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City levy rises with property values

NEW ULM — The city’s 2023 budget was set at a maximum increase of 12.49%.

The New Ulm City Council set the preliminary 2023 budget and tax levy Tuesday. Next year’s budget is currently $23,522,185, with a maximum property tax levy of $9,582,826.

Last year’s final levy was set at $21.7 million with a property tax levy of $8.3 million. This represents a levy increase of $1.1 million or 12.5% from last year.

Since last year, New Ulm saw a $578,837 increase (2.9%) in expenses and a $368,807 decrease (7.6%) in revenues.

Despite the high increase, the city’s tax capacity also increased by 16.5%.

Finance Director Nicole Jorgensen said this was an incredible increase in tax capacity, but it meant property values also increased. The 12.49% levy increase combined with a 16.49 tax capacity increase could technically result in a tax rate decrease of 2.79% but only if a resident’s home value remained unchanged.

As an example, Jorgensen said if a person with a $150,000 home in 2022, it will probably be worth $175,000 in 2023. This means even with a tax rate decrease a homeowner could see their taxes go up by $150 because of a market value increase.

The City Council approved this preliminary levy but indicated they hope to reduce the overall levy from 12.49% to under 10% before approving the final levy in December.

Councilor David Christian said in reviewing data from other cities, he saw New Ulm as in the middle.

“We’re not in bad shape,” he said. “We’re in good financial shape.”

Christian said his goal was to bring the levy down to the 8-10% range.

The council chose not to reduce the levy as currently recommended, but it was suggested the leaf vacuum truck program be delayed. The cost of purchasing two leaf vacuum trucks for the city is $260,000. This alone has a 3% impact on the levy. If cut from the budget, the levy increase would go below 10%.

Councilor Larry Mack said he did not see the leaf vacuums as a need.

Council President Andrea Boettger agreed that the city reviews the timing of the leaf vacuums as they could be added next year when a better plan was in place.

Once the preliminary amount is set it can not be raised. Changes and adjustments can still be made to the budget as long as the levy amount does not increase.

The Truth in Taxation public hearing on the budget will be held at 6 p.m. Tuesday, Dec. 6. The council must set the final levy amount on or before Dec. 20.

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