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Serving Northern St. Louis County, Minnesota

Council approves levy increase of 2.75 percent

Despite higher levies for the city and county, many Ely taxpayers should see lower property tax bills next year

Keith Vandervort
Posted 12/8/16

ELY – The city council here, on Tuesday, approved a 2.75-percent levy increase for next year. The decision came after budget discussions last week during the city’s Truth in Taxation …

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Council approves levy increase of 2.75 percent

Despite higher levies for the city and county, many Ely taxpayers should see lower property tax bills next year

Posted

ELY – The city council here, on Tuesday, approved a 2.75-percent levy increase for next year. The decision came after budget discussions last week during the city’s Truth in Taxation hearing.

The total property tax levy in the city of Ely for 2017 is proposed to be $1,665,300, up 2.75 percent from $1,620,800 in 2016.

While councilors were reluctant to raise the levy, which will impact property taxes next year, Mayor Chuck Novak said during last week’s hearing that he’s concerned that the “change in the state Legislature (from DFL to Republican control) mean one of our main revenue sources, the LGA, may be at risk.”

Novak also noted that many Ely residents and business owners have told him their proposed property tax statements, which St. Louis County sent out last month, had shown a decrease for next year, despite proposed levy increases by the city and the county.

But Ely taxpayers may find that their ultimate tax bill will differ somewhat from the proposed tax statement they received last month. According to Deputy St. Louis County Assessor Ben Thomas, that’s because the proposed statements did not include the effect of the renewal of the school district operating levy, which voters approved on Nov. 8. The statements were prepared prior to that vote and so did not include the tax implications of the voters’ decision to renew the levy.

At the same time, most residential and commercial properties experienced valuation reductions, according to Thomas. Based on the county’s most recent sales ratio study, the county reduced most residential properties by 10 percent and commercial properties by 15 percent. Residential properties on Shagawa Lake, located within the city limits, saw a 15 percent reduction. Residential properties in Chandler and Spaulding were the only residential properties that did not experience valuation reductions. The lower valuations on most Ely properties mean that Ely taxpayers will pay a smaller share of the county’s overall tax levy. He said the market value reductions in most parts of Ely is likely to offset the impact of the renewal of the school referendum.

City Council member Al Forsman, a member of the budget committee, expressed a similar view. “We looked long and hard at the numbers and I don’t think most taxpayers will see a net increase in their taxes,” he said.

No citizens attended the public hearing, and following limited comments from the council, Novak was quick to attempt to adjourn the hearing. Clerk-Treasurer Harold Langowski objected and requested to make his budget presentation. “I promise, I will be brief,” he said.

He said the general fund expenditures in the city budget show an increase of just over 11 percent, from $402,300 to $446,900. The Library Fund jumps 11.6 percent to $281,700.

Economic Development Fund shows a 100 percent decrease of $55,100 due to fund transfers from the General Fund into the Ely Economic Development Authority account for ongoing maintenance projects for the Sato Building, Langowski said.

The Cemetery Fund shows a significant 57.5-percent increase from last year, $13,000 to $21,100. “We have been seeing, on an annual basis, additional costs in maintaining the cemetery, such as mowing the grass. We were cutting well into September,” he said.

Debt service is decreasing 35.6 percent in 2017, from $359,600 to $231,600. “This is due to some of our general obligation bonds being retired,” Langowski noted.

The Capital Projects Fund is jumping about 39 percent, from $375,000 to $521,000 “for an increase in streets and infrastructure project proposals and not as much grant money coming in,” he said.

Revenue sources for the proposed 2017 budget for the city of Ely are again led by Local Government Aid (LGA) at 33.1 percent. “This is the largest single source of revenue for the city of Ely to provide services,” Langowski said. “I can’t stress that enough. At 33 percent, if that was to be reduced, you are going to see significant changes in service or your overall property taxes.”

Property taxes account for 26.1 percent of revenue; followed by grants and aids, 19.6 percent; rents, five percent; taconite aid, 4.8 percent; airport sale of fuels, 2.7 percent; streets and infrastructure/maintenance fees, 2.3 percent; and other (charges for services, permits, fines, fees, and donations) 5.9 percent.