Preliminary Levy

The Minnesota Department of Revenue (DOR) made a large change this year with the way utility and pipeline property is valued. The result of the change involves a devaluation of Investor Owned Utilities in Electric an average of 27%. In Becker the overall reduction in net tax capacity will be 15% by 2010. Given the large decrease in values the rule change made by DOR will be phased in over a 3 year period. In 2008 we’ll see a reduction of 20% of the difference between the old value and new reduced value. For 2009 that difference will increase to 50% and with taxes payable in 2010 the reduction will be complete with the total devaluation, due to the change in rules, taking place.

The city council has been working on a budget that anticipates cutting of some expenditures ($173,900) and a small increase in taxes. The preliminary levy shows an increase of $35,944. This increase is 0.69%. Keeping the increase low is good news but the resulting estimated tax rate, given the reduction in taxable property values, has been estimated to increase from 31.33 to 32.9075. This is an increase in rate of about 1.6.

The council, by law, must set the preliminary levy by September 15, 2007. This means the preliminary levy will be set on September 4th. With the preliminary levy set the amount can not increase but can decrease. The city will continue to look for ways of trimming the budget until the final levy is set at the end of the year. Any feedback the public may have concerning the budget would be appreciated prior to the September 4th meeting and subsequently thereafter.

As many of you know legislation this year was pursued to address the loss of value. A bill was passed in both the House and Senate and included in the final omnibus tax bill. After the session closed the governor vetoed this bill for other reasons. By doing this the rule change became effective and created the loss in value we’re addressing within this budget. As indicated above we have two more years of phasing to address. We also have a strong desire to again seek legislation to resolve the problem of lost value with the legislature next year.