Keeping lid on levies to smooth way in bumpy times

Plymouth, Cottage Grove, Ramsey and Rosemount are in the vanguard of municipal frugality in a down economy.

The four cities from all compass points around the metro area are among a small number that have reduced their 2010 property tax levy from last year. Others that reduced their levies include Elk River, Independence and Maple Plain, city officials said. The cuts range from about half a percent in Plymouth to 9.8 percent in Ramsey.

Cities were required to send maximum tax levy proposals to county officials by last Tuesday. The numbers can't be increased, but they can be trimmed when final city budgets are adopted in December.

A number of other metro cities have kept the lid on their levies. Anoka, Blaine, Oak Grove and Burnsville had no increase over 2009, for example, and levies increased by less than 1 percent in Apple Valley and Coon Rapids.

City officials said they tried to rein in expenses to hold the line on taxes, partly because of the economic downturn that has hit their residents. But they also have had to deal with reduced state aid and tax revenues trimmed by dropping property values.

In Plymouth, "We hear from residents: 'I am struggling, my neighbor is struggling; now is not the time to raise fees or taxes,'" said Mayor Kelli Slavik.

Rachel Walker, policy analysis manager for the League of Minnesota Cities, stays in touch with city officials and has monitored media coverage of 2010 tax levy decisions. She tracked some 67 cities.

"When folks see their property valuations go down, they frequently expect their tax bills to go down. That may or may not happen," Walker said. She said that last year, too, "there was an uptick" in the number of cities with levy decreases.

In the past five years, an annual average of 54 of the state's 855 cities lowered their levy from the previous year, according to records from of the state Department of Revenue.

Gary Carlson, the league's director of intergovernmental relations, said many city officials have told him they are being frugal because of the economy. "It's a real fiscally conservative time. A lot of cities are trying to negotiate no salary increases with unions."

Carlson noted that some factors have helped cities control costs, notably the drop in fuel prices from a year ago.

Effects on services

Ramsey cut its 2010 levy by $933,000 from this year, mostly by using fund reserves. It also cut four jobs -- three building inspectors and a secretary. "I don't think we can reduce taxes any more than we have," said Mayor Bob Ramsey. "You can only get so low."

He said the cuts had minimal effect on services, partly because building permit applications have plummeted. The city mows grass less often along trails and roads. He noted the city still has almost $4 million in its "rainy day" reserve fund.

Most of the other six cities that cut levies also said services weren't seriously impaired.

Plymouth cut 13 jobs, a number in the building division, and most by attrition. Administrative Services Director Cal Portner said impacts of the cuts include fewer park activities, less grass mowing, and eliminating pet licensing and the police bike patrol. The council cut $155,000 from last year's budget.

Portner said a street bond was paid off, avoiding an additional levy of $424,000 next year. But that was more than offset by a loss of about $500,000 in state aid for market value homestead credit in 2010. He said the city budget also benefited from low fuel prices, and two unions that agreed to take no cost-of-living increase.

Rosemount's 2010 levy is 2.3 percent less than this year's. The proposed level also benefited from the early payoff of $525,000 of bonds for trucks and other equipment, said city finance director Jeff May. He said Rosemount property values declined 4.3 percent, less than most other cities in Dakota County. He also noted that this year's city budget didn't rely on $360,000 in state homestead credits that was later unallotted by Gov. Tim Pawlenty.

"We've fortunately been pretty conservative in our estimation of revenues," May said.

Cottage Grove cut its 2010 levy by $291,500. Administrator Ryan Schroeder said the City Council trimmed enough to give homeowners nearly a 7 percent tax cut, about the same as the reduction in city property values. The city also used reserves to pay off debt that reduced the 2010 levy by about $200,000. The city has negotiated zero cost-of-living increases for public works employees and police sergeants and has kept its staff at the 2001 level, Schroeder said. He noted the city keeps a larger reserve fund than many cities to protect against state aid cuts or other emergencies. "It is a cash basis of accounting," Schroeder said. "If we can't pay for it in cash, we're not doing it."

Jim Adams • 612-673-7658