Posted 9/12/01 Rush City will see 29% levy increase for 2002 By MaryHelen Swanson There are no new programs. Remember this statement, it will help you understand that budgeting for 2002 is not an easy thing and, to say the least, quite confusing. Remembering that initial statement, residents of Rush City can expect expenses for 2002 to be higher than this yearís - about $57,000 higher. The proposed budget shows a $24,000 increase in Public Works, $13,000 in Police coverage, and Fire Relief, administration and airport costs increase of $18,000 combined. According to information presented at the Sept. 10 council meeting, Public Works will increase due to salaries that will be paid from the General Fund rather than water and sewer funds now that major projects are completed. Police costs will be up due to the annual contract rate change. Rush City contracts with Chisago County for 120 hours of coverage per week. Other increases for next year are due to such things as inflation, increased insurance costs, increased natural gas/utility prices. Again, there are no new programs, no new employees, no major expenditures included in the budget. And even though anticipated revenues for next year are $69,000 higher than this year, the whole process becomes very confusing due to actions by the 2001 Legislature. The Minnesota Legislature has removed the HACA (Homestead and Agriculture Credit Aid) an amount of $72,000 and cut housing aid in half. However, Rush Cityís Local Government Aid is expected to go up $129,000 for a net gain of $51,000. Fire revenue is expected to be up and the city is budgeting for medical debt collections (still due from the hospital) as well. In his explanation of the process, City Administrator Daniel Hoffman noted at this point that it would appear the city has about a $13,000 ìsurplusî for 2002. But, there is more to the story. The State has laid some difficult issues in citiesí laps by reducing the 2002 Tax Capacity ratios for commercial/industrial property by about 40 percent, lowering Tax Capacity ratios for homes over $72,000 and picking up school taxes (General Education funding). At this time, Hoffman does not believe there is any way to calculate the overall effect of the state changes for a particular piece or even class of property. The city is anticipating significant deficit in debt service (tax increment financing districts) due to the formula changes. To offset this, Hoffman is recommending that the ìsurplusî in General Fund revenues go toward the debt service shortfall which could be as high as $146,000. Thus, the city is looking at a 2002 levy of $321,000 which would be broken down as follows: General Fund $189,000 Fire Relief 10,200 Library 2,100 Debt Service 109,800 Fire Equip. 10,000 Total $321,000 ìIn case you are wondering,î Hoffman noted, ìthis would be an approximately 29 percent increase.î But that increase will be in the levy, actual city taxes, Hoffman explained, will probably only be increased by 13 percent. Hoffman explained that the 1994 levy was $48 more than this yearís. And for seven years the city has not increased the property taxes (increases may have been seen if valuation of property changed, however). Hoffman noted that during this time there has been a lot of ìbelt-tighteningî and deferral of equipment purchases . . . and very little street, curb and sidewalk refurbishing. Additionally, with many unknowns still hanging in the air, including how the cityís growth will affect the numbers, Hoffman said the city has no way of knowing what effect this increase, coupled with the Countyís increase and a possible school bond, will have on individual taxes. He anticipates that by December there will be more definitive answers. He also noted that the city could lower the levy before final adoption, pointing to two discretionary items that might be considered: a $5,000 replacement to the General Fund for costs incurred in a recent lawsuit, and the fire equipment fund of $9,800. Anticipated total revenue for 2002 is $673,310 - total expense budget is $864,310. ©Post Review