did when (Gov. Tim) Pawlenty said we would not get our LGA promised, everybody deferred capital outlay projects.”

This year, the city will not defer those projects, she said.

“We will go ahead with projects and get stuff done,” she said. “It’s cheapest now in the business cycle, it keeps people employed locally, and it helps the environment of the community.”