tax base

The city has for some time been addressing a change in the rules that determine how power plants are assessed. This change occurred in February with the result of the city loosing approximately 15% of it tax base as a result of a change in the power plants value. The rule that was adopted provided for a phase in of the adjusted values so that for taxes payable in 2008 the city is faced with a 20% reduction of the total reduction we'll see. That phase in continues with it going to 50% reduction in 2009 and full reduction of value in 2010. In addressing this rule change we worked with legislators to change the tax rate to make the situation of value change revenue neutral. The class rates for electrical property are presently 2% and by changing them to 3% we would be able to keep taxes and budget consistent. The bill that advanced that change was passed in both the Minnesota House and the Senate and made it into the final tax bill. In the end the governor vetoed the bill. The result is reduction in the amount of tax dollars created at the existing city rate. To make up for that either cuts are made or the tax rate will increase. Presently the effort is to find cuts in expenses to address the problem.

The Xcel Trail

As some of you know the city has for some time been working with Xcel to establish a trail within the buffer property they own adjacent and north of the Mississippi River in Becker. Funds have been secured from Sherburne County and the City of Becker as well as from the State of Minnesota through an appropriation in legislation known as a bonding request. This request provided 50% of the funds for the project. As the city moved to establish the project we encountered problematic restrictions in the use of these funds dictated by state rules for using bonding resources. These involve land covenants which make the project infeasible to accomplish as the property will remain in Xcel's ownership with the city/county receiving a long term lease on the property to establish and maintain the trail. After a great deal of effort from a number of parties it was recognized that given the present state of requirements for the bonding funds the project can not be constructed. Our remedy seems to be going back to the legislature in 2008 with a project specific bill authorizing the expenditure of state funds in a manner that is acceptable to all parties.