Council Unanimously Approves 2012 Tax Levy, Budget

After six months of budget wrangling, the Eagan City Council unanimously approved the final 2012 tax levy and budget with little fanfare on Tuesday night.

“It always seemed anticlimactic to approve this thing after having worked on it so much," Mayor Mike Maguire joked just before council members cast their vote on the motion.

The council voted to reduce the city's total tax levy from approximately $28,247,000 in 2011 to $27,425,000 in 2012—a 2.9 percent reduction. The council also approved a 1.3 percent increase to the city's general fund budget, from $27,687,900 in 2011 to $28,040,000 in 2012.

The council's decisions on Monday mark the culmination of months of intensive budget negotiations that began in June when the city began its budgeting process. On Nov. 22, the city held a public open house on the budget, and followed that meeting up with its annual Truth in Taxation hearing on Dec. 6.

The increase in the city's 2012 budget is primarily to account for inflation, according to city officials who spoke earlier this month at the Truth in Taxation hearing. Public safety costs are projected to account for 46 percent of the 2012 budget expenditures, according to City Administrator Thomas Hedges, while general government expenses—which includes administrative, human resources and election-related costs—comprises 22 percent of the projected expenses.

Property taxes levied by the city will likely account for roughly 77 percent of the city's total revenue in 2012, Hedges added.

Despite the reduction in the 2012 tax levy, Eagan residents may still see a property tax increase this year, thanks to the implementation of the state's Market Value Exclusion program.

The program, which replaced the state's Market Value Homestead Credit this year, effectively excludes a portion of certain properties from the city's taxable market value, shrinking the city's tax base. In order to bring in the same amount of tax dollars as before, city officials had to increase the tax rates for all property in the community.

The burden will fall heaviest on commercial and industrial property owners, Director of Administrative Services Gene VanOverbeke noted in his presentation on Dec. 6. Those properties, VanOverbeke said, are not eligible for the market value exclusion program, but are still expected to see a tax increase as a result of the program.

The average value of a home in Eagan is projected to decline from $241,744 this year to $237,696 in 2012, city officials noted in their presentation earlier this month. Despite that decline, the taxes on an average home will see a modest increase, from $800 to $805, city officials said.

Click here to see a slideshow from the city's budget and tax levy presentation.