Council votes to decrease levy, but overall taxes up

The Cloquet City Council voted unanimously to lower the city’s property tax levy by 1.5 percent Tuesday, but City Administrator Aaron Reeves cautioned that not everyone would see a decline in the city’s portion of their property taxes.

“If you have a property that was valued at $200,000 last year but then the county assessor came through and reassessed it at $220,000, even though we may be decreasing our portion of the taxes, you’re being taxed at a higher value,” Reeves said. “You will quite possibly see an increase, although it would be less of an increase than if the city was raising its taxes.”

In fact, very few Cloquet residents probably saw a decrease in the proposed property tax statement that arrived in mailboxes recently, because those figures were based on the preliminary 1 percent increase that the council approved in September. Local governmental bodies such as cities, schools and counties have to approve a preliminary tax levy in September, and a final levy in December. After September the levy amount can decrease, but not increase.

The total tax levy was set at $2,991,500, versus $3,037,000 in 2018.

The decrease passed by the council Tuesday won’t be reflected until the actual tax statements come out in the spring, said Carlton County Assessor Kyle Holmes.

And even then, they shouldn’t be expecting their overall tax bill to decrease. Both the Cloquet School District and Carlton County are expected to approve increases to the levy, along with the Cloquet Area Fire District.

“I would commend/applaud the city on holding the line in their budget and keeping it in check, as every little bit helps, but people shouldn’t expect taxes to go down,” Holmes said.

That was disappointing news to at least one senior-citizen homeowner in Cloquet, who saw her total estimated taxes go from $4,440 to $4,800 this year, an 8 percent increase. Of that, her predicted city taxes went up by $45, county taxes by $125 and school district taxes by a total of about $125, including voter-approved levies. The assessed value of their home increased by $15,000 from last year.

The resident, who asked not to be named, said she has to use about six months of her school district pension to cover taxes and insurance on their one-bedroom home in one of the city’s nicer neighborhoods.

“I don’t think I’ve ever seen a tax bill go down,” she told the Pine Knot News, after sharing her tax statement.

Property owners whose home or business did not increase in value could see a decrease in the city portion of their taxes by almost 6 percent, Reeves pointed out during Tuesday’s meeting. That’s because the city’s tax capacity actually increased 4.3 percent due to new construction and higher home values.

Assessed home values have gone up fairly consistently in recent years, which means higher prices and higher taxes.

Holmes confirmed that his department went door-to-door in the city of Cloquet in 2016, and changed assessed values for the 2017 taxes payable in 2018. Then in 2018 for taxes payable in 2019, he said the Cloquet market remained hot and his office again increased residential values in the city, this time by 8 percent to meet state guidelines, he said.

Holmes added that Cloquet and other areas in Carlton County remain “hot,” so they will probably be increasing values by another 5 percent this spring.

“This is actually quite a bit lower than what I thought we would have to do back in the summer of 2018 but the market has begun to cool off considerably and the increase of 5 percent we are potentially looking at is about a third of what I was expecting to see back in June.”

The vote Tuesday was the first time since 2003 that the city actually decreased its taxes, although the city did hold the line at a zero-percent increase from 2011-14, during the recession.

The Carlton County Board of Commissioners will hold its Truth in Taxation hearing at 6 p.m. Tuesday, Dec. 11 and the Cloquet School District holds its T&T hearing 6 p.m. Monday, Dec. 10. No residents spoke at Tuesday’s Cloquet City Council hearing on the tax levy and city budget.

Residents who want to challenge the assessed value of their property should attend the Board of Appeals meeting in the spring, after the final property tax statements come out, Reeves said.

Budget set

Cloquet City Councilors passed the 2019 budget Tuesday. The budget resolution shows expected 2019 revenues at $21,168,900 and expenditures at $26,780,185, a difference of more than $5.6 million dollars.

City Finance Director Nancy Klassen said the city is basically spending down its reserves to make up the difference between the two figures. The city is taking $4 million from reserves to finance the purchase and renovation of the Members Cooperative Credit Union building, which it plans to use as a combined city hall and police station next year. Another $1 million will come from paying off the final business park bonds from reserves. And close to $500,000 is due to funding for various capital projects, she said.

“The City Administrator recommended the levy decrease since he would like to maintain general fund reserves at the 50-percent-of-expenditures mark versus the 70-percent mark that we previously had,” Klassen said.

Taxes don’t cover all of the bills.

The two biggest revenue sources for the general fund are the local property tax levy (31 percent) and local government aid (LGA) from the state (34 percent). Other sources, including licenses and permits, fines and forfeits, charges for services, and other intergovernmental revenues make up the other third.

Police department funding takes up the biggest slice of general fund expenses, at 36 percent ($3.094 million), while public works gets the next biggest piece at 20 percent ($1.775 million) in 2019. All other city departments fall into the 2-8 percent range.