City welcomes feedback on budget, taxesPublished 11:38am Wednesday, December 4, 2013
Column: Guest Column, by Chad Adams
On Monday, the Albert Lea City Council will hear comments from the public on the city’s proposed 2014 tax levy and budget.
In the past several weeks, I’ve spoken to several civic organizations about the proposed budget and tax levy and have appreciated all the great questions and feedback on the budget and other community topics. We’ll provide an overview of our budget Monday and welcome your comments prior to or at the meeting.
There are a number of highlights worth noting regarding the proposed 2014 budget and tax levy.
First, the city was fortunate to receive an increase in our local government aid for 2014 as a result of the 2013 legislative session and compromised bill on a new LGA formula. The city received just under $6.5 million in LGA in 2002 and is expected to receive about $5.1 million in 2014. While the city is receiving an increase from 2013, the amount still falls short of the aid we were receiving a decade ago.
The city will see some relief through a new sales tax exemption on certain municipal purchases. By receiving increased LGA and sales tax relief for 2014, the city set its preliminary general fund tax levy at no increase or 0 percent. The increased revenue and relief allows the city to maintain our current levels of service and to not dip into cash reserves as we had to do for the 2013 budget.
Additionally, the city is now able to fill vacant positions in 2013 and 2014 to provide core essential services. The city is still unable to fill positions cut prior to 2013 and is focusing instead on innovative or creative measures to provide essential services.
Also, due to past year LGA reductions and local economic challenges, the city was not adequately budgeting sufficient funds for large equipment replacement, small capital projects and large street improvements. With increased LGA, sales tax relief, a new financial software system largely in place and accompanying financial policies, the city is better positioning the organization to meet equipment replacement, small capital needs and some street maintenance.
Despite the increase in LGA and sales tax relief, the city has been faced for years with large infrastructure needs in roads and facilities.
In September, the City Council established a 6.74 percent overall increase in the tax levy to pay for bonds and the debt associated with infrastructure projects completed in 2013. Some of those projects included the Broadway reconstruction, West Ninth Street road improvements, Fourth Avenue road improvements, Shoreland Heights area road improvements and long overdue improvements to City Hall’s heating, ventilation and air conditioning.
Fortunately, due to an increased tax base, the 6.74 percent tax levy increase is not resulting in an equivalent 6.74 percent tax increase for residential households that generally have seen little to no market value changes. The city’s preliminary tax rate (formerly referred to as the “mill rate”) changed only minimally for taxes payable 2014.
In essence, the tax levy the city proposes is being spread against a larger tax base. With commercial, industrial and agricultural values generally increasing for taxes payable 2014, these properties are more likely to see an increase in their city portion of the taxes.
For 2014, LGA will represent about a third of the city’s revenue source for our general fund budget. With the new LGA formula change, we are more confident in our ability to forecast a stable future of LGA to Albert Lea.
LGA is only one of many variables that we’ve been analyzing the past few years as part of a long-range financial management plan. Looking ahead, infrastructure improvements that have been delayed because of past budget cuts and LGA reductions will continue to dominate the policy discussion by city leaders. However, we are seeing some local signs of economic recovery through local employers adding jobs, providing facility expansions and building new facilities, which will all add to a broader and more diverse tax base.
With mounting pressures to meet infrastructure needs, the city is focusing on opportunities to further increase the community’s tax base and jobs. We continue to partner with the Albert Lea Economic Development Agency and other agencies to achieve these objectives.
One specific project that we are working to promote for redevelopment is the Freeborn Bank and Jacobson buildings. We have received strong interest in the project and have appreciated the community’s input on the desired uses of the buildings and in the downtown through our summer focus groups and public forum.
The next big step in the project is a deadline of this Friday to receive letters of interest from prospective developers. Check out the city’s website at www.cityofalbertlea.org for more information on the project and timeline.
We also recognize and are beginning to devote more attention to the Blazing Star Landing for redevelopment as a destination location for our residents and visitors to the community. Our National Citizen Survey conducted more than a year ago showed strong support from the community to redevelop the site. We look forward to engaging the public further on the Blazing Star Landing in coming months in partnership with other community agencies and groups.
The city continues to welcome input and feedback on the future direction and priorities for the community. In a few months, the city will set goals for our future, and we encourage your comments through direct contact with staff, elected officials, at council meetings or during my speaking engagements with civic organizations and the public. Feel welcome to contact my office to invite me for a visit to discuss city activities and priorities.
Lastly, I appreciate all the work being conducted by civic groups, the private sector and partnering agencies to invest in our future with the ultimate goal of sustaining and improving our overall quality of life.
Chad Adams is the Albert Lea city manager.