While it might seem like minor progress in light of the hardships of recent years, city staff for South St. Paul and Inver Grove Heights are forecasting a few rays of hope for city finances in the upcoming year.
Despite mixed or declining home values, the tax capacities for both cities is expected to increase in 2014. That change, paired with decisions from the State Legislature this year that absolve cities from paying sales tax and restore financial aid for cities such as South St. Paul, provides more breathing room for municipalities which have trudged through consecutive years of declining revenues during the recession.
South St. Paul
The South St. Paul City Council approved a 0 percent increase to its levy in its Dec. 2 meeting, maintaining the property tax revenue at 2013’s $8.6 million amount. City Administrator Stephen King explained the city was able to keep the levy flat while increasing total spending from $11.3 million in 2013 to $12.1 million in 2014 in part due to legislative action.
The city is projected to save $37,000 thanks to a measure that exempts most city purchases from sales tax; meanwhile, revenues will be bolstered by an additional $627,000 in Local Government Aid.
“This year’s process did have some fairly major outside influences on it,” King said.
The 7 percent spending increase in 2014 will be spread across various departments. The police department will receive an additional $217,000 that will go toward the hiring of a new officer, an internal promotion to sergeant and one internal administrative promotion, as well as increased training.
Funding for the South Metro Fire Department, which services both South St. Paul and West St. Paul, will increase by $98,000 to cover a new labor agreement.
The streets department will receive an additional $100,500 in 2014, including $20,000 to replace trees damaged by hefty storms in 2012.
“I’m excited that we were able to keep the levy at a zero percent increase this year,” Council member Chris Lehmann said at the meeting. “I understand that can always be a challenge, but I think that we do look at every penny we’re spending and do it very carefully, making sure we are maintaining the infrastructure and maintaining the level of service our citizens expect.”
Inver Grove Heights
The Inver Grove Heights City Council approved a 3.5 percent levy increase in its Dec. 9 meeting, raising the city’s property tax revenue from $14.4 million this year to $14.9 million in 2014.
Despite the increased levy, Finance Director Kristi Smith pointed out the final levy is actually $185,000 lower than the preliminary levy the council approved in September, and represents a 0.1 percent decrease in the tax rate.
Legislative changes absolving cities of sales tax on most purchases is projected to save Inver Grove Heights around $107,000 — savings Smith said were used in part to lower the amount the city was seeking in property tax revenues.
"There are direct savings passed on to property owners,” Smith said.
The city’s tax capacity for 2014 will tick upward 3.4 percent to a total of $28.1 million, marking the first increase in four years. While that comes as a welcome change compared to last year’s 5.5 percent drop, the capacity is still well below the pre-recession figure of $35.6 million from 2009.
Public safety remains the city’s largest expense, claiming 48 percent of the city’s general fund. Public works follows at 22 percent, while parks and general government expenses each account for 10 percent.
Following council approval, city budgets and levies now go to Dakota County for final approval before Dec. 30. The City of West St. Paul will finalize its levy and budget in its Dec. 16 meeting, while Mendota Heights will follow suit Dec. 17.