TAX NEWS - 2010

Minnesota Tax: Stillwater taxes will likely dip as city settles budget

Tax rates were the target of some scrutiny Tuesday night, as the Stillwater City Council held its annual Truth-in-Taxation hearing.

The meeting gave residents the opportunity to express their opinion about their proposed 2010 property taxes,

The proposed 2010 levy for the city, at just over $10.1 million, is a $10,421 increase from 2009.

The city's tax rate is going up, from 47.86 percent to 49.41 percent, but taxes should be going down for property owners, said Larry Hansen, city administrator. The reason is that while the tax rate is going up slightly, property valuations are estimated to fall 3.6 percent from 2009 to 2010.

"Taxes are actually going to be just a hair less than last year," Hansen said during a presentation during the hearing.

Hansen explained that not everyone will see a decrease, as property valuations will vary.

But the difference between actual taxes paid and tax rates was a point of contention for one of the two citizens who spoke at the hearing.

Tim Press, who said he's lived in Stillwater 17 years, was unhappy with the way Hansen conveyed how property taxes would change in 2010. He said there should be more clarification.

"If a property owner's value has remained stable year over year, are their taxes higher, lower or unchanged?" he asked. "If our tax rate went up, how can our taxes go down?"

Mayor Ken Harycki told Press he was correct that the rate is going up. But Harycki also pointed out that the tax rate actually decreased a few years ago, because property valuations were climbing.

Still, he agreed with Press' point.

"It's kind of an illusion," Harycki said, "because our property values are falling, but the minute they rebound to where they were, you have yourself an increase next year."

For another Stillwater resident, Paul Randall, a reduction in his home's valuation didn't result in lower city taxes.

"I'm sure you can understand how I was really perplexed when I got my proposed property tax for 2010, my valuation of my property went down, but my property taxes went up," he said.

While Randall said he understood that the city was dealing with many factors, including unallotment in local government aid, he felt the city could do a better job of cutting.

"It is incumbent on you people to get the cost of this operation down," he said.

Press agreed.

"I firmly believe that every penny the city spends needs to be scrutinized," he said. "The council should ask themselves, 'What is the benefit to the citizens and taxpayers of Stillwater that are paying taxes?' It's vitally important and I'm not sure that question is being asked enough."

Earlier in the night, the city did reduce its proposed levy by $60,000. Hansen said that reduction came as a result of lower health care costs than expected.

However, the city also lost some revenue in its overall budget, as $40,000 it collected in fire inspection fees this year will be returned. The council voted two weeks ago to give back those fees, as it was pointed out that the city didn't have the authority to collect them.