Eagan City Officials Eyeing 3.3 Percent Preliminary Tax Levy Increase for 2013

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Eagan city officials are weighing a 3.3 percent preliminary tax levy increase in 2013—a move that will help the city keep up with inflationary costs and pay for a roughly 1.5 percent pay increase for all city staff.

The proposed increase would bring the total amount levied in 2013 to $28,322,017, a nearly $900,000 increase over the $27,425,081 levied in 2012.

The city's 2013 tax levy and budget was the focus of discussion at a special meeting held by the Eagan City Council at last Wednesday. The council must certify a preliminary tax levy by no later than Sept. 15 and submit it to the Dakota County Treasurer-Auditor.

But the preliminary levy is just a benchmark—council members cannot increase the preliminary levy amount, but they can reduce it before certification of the final 2013 tax levy at a Truth in Taxation hearing scheduled for Dec. 4.

"We are setting the levy at a amount that will enable the city to continue to provide the services that we believe citizens want," Eagan Chief Financial Officer Tom Pepper said. “At the same time, we have seen what the impact is on the average homeowner."

With the exception of several union groups that had previously negotiated for pay raises, Eagan city staff have have had their wages frozen for the past three years, Pepper said. Since 2009, Pepper added, the city has reduced its employee roster by roughly 5 percent—from 243 Full-Time Equivalent (FTE) positions to 232.3 percent in 2012. This year, the city may further reduce the number, shedding an administrative position and a finance department position for a total reduction of 1.7 FTEs, Pepper said.

In part because of the proposed pay increases, the city's general fund expenditures are expected to rise from $28,040,000 in 2012 to $28,854,000 in 2013, according to budget documents released by the city. Roughly 77 percent of general fund budget revenue comes from property taxes levied by the city. The Eagan Police Department is expected to account for 38.8 percent of the city's 2013 expenditures, while the city's Parks and Recreation Department and Public Works Department will likely claim 16.1 percent and 12.4 percent of the city's 2013 spending, respectively. 

Several department heads have also asked for three additional staff positions in 2013, which, if added, could cost an additional $256,000, city staff say. Those positions haven't yet been added into the 2013 budget estimates, Pepper said. If they are approved, the city's number of Full-Time Equivalent positions would increase, rather than shrink. However, the cost for those positions would not be paid for with property tax revenue, Pepper said.

The proposed levy increase comes at a time that the net local market value of properties in Eagan—and the city's tax capacity—continue to decline. In 2013, the average home value in Eagan is expected to be $220,252, down from $237,696 in 2012. Because of declining property values, many residents in Eagan may actually see a decrease in their property taxes in 2013, despited the proposed 3.3 percent levy increase, Pepper said.

“We can’t say that the county is going to reduce everybody’s property value across the board," Pepper said. "On the whole, we expect that there will be more people that will be seeing a decrease than an increase."