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Carver tax rate increases 8.56 percent
by Nick Mason
Dec 26, 2011 | 1301 views | 0 0 comments | 3 3 recommendations | email to a friend | print
The new year will bring city of Carver residents a 8.56 percent increase in the city property tax rate and no increase in utility rates.

The City Council voted unanimously Monday to adopt a $2,239,332 budget for city government operations and repaying debts in 2012 and a $1,870,647 property tax levy to pay most of those expenses.

Spending is increasing 1.8 percent and the property tax levy is increasing 0.8 percent. The small increase in property tax collections for 2012 follows a 1.5 percent drop in city property taxes collected in 2011.

The city’s tax capacity tax rate is climbing from 47.95 percent in 2011 to 52.06 percent in 2012, which is an 8.56 percent rate in-crease. The tax rate increase reflects declining property values, a rising levy and a change in the tax structure.

About one-third of the total property tax bill paid by a Carver homeowner goes to the city government. The rest is paid to School District 112, Carver County government and other smaller taxing agencies.


Carver councilors also approved separate water, sanitary sewer and storm water budgets totaling more than $1.1 million while keeping rates currently charged existing customers in place for 2012. The last increase in those rates was in 2010.

Understanding budgets and property taxes can be challenging in a normal year, but this year is especially tricky because the City Council and the Minnesota Legislature changed the tax structure.

The bottom line is that many Carver homeowners actually will pay less property tax in 2012 than they did in 2011 despite the in-crease in the property tax rate. That is primarily due to their property values depreciating and the legislature shifting more of the property tax burden from owners of modest-priced homes onto owners of expensive homes.

To illustrate that, City Administrator Brent Mareck said he randomly chose 10 residential properties in a cross-section of city neighborhoods and asked the Carver County Taxpayers Services Department to calculate their city property tax bills in 2012.

Nine of the ten property owners had declining taxable market values and will pay less property tax to city government in 2012 than they paid in 2011. Tax reductions ranged from $52 to $268. The 2012 taxable market value of those 10 residences ranged from $110,600 to $533,300.

The exception was a home with a $9,000 market value increase, rising from $319,200 to $328,200. That owner will see a $54 increase in city property tax in 2012.

Mareck also presented councilors with a calculation by the county’s Taxpayers Services Department showing the savings a homestead with a $250,000 market value receives from the state’s new market value exclusion program.

The calculation shows $14,700 of market value newly excluded from taxation and the homeowner paying $1,225.04 of city property tax in 2012, down $42.19 from the 2011 city property tax of $1,267.23.

Overall, Carver lost more than $11.7 million of property market value in 2011, Mareck wrote.


Carver Mayor Greg Osterdyk praised Mareck for his second annual budget proposal since Mareck was hired in May 2010.

“I think we’ve got a good budget,” Osterdyk said during a Dec. 12 interview. “By going through the process a second time and get-ting to know what is important to residents of Carver, he has a good handle on things going forward.”

The $1,870,647 of property tax levy in 2012 includes $1,618,242 allocated directly to the city and $252,405 forwarded to the city through “fiscal disparities,” which is a state-ordered revenue sharing program among local governments in the Twin Cities metro-politan region.

The remaining city income in the general fund is from contracts to provide firefighting service to Dahlgren and San Francisco townships, city building permits and various other fees and revenues.

Nobody from the public spoke during the Dec. 5 public hearing about the budget and property tax rate and levy. Only two resi-dents sat in the audience that night and listened to Mareck summarize the financial income and spending highlights for councilors, accompanied by a power-point presentation containing charts and graphs.

Councilor Cindy Monroe liked what she saw and heard from Mareck.

“This is a very nice presentation. Very informative,” she said.


The water, sanitary sewer and storm water budgets are separate “enterprise” funds financed primarily by user fees collected from more than 1,200 existing customers and from developers wanting to connect to the city’s utility systems.

These budgets routinely contain surpluses to build cash reserves for later use during an emergency, such as a major water pipe breaking, or to pay for major projects or purchases. This year, cash reserves were tapped to pay the $239,000 contract for painting and structural repairs to the city’s water tower along Mount Hope Road.

