Homeowners alarmed by the sizable increase in their estimated city property taxes brought their concerns to the Park Rapids City Council’s truth-in-taxation hearing on Tuesday, Dec. 12.
Courtesy of the City of Park Rapids
City Administrator Angel Weasner made multiple attempts to explain that the estimates sent out by Hubbard County were based on the city’s preliminary budget and tax levy for 2024, set in September.
She noted that the city set the preliminary levy high, with a 33% increase over the 2023 levy, but had made cuts to reduce the increase to 17%. However, it was the 33%-increase version of the levy that went out in the county’s estimated tax letters.
Weasner also stressed that due to development during 2023, the city’s tax capacity increased by over $900,000, spreading the tax burden around.
As a result, she said, the city tax rate is actually decreasing from 2023 to 2024, along with the tax burden on homes whose value remains the same.
However, the concerned homeowners, who were not asked to identify themselves, reported that their property values also went up.
Courtesy of the City of Park Rapids
Questions about where the numbers come from, misconceptions about how the levy works and suspicions about mishandling by the county went round and round throughout the hearing. Weasner’s repeated attempts to explain the process showed little effect.
In her truth-in-taxation slide presentation, Weasner reported:
- The city’s 2023 levy of $3,035,000 was a 3.5% increase from 2022. The final levy for 2024 is $3.55 million, a 17% change from 2023, or an additional $551,966 to fund city operations.
- The city expects to receive $856,523 in local government aid (LGA), an increase of $256,000 from 2023.
- The city is projecting general fund revenues totaling $5,284,000 in 2024, of which 66% will come from the property tax levy, 14% from LGA and 18% from grants and fees for services.
- The general fund expense budget for 2024 totals $4,197,387, a decrease of about $425,000 compared to 2023.
- Broken down by department, this expense budget includes about $1.56 million for police; $662,000 for highways, streets and roads; $425,000 for the fire department; $363,500 for administration; $119,000 for parks; $119,000 for planning and zoning; $109,000 for the public library; $105,000 for general government buildings; $100,000 for ice and snow removal; $97,000 for the city attorney; $91,000 for street lighting; $85,000 for building inspection; $80,000 for unallocated expenses; and decreasing amounts for sidewalks and crosswalks, economic development and assistance, assessing, contractual services (the audit), council expenses, transit, rental housing inspection, natural resources, elections (March presidential primary, August primary and November general election) and plumbing inspections.
- The city’s total net tax capacity for 2024 is $5,688,912, up from $4,754,704 in 2023.
- The city’s estimated tax capacity rate for 2024 is approximately 62.4%, a decrease from 77.2% in 2021. “We have been declining ever since 2021,” Weasner said.
Weasner explained that the county calculates the city’s tax formula. First, it multiplies each property’s taxable market value by its class rate, which equals the tax capacity. Next, it multiplies the tax capacity by the local tax rate to determine the base tax on each property. Then, it subtracts credits and adds referendum levies and the state general tax to reach the amount of taxes due.
Challenged about whether the city’s growth in tax capacity means it will be collecting a tax surplus, Weasner stressed that the city is only collecting the requested dollar amount needed to cover operational expenses, divided between property owners based on assessed values and how the county calculates tax rates.
Weasner calculated that divided between the 1,911 households in Park Rapids, according to the 2020 census, the proposed levy would cost each household an average of $1,858 in 2024, or $154.85 per month if all property values were equal.
For that amount, she said, residents enjoy 24/7 police and fire protection, snow removal, street cleaning and maintenance, building inspections, planning and zoning administration, parks and beautification, access to a public library and a municipal airport, and public transportation.
Council member Liz Stone made separate motions to adopt the final 2024 general fund expense budget and the final 2024 property tax levy. Both motions passed unanimously.
Robin Fish is a staff reporter at the Park Rapids Enterprise. Contact him at rfish@parkrapidsenterprise.com or 218-252-3053.
