ELY – City Council members here approved a seven-percent increase in the 2021 tax levy this week on the heels of a Truth in Taxation public hearing that failed to generate even one interested …
ELY – City Council members here approved a seven-percent increase in the 2021 tax levy this week on the heels of a Truth in Taxation public hearing that failed to generate even one interested community member.
City staff explained the 2021 budget and levy proposal at the state-mandated public hearing on Dec. 8 and council members gave their final approval during their last meeting of the year on Tuesday night.
The approved city tax is $1,892,300 for 2021, an increase of $123,800 over 2020.
The Taxable Net Tax Capacity remains steady at $1,496,148, compared to $1,469,450 in 2020. “This is a very minimal change from last year,” said Clerk-Treasurer Harold Langowski.
The Estimated Taxable Market Value for 2021 also remains steady at $149,724,357, compared to $149, 464,152 in 2020. “From last year, we saw an actual increase, but again, it is minimal,” he said.
Tax scenarios provided by city staff from St. Louis County auditors showed tax hikes from 11 percent to as much as 24 percent on residential properties, and about 10 percent for commercial properties.
“For example, on a (residential) $50,000 value, in 2021, the payable amount in 2020 was $285.17 (including, city, county, school and special taxes), and in 2021, with our seven-percent increase in the levy, would equate to $340.81, or a $55.64 increase,” Langowski said. “And for the $250,000 classification the 2020 payable tax was $4,145.94, and payable 2021 is at $4,558.83, or an increase of $412.89 on residential.”
He also compared commercial property rate increases. On a $50,000 valuation property the tax increase is just over $100 for 2021, and on a $200,000 commercial valuation, the increase would be almost $400.
“The increase in levied taxes is split between all tax classifications by St. Louis County,” Langowski said. “We can only assume that some of the bigger contributors are being assessed less of the levy and the rest of the classifications end up having to pay a higher percentage. If every parcel from 2020 paid the same portion of the levy in 2021, the percentage increase of the proposed tax would be seven percent across all the classifications. This is not the case. The county auditor sets the rates the classifications are taxed at. We can’t assume that we are collecting from fewer properties. I do not think many parcels were taken off the tax rolls in 2020.”
The $123,800 increase in the city property tax levy for 2021 shows an increase of $70,000 (14.4 percent) in property tax for capital projects. The library fund also shows a city tax increase of $45,700 (15.5 percent). Debt service is decreasing from $315,100 to $311,500.
Langowski highlighted a list of capital projects in the 2021 budget, totaling $1,322,900. Property taxes collected of $558,900 will help fund the projects. Federal and state grants of $634,000 and street maintenance fees of $130,000 also help pay for those projects. “We’re looking at reconstruction of West Chapman Street from Second Avenue to the water tower, West Shagawa Road and Washington Street, from the alley to Third Avenue East,” he said. “We have two grant applications in, one to St. Louis County Community Development Block Grant and another to Iron Range Resources and Rehabilitation. Hopefully we get the funds to minimize the impact on property taxes.”
The public hearing on the city’s budget did stress the importance of state assistance in the form of Local Government Aid. Ely is likely to receive $2,448,500 in 2021, an increase from $2,364,000 in 2020. That additional $84,500 is a 3.14-percent increase.
Coupled with another $331,000 in state aid (Taconite and PERA) LGA makes up more than 75 percent of the city’s general fund revenue.
“(This) is the only way we continue to exist as we do,” said council member Heidi Omerza. “I can’t stress how important this is. I’m not concerned about the coming year. It is going to be in 2022 that we are going to need to be vigilant about LGA. That is something that we are going to have to keep on our radar. We, as a council ,must remain cognizant of that and not let that go.”
Prior to approving the 2021 city budget and adopting the final tax levy this week, the city’s Budget Committee met on Monday night to take one last look at the city’s finances. “We run a very tight ship with a small amount of employees, and there isn’t a lot of room for us to make changes,” council member Al Forsman said.
“To make changes comes down to cutting out projects. We wouldn’t be able to continue to service our city infrastructure the way we do,” he continued. “Other things that are affected by this budget, like health insurance and things like that, we really have no control over. As much as I would like to reduce this from the seven-percent (increase), it would not be fair to our city to do that.”