Northfield City Council OKs 4.78 Percent Tax Levy Increase

Northfield’s 2012 property tax levy will be lower than first thought.

The Northfield City Council on Tuesday approved a property tax levy of $6.7 million for next year, which is 4.78 percent more than the 2011 levy. The council in September approved a preliminary tax levy increase of 7.2 percent. Council members could have kept that number or decrease it, as they did, but could not have approved a levy increase more than that.

The finalized amount is nearly $128,000 less than the proposed property tax in September.

The city’s proposed tax levy was used to calculate figures on the proposed property tax notices that homeowners received in the mail from the county auditor in November. So, homeowners could see a slightly lower bill when tax statements arrive in their mailboxes next spring.

The approval of the property tax levy—as well as the city’s Housing and Redevelopment Authority and and Economic Development Authority levies and the city’s general fund budget—ended a budgeting process that city leaders kicked off in May.

In the midst of formulating the city’s budgets and levies for next year, councilors met with city department leaders and dealt with the fallout of the Minnesota Legislature's decision to alter how property taxes are calculated.

That legislative change looms large in city property tax bills, said the city’s finance director, Kathleen McBride.

This past summer, the Legislature repealed the Homestead Market Value Credit and replaced it with a Homestead Market Exclusion, meaning local governments no longer receive property tax credits from the state.

In Northfield’s case, property owners will make up more than $300,000 in loss tax credits on their tax bills next year.

That equals about 3 percentage points of next year’s tax levy increase, McBride said.

“There is so much to the tax rate the city does not control,” she said.

During the public hearing about the city budget conducted prior to the council’s levy and budget votes, two of the four residents who spoke said the city needs to work with the Legislature, as well as neighboring cities, counties and school districts, to fix what they called a “regressive” property tax system that harms people on fixed incomes.

In addition to approving the property tax levy Tuesday, the council:

• Unanimously approved the 2012 HRA tax levy of $236,235 for and the city’s general fund budget of $9.86 million.

• Voted 5-2 to approve the EDA levy of $221,384. Councilors Patrick Ganey and Erica Zweifel voted against the levy.