When residents of the City of Redwood Falls opened their preliminary tax statement earlier this year, the amount they saw that would be paid in 2019 was based on a preliminary levy approved in September.

Things have changed since then, and as a result the levy which was certified by the Redwood Falls city council at its Dec. 18 meeting dropped.

Initially, the city council approved a 4.99 percent increase in the property tax levy for 2019, but when the final levy information was presented to the council by Melissa Meyer, city director of finances and administrative services, the increase had dropped to 4 percent.

According to Meyer, the primary reason for the drop is a favorable health insurance renewal for the city’s employee coverage.

The final levy certified for 2019 by the council is $2,694,767, which is $103,747 more than was levied in 2018 – $2,591,020. The amount includes $1,276,065 for the city’s operating levy, with $1,368,583 for special levies, including the community center bonds ($47,031), the Garnette Gardens tax abatement ($30,295), the Redwood Valley 4th Addition tax abatement ($31,547) and the wages and benefits for the police department ($1,196,229). The levy also includes a $50,119 allocation for the port authority.

While the levy includes an overall 4 percent increase for 2019, that does not mean every property will see a 4 percent increase over what was paid in 2018 – some may see a higher percentage, while others may see a lower increase. 

All of that is based on what is known as the net tax capacity for the city. The total net tax capacity for the City of Redwood Falls, which is based on the residential and commercial development in the community, is $3,125,769.

That amount used for the 2019 levy is an increase over the net tax capacity of $2,968,775 used for 2018. The net tax capacity has grown by nearly $1 million since 2012 in the city, and Meyer said that is a good thing, as more net tax capacity means more properties are paying taxes helping to distribute the overall tax levy and, in turn helping to reduce the amount everyone pays.

In order to help offset the increased expenses for the city, the state provides what is known as local government aid. That allocation from the state for 2019 is $1.535 million, which is an increase over the $1.531 million allocated in 2018.

Since 2012, the city’s local government aid has increased from $1.075 million to the $1.535 million, which also helps reduce the property tax levy.

The property tax levy paid each year is a small percentage of the overall budget for the city, as more than 90 percent of the revenue the city receives comes from other sources. One of the major changes in the city budget which was also approved by the city council at the Dec. 18 meeting, is the removal of the hospital as a line item.

With the sale of the hospital in 2018 (the changeover is official as of Jan. 1, 2019), the overall budget will drop dramatically for the city. With the hospital out of the picture, the city’s most significant expenditure is public safety (28 percent), with general government (19 percent), culture and recreation (18 percent), project coordination and streets (18 percent) and library (14 percent) making up the majority of the 2019 budget expenses, which are estimated for 2019 at $28,234,779.  The budget for 2018, with the hospital was $67,6125,908. The anticipated revenue for 2019 is $26,913,833, while the revenue for 2018 with the hospital was $50,417,961.

Even though the hospital is no longer a line item in the budget, the city will receive funding from the hospital through a payment in lieu of taxes for the next 10 years at $450,000 per year. Meyer told the council it will have to talk about what to do after that 10-year period to address any of the expenses and improvements that will be covered in the short term with those funds.

The city council also approved the payment in lieu of taxes (PILOT) allocations for 2019, including $368,495 from the electric utility, $69,048 from the water utility and $120,000 from the liquor fund.

At the conclusion of the presentation John Buckley, council member, and Corey Theis, mayor, both complimented the city staff for its efforts to develop the budget each year.

The city council also approved a number of business licenses during its meeting including:

• Cigarette and tobacco products for Redwood County VFW Post 2553

• On-sale liquor for American Legion Post 38, Freedom Bar & Grill, LLC., Redwood Falls Golf Club, Inc., Redwood County VFW Post 2553, Duffy’s South, Inc. doing business as Duffy’s Riverside Saloon and Chumly’s, Inc. doing business as Chumly’s Burger and Brew.

• On-sale Sunday liquor for American Legion Post 38, Freedom Bar & Grill, LLC., Redwood Falls Golf Club, Inc., Redwood County VFW Post 2553 and Duffy’s South doing business as Duffy’s Riverside Saloon

• On-sale 3.2 malt liquor for Bridge Street Cuisine, Inc. doing business as Country Kitchen

• Solid Waste hauling - commercial for R&E Sanitation, Inc. and Waste Management of MN, Inc.

• Therapeutic massage for Bridge Street Massage - Dakota Harmoning and Redwood Chiropractic PSC - Emily Moseng 

• Wine for Bridge Street Cuisine, Inc. doing business as Country Kitchen