After a series of preliminary budget meetings in August, Detroit Lakes is penciling in a 10.2% property tax levy for 2022.
An average home in Detroit Lakes, valued at $191,000, can expect an increase of $37.07 on their 2022 property taxes compared to the previous year.
The proposed levy increase is more than the 6% tax increase in 2021, but residents will be getting three major additional benefits, said Heidi Tumberg, finance officer for Detroit Lakes.
"The first thing is, we're adding a parks employee," said Tumberg. The city also is taking steps offset a possible drop in state funding and the levy increase will help fund a home repair program.
In the 2022 budget, the Detroit Lakes Housing and Redevelopment Authority will receive $120,000 from its own property tax levy to implement a new affordable housing repair program designed at saving and preserving less expensive housing in Detroit Lakes.
"The idea is to keep our existing, affordable ownership properties in good shape so they remain viable," said Kurt Keena, executive director at the Detroit Lakes Housing and Redevelopment Authority. "If you lose (an affordable home), you can't possibly replace it. You can't build something new to replace it for anywhere near the cost."
The program will be designed for lower income residents to make repairs to their homes. Repairing a leaky roof, fixing a foundation, or replacing a furnace are few of the many home repair options that will be available through this new program, he said.
Residents who qualify will be able to apply for 0% interest deferred loans against the property from a minimum $3,000 to a maximum $12,000 loan amount, according to the program outline presented to the city's finance committee.
"We should be able to help about 10 homeowners with this first batch of money," said Keena. "And then assuming that we can prove that the program works and there is a need for it, then the council may in subsequent years decide to levy more."
The 2022 budget also anticipates a reduction in the local government aid funding from the state beginning in 2023, if the state doesn't update their aid allocation formula, she said.
"In 2021, the Legislature went forward with this tax bill that held cities harmless, so for 2022 we won't be losing any LGA," said Tumberg. "The caveat to that is, if they don't tweak the formula next year and get everyone to buy into that, whatever that tweak might look like, we could be losing more."
The city is budgeting for $537,802 in LGA funding from the state in 2022.
The third major increase for the 2022 budget is the addition of a new full-time city parks employee, which the parks department has been asking for a long time, Tumberg said.
Expenses for the budget process are difficult to predict, but, based on spending levels from previous years, she said health insurance costs, the amount of building permits granted by the city and the unknowns associated with the new police station could be line items that may need adjusting.
"Our health insurance has been going up like crazy," said Tumberg. "Building permit revenues are really volatile, they are pretty low right now, I mean not extremely low because we still have projects going on, but they are not at the level they were and I think part of that, too, is the costs and availability of building projects.
The Detroit Lakes Police Department has a 2021 budget line reserved for $50,000 for body cameras. Police Chief Steven Todd previously said a lot will need to occur before body cameras can be worn by local officers, like public hearings on the potential department policy that would need to be adopted by the City Council, a better cost estimate as to the ongoing costs associated with the program, and staffing needs for the potential program.
The taxable capacity for Detroit Lakes is projected to be 42.88% in 2022, which is up only slightly from the 40.71% in 2020.
Additionally, the nearly $1 million in federal funding allocated to Detroit Lakes from the American Rescue Plan Act has not been factored into any budget calculation since council members are still awaiting guidance on what they can, and cannot, spend the federal funds on, she said.
The preliminary budget is expected to be discussed at the next Detroit Lakes finance committee meeting on Tuesday, Sept. 14, at 3 p.m. in the City Hall conference room. A meeting of the full City Council will also be held on Sept. 14 at 5 p.m. in council chambers.
Putting together a city budget and projecting taxes for a continually changing community can be challenging, Tumberg said, but the reward can be seen in all the completed projects around town.
"It's exciting to see what difference we are making, I mean, big picture, developing goals, and then doing things to reach those goals, that's exciting," said Tumberg. "And you can see the improvements in the city, you can see South Washington Avenue and how it looks awesome. It's so beautiful and it was an expensive project, but there are so many things that help make our community better and it's fun to kind of be a little part of that."