SSP to keep taxes flat for 2014

For South St. Paul residents, the outlook for 2014 is mixed: home values are projected to decrease yet again, but the tax rate will remain unchanged.

For city officials, the outlook is marginally better. Despite lackluster residential values, the total tax capacity of the city ticked up by 1 percent, and overall revenues are expected to increase by more than 5 percent.

The preliminary budget and levy approved by the South St. Paul City Council in its Sept. 3 meeting will keep the city’s property-tax rate the same as 2013, for a total levy of $8.6 million. Total spending is slated to increase by about $640,000 from last year, but city staff says the difference will be covered thanks to a favorable change in state policy that will lead to an increase in financial assistance for South St. Paul.

This past session the state Legislature enacted changes to the Local Government Aid program, which redistributes revenues to Minnesota cities to help with operations, for the first time since 2003. The reforms are expected to increase South St. Paul’s share by $627,000 compared to 2013, for a total LGA payout of $1.4 million in 2014.

In the past, however, the state government has not always delivered the entire LGA allotment promised due to its own budget struggles, and the city council has said that it plans to reduce its reliance on state assistance in the long term.

“Historically, we would project, and we wouldn’t necessarily receive all we projected,” Michelle Pietrick, city finance director, told the council at the Sept. 3 meeting.

What recovery?

Home values remain a disappointment for South St. Paul. Despite signs of an improving economy, the median value of South St. Paul home is projected to decrease by nearly 1 percent in 2014 to $136,400.

The change is in line with the varied home values across Dakota County. Apple Valley and Burnsville are projected to see median home values increase by more than 3 percent, while South St. Paul’s neighbors West St. Paul and Inver Grove Heights are both expected to decline slightly.

On a budget

Notable new expenses in the preliminary 2014 budget include a renegotiated contract with the South Metro Fire Department, which will cost the city an additional $100,000 compared to this year.

Personnel costs are also increasing in the police department by around $100,000 because of internal promotions and the hiring of a new officer. The police department receives another $33,000 in the preliminary budget to cover new training and community outreach programs as well as new contracted services.

The city is also setting aside $20,000 in 2014 to replant trees in public spaces that sustained heavy damage in this year’s storms.

Overall, 81 percent of the 2014 levy would go toward the city’s general fund, which covers the majority of departmental and operations expenses. The remainder goes toward a variety of areas, including the South St. Paul Library, the Wakota Arena, capital spending projects and debt service.

After voting to approve the preliminary budget and levy, South St. Paul Mayor Beth Baumann emphasized that the council could not raise the tax rate from the preliminary level.

“It cannot go up,” Baumann said. “It can only go down if we choose. I just wanted to capitalize that.”

From here, the city’s budget and levy must be submitted to Dakota County for approval by Sept. 16. The council can continue to tinker with the budget following that date; a final budget will be presented in a public hearing at the Dec. 2 city council meeting.

Luke Reiter can be reached at lreiter@lillinews.com or at 651-748-7815.

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Comments

The South St. Paul preliminary budget, which was covered in the Sept. 8 issue, will bring tax rate changes for some property owners in 2014. While the city’s total tax levy will not increase in 2014, tax rates and individual parcel taxes are dependent on property values and property owners could see rate and tax changes as a result of new valuations and the type of property they own. The South-West Review regrets the error.

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