The 2012 water budget shows $640,000 of income, $491,289 of expenses and a $148,711 surplus. Those are all increases compared to 2011, when the water budget was $565,500 of income, $425,960 of expenses and a $139,540 surplus.

Monthly water rates will remain at $4.93 per 1,000 gallons for the first 20,000 gallons and $7.40 per 1,000 gallons for all water used over 20,000 gallons. Monthly water meter fees, such as $2.26 for a standard 5/8-inch residential meter, also remain unchanged next year.

The sanitary sewer budget changes little. The 2012 budget is $372,700 of income, $348,591 of expenses and a $24,109 surplus. The 2011 budget was $366,993 of income, $354,659 of expenses and a $12,334 surplus.

The monthly sewer fee in 2012 will remain at $5.62 per 1,000 gallons based on the individual customer’s average water consump-tion during January, February and March each year. Winter months are chosen for the year-round sewer benchmark because most water used during those months enters the sewer system, unlike summer months when landscaping irrigation is common.

A new twist is moving the storm water program’s income and expenses from the general fund into its own separate budget. It shows $95,000 of income in 2012, $23,780 of expenses and a $71,220 surplus.

Residents will continue in 2012 paying the existing monthly storm water fee of $8.52 for repairing and maintaining drainage ditches, storm water ponds and other wetland outlets.


Here are the nitty-gritty details about the city and state changes for 2012 in the tax structure.

The 8.56 percent increase in the city’s tax capacity tax rate is partly offset by the City Council eliminating in 2012 the separate market value tax rate for voter-approved levies due to refinancing of the city’s debt in 2011.

The market value tax rate, which was .048 percent in 2011, is being rolled into the tax capacity tax rate for 2012.

The Minnesota Legislature changed the property tax structure statewide by eliminating the market value homestead credit and replacing it with a sliding-scale homestead market value exclusion program.

In simple terms, the legislature’s new program gives the biggest tax break to owners of homes with modest values by excluding the largest share of their home value from being taxed.

As home market values increase, the amount of exclusion and tax break declines and eventually stops.

That means owners of homes with mid-priced values get smaller tax breaks because smaller shares of value are excluded from taxation. Owners of expensive homes get no tax break because they get no exclusion of value.

“The market value exclusion ranges from $30,400 for a home valued at $76,000 to $0 for a home valued above $413,800,” Mareck wrote in his PowerPoint presentation.

Major budget changes

Here are major budget changes for 2012 as adopted by Carver City Council:

* $20,000 to pay part of the estimated $65,000 cost for reconstructing worn tennis courts atLionsPark. The city also would borrow $30,000 from the city’s park dedication fund and raise $15,000 from undetermined other sources.

* $19,374 for replacing self-contained breathing apparatus for firefighters.

* $16,869 contribution from the city’s general fund to the city’s park dedication fund to supplement fees paid by developers for building, improving and equipping parks.

* $11,000 to replace the city computer network’s broken server.

* $11,000 to add two seasonal part-time employees to work in the Public Works, Parks and Public Utilities departments.

* $10,000 increase for street seal coating, minor repairs and street sweeping. The 2012 budget is $60,000. The 2011 budget was $50,000.

* $10,000 for City Hall renovations to create a larger entrance service counter that complies with the Americans with Disabilities Act, create a small break room for employees and create a plan review area and shared work space for Building Inspections staff.

* $7,500 for computers and software to switch to preparation of paperless agenda packets for the City Council.

* $7,000 increase for the program providing a second full-time Carver County sheriff’s deputy assigned to the city of Carver during summer months. The seasonal program started this year with $15,000 budgeted. The budget climbs to $22,000 in 2012.

* $6,000 to buy a snow plow that will be attached to a city pickup truck.

* 2 percent wage increase for all employees, startingJan. 1, 2012. Their last pay raise was 1.2 percent onJuly 1, 2011.

* 3 percent increase in pension payments for firefighters.

* 5 percent decrease in employee health insurance premiums.

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