Apple Valley Approves Tax Levy Decrease for 2011

For the second year, most Apple Valley taxpayers should see their city tax bill stay the same or decrease in 2011, according to city officials, largely due to declining residential property value assessments, as well as a some cost-saving measures and a reduced tax levy.

The Apple Valley City Council on Thursday held its Truth in Taxation public hearing and approved by a 4-1 vote a $51.7 million budget for 2011. It also approved a $22.7 million tax levy, down nearly $140,000 from this year.

The general fund, or main operating fund, is $25.7 million.

Council member Ruth Grendahl voted against approving the budget and tax levy. No members of the public spoke during the public hearing.

More than 94 percent of residential property decreased in value by 6 percent or more, so most residents will see their tax bills stay the same or decrease, said city Finance Director Ron Hedberg.

City property taxes will hold steady in 2011 for those whose homes decreased in value by 6 percent; a resident whose home experienced a 7 percent decrease will pay about $11 less. The owner of a $203,200 median-value home is slated to pay $860.

"We're doing anything we can to be cost-effective," said Apple Valley Mayor Mary Hamann-Roland.

Nine city positions remain vacant and the 2011 budget includes no new programs or services.

The city also hired two in-house city engineers, positions it previously contracted out, Hedberg said, and with another shift in the engineering department saved about $264,000.

The hires also were more cost-efficient because the engineers had worked for the city's contractor, Director of Public Works Todd Blomstrom said.

Council member Sharon LaComb said she thinks the city did its best to balance the budget. 

"We took the resources we had, we looked at the requirements of our residents and we balanced that," LaComb said. "Perfect? No. But the best we could do."

Grendahl said the city's reduced tax levy came largely from reducing its contingency fund. She said she thought some city departments could have looked at other ways to save money, citing the savings within the public works department.

"Employees who help save money should be rewarded for that," she said.

The contingency fund, which can be used for unforeseen expenses like repairing broken equipment, will decrease by about $95,000 in 2011, to $135,000.

The $25.7 million general fund for 2011 is about $14,000 less than in 2010. Taxes make up 77 percent of general-fund revenue, and the rest comes from a bevy of sources, including transfers from other funds, licences, permits, some state aid and charges for certain services make up the remaining amount.

Each year, for example, the city transfers some of the profit from Apple Valley's municipal liquor stores to the general fund, Hedberg said; in 2011 the city plans to transfer $525,000 for parks and recreation activities. For 2010, the City Council authorized a $485,000 transfer.

But the city will again have to fund the Market Value Homestead Credit for its residents without the state reimbursement it used to receive for the program, Hedberg said, at a loss of more than $1.1 million.

"That will be felt," he said.

The state program requires that cities identify property taxes for those that can be reduced by a certain percentage, based on the market homestead value. In Apple Valley, a $203,200 home would receive a $77 credit, Hedberg said Thursday.

The city does receive some state money—about $509,000—for fire training and aid for police pensions, Hedberg said, which officials hope to retain.

But as the state addresses its forecasted $6.2 billion deficit, it's inevitable "everything will be looked at," Hedberg said, and funds could shift around.

All these issues have made city officials look more closely at what they're doing and why, and prioritize, he said.

"We have to cross that bridge—figure it out," Hedberg said.