Typical Home Tax Bill to Shrink in 2013 Even As City Budget Grows

The owner of a median-priced home would pay about $18 less in Eden Prairie property taxes next year under a preliminary tax levy the City Council approved this month.

The budget and tax levy should actually tick up a bit in 2013. But sinking home values and rising values for other types of property have shifted the tax burden away from homeowners and onto commercial and industrial properties.

When a property holds its value better than other properties, that property pays a greater share in taxes. The median home value for this year is $312,600—down 4.4 percent from last year’s median home value of $327,000, said Finance Manager Sue Kotchevar. By contrast, other property values increased 1 percent.

Last year, the tax bill for a median-priced home grew by $6 to $7, said City Manager Rick Getschow.

The preliminary budget proposal, which covers the second year of a two-year budget cycle, would grow the budget 2.5 percent to $42.8 million.

The city forecasted a 3- to 3.5-percent increase when officials first put the plan together. However, city staff was able to find additional savings, primarily in health insurance, Getschow said.

The tax levy—or the portion of the budget paid by local property taxes—would grow by 0.9 percent, the same as it did last year, to $32.5 million.

Councilman Ron Case noted that the increase was small enough the city could have kept the levy flat. But he added that Eden Prairie has buttressed its budget with savings over the past few years and needs to wean itself off of that.

“We’ve been living on borrowed money, and we’re trying to undo a cycle that we’ve gotten ourselves into,” Case said.

In the past two to three years, the city has trimmed its annual operating deficit from $1.6 million to a projected $500,000 for 2013, Getschow said.

This month’s vote is not the final word on budget matters. The council will grant final approval Dec. 4. The city can decrease the budget and tax levy but can’t increase them.