By Patrick Tepoorten

After years of relatively flat tax growth, Rush City taxpayers may be in for a substantial increase in 2008. Next year's levy could represent as much as a 50.9 percent increase over 2007.

The largest increase to next year's levy is likely to be in the area of debt service. Back in the late 1990s, the city utilized a public facilities authority (PFA) loan to make citywide improvements to its sewer system, built two water towers, opened two wells, and improved a lift station, among other things.

Until 2008, the city was paying half the debt service on the loan with industrial TIF district number two. But that district will be decertified at the end of this year, leaving the city looking for the capital to cover 100 percent of the $400,000 annual payment.

To that end, the city's preliminary budget includes a $100,000 levy for debt service on the PFA loan. City administrator Amy Mell is still hopeful that figure can be reduced by the time the city must certify its levy, Dec. 10.

In the meantime, the city is looking at other ways to cover the debt service as well. "We have to do some more research on how we plan on paying for it," said Mell. "We're trying to see if there is any other way, and we're going to keep trying."

The city's water and sewer fund has been covering half of the annual payment, and it will be scrutinized between now and final levy certification to see what it can withstand. Can the fund cover more of the annual payment out of current revenues? Or, will water and sewer rates need to be increased to help cover the annual payment?

The city will commission a study to look at water and sewer rates to determine how much it might need to be increased to pay the debt. Mell is hopeful the study can be completed in time for final levy certification.

Yet another industrial TIF district does cover a small portion of the payment, and the city will see an increase in revenue to the general fund due to the decertification of TIF two. That revenue could also be used to help pay off the PFA loan.

In the meantime, it is possible that the $100,000 levy is not a one-time expense. The loan payments are scheduled until 2019.

The second largest increase to the 2008 levy is in the general fund, which is set to increase by just over $40,000. Mell explained that, on top of the expected increases, monies have been added to the fund which will ultimately be transferred to new funds earmarked for street, sidewalk, and streetlight improvements. It was a goal of the city council to address perceived deficiencies in these areas.

A new line item has been added this year in order to finance the newly formed Economic Development Authority (EDA). The city will levy $24,000 for the EDA.

The levy increase, from $339,220 in 2007 to $512,039 in 2008, represents a more than 4 percent increase in the city's tax rate over last year.

The bottom line for city taxpayers will be a bigger bill next year. A property with a taxable value of $150,000 will increase from $532.14 to $611.45. Likewise, commercial properties will also see increases depending on value.

Mayor Jim Ertz cautioned taxpayers about reading too much into the proposed increase for the PFA loan. As noted, the city is looking at many other avenues to generate the revenue needed to cover the loan payments. "We needed some latitude, just in case," said Ertz. He does expect there to be increases to sewer and water rates, but added that those increases should have been implemented two years ago.

In any case, when the final levy certification comes around, Ertz expects it to look a lot better for taxpayers. "It will be tolerable. Much more in line with what is typical."

Comment from Pat , 9/20/07

The LEVY is going up 50% but it appears that the tax base change must have changed. This levy nets an increase of $79.31 ($611.45 - $532.14) or about 15% increase in taxes on a $150,000 home per the figures quoted.... I'm not saying this is acceptable, but the headlines are very misleading being false.