By ELI LUTGENS
Publisher/Editor
A preliminary 2022 City of New Richland budget proposal calling for a 10.21% residential property tax increase was presented during a public budget hearing, September 13, 2021.
“I don’t want anyone to be alarmed, because right now it looks like a 10.21% increase,” Mayor Gail Schmidt said. “There are reasons for that[...]. So the numbers are ugly. I really don’t want anyone to panic, because there is still work to do. We just have to get this preliminary submitted to the county before the end of September.”
Property Tax Increase
The proposed property tax hike would have owners of residential property valued at $100,000 see an increase from 2021 totals of $888 go to $969 in 2022, an $80 increase. At the high end, for properties valued at $400,000, the increase would be an additional $446. Properties valued at $200,000 would see an increase of $202. Commercial properties valued at $500,000 would see an increase of $1,033 at the proposed rate increase.
The rate may decrease once the city receives its tax rate from the county. “We’re kind of at their mercy because we’re waiting for a tax rate,” Mayor Schmidt said. “I think once we get that tax capacity [rate], that’s gonna bring it down some."
Explanation
The reasons given by Mayor Schmidt for the proposed increase are:
1. Liability insurance increased by 20 percent due to the turmoil in police departments across the state of Minnesota.
2. Workman's compensation increased 12 percent.
3. Health insurance increased six percent.
“These are things we do not have control over,” Mayor Schmidt explained. “Those are big jumps, especially the property and liability.”
Comments/public remarks
“All I can say is it's much less than what we had to pay when we lived in the Twin Cities,” New Richland resident Larry Goehring said. “So we’re happy.”
“Sometimes it is what it is,” Ambulance Director Sarah Sundve said. “You gotta do it.”
“I think in the grand scheme of things if people, when they see that 10 percent, and that seems like really a lot of money, but if you think about that $202 and you break that out over 12 months, it’s really not a whole heck of a lot money to continue to maintain this level of city services that we have,” Police Chief Anthony Martens expressed. “And I understand that we want to go down from there, but I think that’s what everybody needs to understand is that 10 percent isn’t gonna be $1,000. Ten percent is gonna be $200.”
“What worries me is we’re just a piece of the pie,” Mayor Schmidt responded. “The county is in there, the school district, so it could be our ten percent along with everybody else’s ten percent.”
Mayor Schmidt expressed her concerns multiple times throughout the public hearing. “I can’t stress it enough: I don’t want the citizens to panic– because we still have work to do. [...] I’m nervous about it, I’m not gonna lie, because we can only go off the numbers that we have. I for one do not want to put a 10 percent tax increase on anyone.”
Expenses
The council is asking for a general levy of $408,135, an increase of $12,000 from last year, which includes an additional $25,000 for capital reserves in the “project fund reserve.”
An additional $10,500 is included under “civil defense” for a new emergency siren. The hope is that grant opportunities will help offset this cost.
A 2009 Refunding Bond payment of $50,000 in 2022 is on the books for the first time. Meanwhile, a 2012 GO Imp Bond payment of $33,000 is not being paid this year, per the auditors suggestion, as it was ahead of schedule.
Care Center Insurance Question/Expense
The city has been making a $5,500 payment to the care center every month for insurance, the reason for which no one has determined. Mayor Schmidt explained that the city and the care center are both included in their health insurance because the care center is city owned. The city receives the bill for everyone, for which the care center pays their portion. “Then we pay them the $5,500 that no one seems to know what it’s for.”
Mayor Schmidt speculated that, from her time in the clerk's office, she believes it's because the city is partly liable for the insurance cost because the care center is city owned. The city's insurance agent was not aware of this. The hope is that this expense can be eliminated entirely, saving the city close to $70,000 per year.
Plans/cuts
“What we do have control over, we will probably be making some cuts,” Mayor Schmidt said. “For now all of the expenses are built into this budget. So between now and when we have to have the final into the county on Dec. 15, we still have work to do.”
Each department was thoroughly involved in the budget process thus far. The police department cut more than $17,000 from its budget and the fire department cut $3,500.
The ambulance department is looking at their billing system as well. “When we bill, we get only a certain amount back because of medicare deductions, the insurance deductions,” explained Mayor Schmidt. “In the past, those have been shown as an expense. The auditors have suggested we do the revenue differently this year. So that’s a possibility that will eliminate an expense.”
Once the city receives its tax rate and the estimates for Health Insurance, there will most likely be another budget session. The goal is to reduce the health insurance cost by paying a higher deductible rather than the very high premium currently being paid.
“We really need to see this as preliminary,” Mayor Schmidt expressed. “And then we need to sharpen our pencils.”
Revenues
The city usually plans for revenues to be less than what they expect. Despite the low projection, the 2022 budget shows a revenue increase of just under $33,000.
The public hearing budget hearing adjourned at 7:03 p.m.