The Detroit Lakes City Council approved a 2020 city property tax levy of $5,745,991 on Tuesday, Dec. 10, a 4.5% increase over this year's levy.
That translates into an additional $247,500 next year. About half of that will go toward personnel costs and half toward equipment and improvements.
Here’s the breakdown:
- $100,000 will go toward personnel costs.
- Another $25,000 toward legal fees with the addition of a part-time city prosecutor.
- There will be a $58,000 injection into the capital reserve for a new Public Works building.
- There will be a $10,000 hike in capital funds for police equipment, $10,000 for public works, and $10,000 for parks.
- The public library will see a $20,000 hike in operating and capital funds.
- The remaining $15,000 will go toward an increase for debt service on Special Assessment bonds.
A bigger tax pie
In a growing city, there is a bigger pie to slice up when it comes to paying taxes. And because the city's tax base grew 9% this year, most property owners will not see higher property taxes next year, and could well see a decrease in their city property taxes, said City Finance Officer Pam Slifka.
“We have a great tax capacity in this town,” she said. “A lot of it is attributable to the great commercial businesses we have here.”
The council on Tuesday also set a 2020 budget of just over $34 million. Both the $34 million budget and $5.75 million levy were approved at a public hearing during the regular city council meeting.
City utilities, liquor store help keep taxes low
In several ways, Detroit Lakes is lucky, Slifka said. Both its electrical utility and its liquor store are big money-makers, which helps keep the levy down.
The electric utility will transfer $605,000 to the general fund next year, and the liquor store will transfer about $561,000.
Without those two enterprise funds, “the levy would have to increase 20% to provide residents with the same level of service they’re getting today,” she said.
The city will also receive about $632,000 in Local Government Aid from the state. That’s the same amount as this year, but down by about $150,000 from two years ago -- and down from $1.6 million in 2001.
Where the taxes go
The city provides good bang for the tax buck, Slifka said. For instance, the owner of a $140,000 home will pay about $465 in city taxes next year.
- The biggest chunks of that go to paying debt service ($89.25), police protection ($88.85) and street maintenance ($66.97).
- The smallest amounts go to the Development Authority ($1.59), the Community Center ($4.04), and the sports arena ($4.41).
- In the middle, among others are the library ($23.86), snow removal ($17.83), and the airport ($10.72).
“I sure wish I could get someone to come out and do snow removal (at my house) for $17.88 a year,” she said.
At 41.2%, Detroit Lakes last year had one of the lowest tax rates of 10 comparable cities -- about a third lower than East Grand Forks (67.7%) and nearly half that of Brainerd (76.9%). It was substantially lower than Fergus Falls (57%), Bemidji (52%), Crookston (54.8%), and Baxter (51.4%), according to Slifka.
The combined tax rate last year of Detroit Lakes, Becker County, the Detroit Lakes School District and special taxing districts was 87%. The other nine cities all had a combined tax rate over 100%, with Thief River Falls the highest at 143.7%.