City View, By Chad Adams

The City Council today will be hearing comments from the public on the city’s proposed 2017 tax levy and budget. We encourage the public to attend the meeting to learn about the proposed 2017 budget and provide input on the budget and tax levy. The council will be considering a staff recommended reduction of the preliminary tax levy set in September from a 2.61 percent increase to a 1.29 percent increase. The additional revenue is being used to pay for debt service payments on road improvement projects. 

Despite the 1.29 percent tax levy increase, the city’s tax base has increased by 3.01 percent, which results in an average overall tax payment decrease of $17 per year for a residential home valued at $100,000. An increase in the tax base is a very positive sign for our growing local economy and helps spread the tax levy against more properties, including newly constructed housing and commercial projects over the past couple of years.

City leaders have been attempting to keep property tax increases low, or be reduced as will most commonly be the case for 2017, to help offset needed increases in water rates over the past five years.  This goal has been achieved by maintaining the city’s operating tax levy at the same amount for the fifth year in a row. During those five years, there have been modest increases in the debt service tax levy, minor to no increases in city sewer rates, but larger increases in city water rates.

Water rates are recommended to increase by 7 percent in 2017 for the purpose of paying for water infrastructure replacement or maintenance.  Much of the city’s water infrastructure is aging and has surpassed its useful life, often times over 70-plus years, and needs replacement. Additional revenue from water rate increases will help the city avoid having to borrow/bond for the infrastructure, which would result in increased costs on interest due on the bonds. For an average residential home, the water and sewer rates will result in a $24 annual increase for 2017.

The city will be completing a water and sewer rate study every two years to ensure that we are meeting revenue forecasts and establishing rates that will responsibly maintain infrastructure without overburdening homeowners and business owners. Fortunately, we have developed a solid capital improvement plan and 15-year financial management plan that greatly assists our forecasting abilities for the next several years.

We also recognize the need to be competitive with our tax and utility rate burden on homeowners and businesses. Every year we compare our rates to other greater Minnesota communities. For the past few years, our combined water and sewer rates are below the 33rd percentile, meaning that 67 percent of other communities are paying more per gallon than Albert Lea residents and businesses. More specifically, in 2016 our water rates were in the 20th percentile, sewer rates in the 36th percentile, with combined water and sewer in the 28th percentile.

I have enjoyed the many conversations with residents and businesses over the past several months in regards to the city budget, taxes and utility rates. The city conducted three open house budget forums this fall, in addition to speaking engagements and receiving input at council meetings. We thank everyone for expressing their ideas and opinions on the budget and many other city projects and initiatives.

Chad Adams is the Albert Lea city manager.