Red Wing City Council was split Monday, Dec. 3 when trying to decide whether to approve the proposed 2019 tax levy. It passed 4-3.
At the public hearing portion of the Truth in Taxation meeting held prior to the vote, the three citizens who spoke brought up the prospect of tax increases. According to the 2019 Collectible Tax Levy, changes in Red Wing's tax base will result in increases for many residents. In 2018, residential taxes provided 21 percent of the city's tax base. In 2019, that will increase to 25 percent. The main reason for this change is that the public utility portion of the tax base will decrease from 57 percent to 51 percent. The commercial and industrial portion will increase from 13 percent to 14 percent and the "other" category - which includes apartment buildings and rentals- will increase from 8 percent to 10 percent of the tax base.
According to the background of the 2019 proposed tax levy report, "the community's public utility tax base will continue to be less stable and predictable over the next few years. While significant public utility tax base growth occurred from 2012 (to) 2018 it is estimated to decrease 15.20 percent for 2019."
Shifting tax base
There are two primary reasons for the predicted decrease in stability.
The first is regulatory actions pending in the Minnesota Public Utilities Authority. The report states, "the Minnesota Public Utilities Authority is expected to commence regulatory activity in 2019 that will shape Minnesota's future energy mix and the Prairie Island Nuclear Generating Plant's role in that future energy mix. It is estimated that the regulatory activity may take several years to complete. During this time period there will be increased uncertainty and unpredictability regarding the community's long-term tax base."
The other reason is Xcel Energy's attempts to reduce its property taxes. Recently, Xcel won a settlement with the Minnesota Department of Revenue that will reduce the utility's local property tax valuations. Xcel also will continue to seek tax relief due to the company's belief that the Minnesota Department of Revenue overvalued Xcel properties.
The total general city and special levies for 2019 will be $20,281,443. This is nearly a $3 million decrease from the 2018 levy.
Council member Ralph Rauterkus moved adoption of the proposed 2019 levy and voted in its favor.
"With the uncertainty of Xcel, I think this is a prudent measure to go through and decrease our tax levy by 13 percent. We're going to need to be looking at that again next year or the year after to be decreased or kept the same. I guess it's a good first step," Rauterkus said.
Council members Dean Hove and Evan Brown agreed.
Brown told the council during the discussion, "We really do have to think and plan for these changes coming from Xcel, and they are going to pursue them, they have been pretty clear that they will. So I think we need to be smart in that way. And also ... I think that this budget really represents a lot of hard work."
Kim Beise, council president, voted against the proposed levy. He agreed that a lot of work had been done by the council and city employees to prepare the levy; however, Beise said he did not believe that enough work had been put into the 2019 plan. Beise went on to state, "There's things that need to be looked at for our taxpayers. Yes, the survey said that they like taxes in our community. I haven't heard that from anyone I've talked to in the last few weeks. ... I've heard totally the opposite."
Citizens speak up
Beise's statement was an echo of comments made minutes earlier in the Truth and Taxation meeting. Becky Kurtz told the council that everyone she has spoken to has taxes that are increasing dramatically.
"You're going to need affordable housing for everybody if you keep taxing us out of our homes," Kurtz said.
Council member John Becker agreed with Kurtz and expanded on her idea, saying, "About 16 percent of Red Wing is on a fixed income and we're creating an affordable housing situation by driving people out of their homes."
Erin Buss, Beise and Becker voted against the levy as presented. Becky Norton, Brown, Hove and Rauterkus voted in favor.
Beise and Becker also voted against the 2019 budget for Red Wing.
The HRA's 2019 collectable tax levy, the HRA's 2019 budget and Red Wing's fee schedule were all passed unanimously.
The Port Authority's levy will be discussed at the Dec. 10 City Council meeting.
For more information about the 2019 budget and levy, visit the city's website at www.red-wing.org/27/Government.