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Luverne proposes 9.7 percent levy hike

By
Lori Sorenson

For the second year in a row, Luverne’s tax levy could increase by more than 9 percent, according to action at the Sept. 8 City Council meeting.
Council members set the proposed 2021 tax levy at $2,298,720, which represents a 9.67 percent increase ($202,596 more than the current levy).
The levy amount includes $2,157,000 for the general fund and $141,720 for principal and interest on existing debt.
At their Aug. 18 meeting, council members reviewed the operating budget, which included rough outlines of the city’s governmental expenses and revenues.
The governmental budget includes the general fund, airport, pool and capital projects.
Governmental expenditures for 2021 will be roughly $7 million and revenues are estimated at $7.3 million.
They include public safety – law enforcement contract $936,000, fire $289,000 and building official – at $1.4 million, about 27 percent of costs; public works and airport at $1.1 million, about 18 percent of costs; culture and recreation at $1.4 million; and capital outlay at $445,000.
Governmental revenues come in the form of property taxes at roughly $2.3 million, or 32 percent; local government aid from the state at $1.5 million, 21 percent of revenue; and the rest from enterprise funds, fees and other sources.
 
Pool expansion discussion
As part of the budget overview, City Administrator John Call reviewed upcoming projects.
For example, the planned $4.7 million splash pad and fitness center expansion won’t affect the 2021 levy.
“The council will meet again this fall to approve the project, and if approved, it would be bid in January, followed by a bond issue after that, built in spring 2021 and completed spring of 2022,” Call said.
“The timing of it will be pretty good because of the way taxes are working with Premium Minnesota Pork. A major part of that will roll on in 2022.”
Call also mentioned that staff is looking at possible sources of new revenues at the facility, such as more a la carte choices.
“I really think there will be some possibilities to offset increased costs with some increased revenue and not see a tremendous amount of operating costs,” he said.
“At the same time, we do have the philosophy that this is a public pool, we want the people who can afford to pay – we want them to pay, but we also want the prices to be somewhat below what the market rate would be or a for-profit business.”
Call also mentioned that the city is making its final payments on the fire hall and Minnesota West building projects, which will also free up more funds for pool expansion.
 
New public works employee and $25,000 per year for Historical Society
Another new expenditure is an added full-time employee in the public works department.
“Now we’re mowing the industrial park, Uithoven Addition and the Loop,” Call said. “We’re always asking public works for extra projects. The extra manpower could definitely be used. So that’s put into this budget.”
The council also committed to $25,000 per year to support the Historical Society’s operations.
 
Levy increase not the same as property tax increase
The council acknowledged that the city’s levy increased 9.41 percent from 2019 to 2020, but the actual increase in taxes was relatively modest, thanks to Luverne’s overall tax rate.
“We’re setting our levy a little bit higher, and as our tax capacity grows, we keep our rate somewhat stable,” Call said. “We are growing, and our market values are increasing and that’s good for our fiscal health.”
A $150,000 home for example, saw an actual property tax increase of 1.3 percent in 2020, despite the levy increase of 9.41 percent.
“We have a low tax rate — among the lowest in southwest Minnesota with comparable communities,” Call said.
“And I want to thank the school district and county for the role they play in watching their budgets and keeping spending low. That keeps the total levy low for all of our taxpayers.”
 
Local government aid
The council discussed Local Government Aid, which was established by the Minnesota Legislature in 1972 to help cities that have greater needs than what they could reasonably cover in property taxes.
The current state budget has been strained by pandemic-related expenditures and fewer tax dollars coming in, so Call said it’s not likely there will be an LGA increase in a state budget deficit.
Statute requires the preliminary levy amount to be set in September, and the final levy won’t be certified until December, after the December truth in taxation hearing.
The amount could be adjusted lower by then, but by statute it can’t be increas

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