City starts work on 2018 budget

Shakopee Valley News

Shakopee city officials are considering a 2018 budget that would increase the tax levy 2.5 percent but spread this increase over a larger tax base, but the city tax rate will be slightly lower.

During a budget workshop Tuesday, Shakopee city officials unveiled a preliminary budget that would add seven full-time positions, including an assistant fire chief, two police officers, one code compliance officer, one city planner and two lifeguards.

These positions and other factors mean the city has higher costs in the 2018 budget year, hence raising the levy and therefore tax revenue.

Under the proposed budget, a separate levy of $350,000 would fund the Economic Development Authority and related economic activities. The EDA levy would increase property taxes by about $20 for a home valued at about $240,000 if there were no other changes in the home valuation. In the past, EDA received funding from general levy funds. Creating separate levies makes that process more transparent, City Administrator Bill Reynolds said.

However, the tax rate is still lower overall, Reynolds said.

“As we started this year and last year and we talked about the goals of the city, when it came to the budget it was low taxes, financially stability, a stable tax rate and this actually lowers the tax rate,” Reynolds said.

The city only accounts for about a third of property tax bills, with the other two major taxing entities being the school district and county.

If the tax base weren’t larger, the burden of the city’s additional costs would require an increase in taxes. However, because of the larger tax base due to new construction, the larger tax amount is spread out over a larger area.

This doesn’t take into account possible increases in the home values, which would increase taxes. Barring a valuation increase, taxes would remain the same from 2017 to 2018.

The proposed 2018 budget has more than $26.2 million in revenue, and nearly $26.5 million in spending, with $250,000 in revenue from “other financing.” Mars said revenue was estimated conservatively.

A public meeting to discuss the budget will be Dec. 5 and the budget will be adopted on Dec. 19.