December 2, 2024 City Council Truth-in-Taxation Public Hearing and Input Minutes

Rud overviewed the City of International Falls’ budget process timeline explaining that the budget process begins after the prior-year audited financials are finalized in June and culminates with the final budget and levy adoption at the second City Council meeting in December of each year.  Rud also overviewed the general property tax timeline, explaining that much of the timeline is dictated by state statute and Koochiching County timelines.  Rud further explained that the general property tax timeline begins in January of each year with property valuations being established by the Koochiching County Assessor’s Office for the following year and concludes in December with the final levies being set by all taxing jurisdictions for the next year.

Rud reviewed the top seven reasons property tax amounts might change including: market valuations, levies, voter approved referendums, non-levy revenue sources, special assessments, debt issuance, and legislative changes and mandates.  Rud explained Net Tax Capacity showing that the City of International Falls makes up approximately 24.2% of the overall Koochiching County Net Tax Capacity, whereby explaining that Net Tax Capacity changes can redistribute tax burden amongst property owners.  Rud also reviewed in detail how to read your proposed tax notice with a redacted example proposed tax notice.  Rud explained the increase in the Homestead Exclusion amount in 2025 and how it benefits property owners.  Rud also explained how when a taxing jurisdiction increases their proposed levy it does not directly equate to the increases you will see on your statement and how they can be a lesser or greater percentage depending on circumstances.

The 2025 proposed levy is $4,234,565 and is distributed amongst six municipal funds including General Government (35.8%), Reserve for Capital Outlay (23%), Permanent Improvement (19.9%), Parks & Rec (11.5%), Library (7.9%), and Riverfront Improvement Fund (1.8%).  Rud overviewed the 2025 proposed operating budgets for the General Fund (101) in more detail as outlined in the approved proposed Exhibit A, including: administrative departments, public safety departments, public works departments and facilities, and the unallocated department.  Rud also reviewed in detail the 2025 partnership agencies and their respective allocations and potential budget implications as well as any contractual obligations.  Rud reviewed the revenue sources that support the general fund including: Local Government Aid (67%), Property Tax Levy (21%), Other Intergovernmental Revenue (3%), Miscellaneous-Interest Income (3%), Public Charges for Service (3%), Licenses & Permits (2%), and Fines & Forfeitures (1%).  Rud also provided statistical data on Local Government Aid and Property Tax Levy trends.

Rud explained the 2025 key levy factors.  Increased costs could be attributed to the following:

·         Inflation and rising costs on resources (e.g. utilities, fuel, supplies, etc.)

·         Increases for employee wages, benefits, and insurances, and inflation of worker’s compensation premiums

Savings drivers could be attributed to the following:

·         LGA increase of $5,575

·         Increase in interest/investment revenues

·         Reduction/reallocation of requested appropriations to other agencies

A copy of the Exhibit A showing the 2025 proposed budget and levy was provided and explained.  A press release from the Minnesota Department of Revenue was provided showing that on average Cities are going up 8.8%, Counties are going up on average 6.4%, and Schools are going up on average 4.4%.  Information was also provided as a resource for property tax relief options available to those that qualify.

Lastly, Rud went over the proposed changes that have been discussed since the proposed levy & budget were set in September.  Rud explained that the Airport Commission was reducing its local share budget request and it would reduce the City’s local share by $77,423 from what was set in September.  It was noted that the intent would be to use this reduction in expenditures to reduce the levy from 8.00% to 6.02%, with the potential for other changes as well.  It was noted that there will be additional discussions at the December 9, 2024 Budget & Finance Committee meeting with the final adoption of the 2025 budget and levy scheduled for the December 16, 2024 City Council meeting.

Joe Kantor, 1607 13th Ave, asked about deferred road projects on the west end of town.  Mayor Droba encouraged Mr. Kantor to speak with Ted Brokaw, Director of Public Works after the meeting about those specific projects.  Mr. Kantor also brought up a matter regarding a bridge in Ericsburg, to which the Mayor clarified that the City of International Falls has no control or jurisdiction in Ericsburg.  Mr. Kantor also asked about reestablishing a dock at City Beach for the youth, which the Mayor said they would look into.

Holly Takemota, 1501 4th Ave East, questioned the school levies listed on her proposed property tax statement.  City Council and staff explained that there was a school referendum that was passed in August 2024.  Ms. Takemota was directed to contact ISD 361 if she had additional questions regarding their levies or attend their Truth-in-Taxation meeting on December 16, 2024 at 6:00 P.M.

Mayor Droba announced that the Approval and Resolution for the 2025 Final Tax Levy Collectible and 2025 Budget for the City of International Falls, MN would be addressed during the next regular City Council meeting on December 16, 2024.