FAIRMONT - Fairmont City Council has approved a 3 percent property tax levy increase for 2013.
The measure does not necessarily mean a 3 percent tax increase for individual property owners.
City administrator Mike Humpal used his own proposed property tax statement for 2013 as an example. The taxable market value of his home increased slightly from $105,300 to $106,200, but the taxes due to the city dropped from $521 to $511, despite the 3 percent levy hike.
The apparent drop in residents' city taxes is "in part because our tax base has grown," Humpal said.
The 3 percent levy increase is expected to generate an additional $93,620 for the 2013 budget. Anticipated revenue for next year totals $18.75 million. Of the city's revenue sources, state aid comprises 20 percent; federal grants and aid accounts for 29 percent; and local taxes add up to 17 percent of the budget.
One of the biggest alterations in the figures appears to be for lake restoration, which leapt from $9,900 in 2012 to $761,500 for 2013. For some time now, the city has been charging $1 per utility bill for lake restoration. The money from that small fee has slowly built up.
"We will use those funds to pay for projects in 2013," said finance director Paul Hoye, referring to improvements to Lair Road and Woodland Avenue channels that will take place this coming summer.
The budget also shows the tax-increment financing for Cenex Harvest States expires this year, which means the company's taxes to the city will go up in 2013. TIF is an economic development incentive cities can offer to businesses for expansions or projects that might not take place otherwise. In 2014, two new TIF districts will go into effect:?for Bank Midwest and Kahler Automation.
"This program has served us well," said Humpal, crediting the tax break for helping Fairmont's tax base grow.
Among the more controversial items to be found in the city's budget is an anticipated water rate hike of 12 percent in 2013. Water usage has dropped, because of the drought and conservation by customers, but the city still needs money to pay its debt service for the new water treatment plant.
"I don't think we can postpone the increase and be able to pay our debt service," Hoye said.
The council will vote on the water rate increase at its Jan. 28 meeting.
The 2013 budget and levy were approved unanimously, along with the decertification of the Cenex Harvest States TIF district.
In other business, the council said a few goodbyes Monday. It was the last meeting for City Clerk Susan Olson and councilmen Harlan Gorath and Andy Lucas.
The council also adopted a resolution authorizing Southern Minnesota Municipal Power Agency to issue bonds for a portion of the cost of extending a transmission line from North Hampton to Rochester to La Crosse, Wis. Fairmont is a member of the power agency, but Humpal said the cost of the project will not be passed on to local power customers.