The City Council trimmed the preliminary levy before adopting the final 2014 city budget on Dec. 10. With the change, the City of Plymouth’s total levy will increase 2 percent – down from the 2.5 percent preliminary levy increase that the council approved in September.
City Manager Dave Callister said the increase in the city’s levy is the second in five years. The other three years, the levy was held flat or decreased.
“The City Council was mindful of balancing the funding of expected city services with the impact on property taxpayers,” said Callister.
The 2014 budget focuses on the basics – delivering core services balanced with maintaining amenities that keep Plymouth attractive as a place to live and work. In addition to spending decisions, several factors affect property taxes, including property type, market value changes and past state legislative actions.
The city portion of property taxes pays for police and fire service, snowplowing, street maintenance, trail and park upkeep, recreation programs, community planning, housing programs and other local services.
Of the property taxes homeowners pay, the City of Plymouth receives about 22 percent. The remainder goes to the school district, Hennepin County and other taxing jurisdictions.
No LGA for Plymouth
Callister noted that while many cities in Minnesota receive Local Government Aid, commonly called LGA, Plymouth does not. “When the state legislature increased LGA funding for cities last session, there was no LGA windfall for us. To maintain service levels and accommodate growth, we need to balance the budget with local financial resources,” Callister said. Plymouth has not received LGA for more than a decade.
Sales Tax Lifted for Some City Purchases
Callister applauded a change made by the state legislature last session that eliminates the sales tax on most city purchases. The change in state law, which Plymouth city officials have sought for years, will save the City of Plymouth about $580,000 in 2014. More than $180,000 of that will be in the general fund budget, which is supported by property taxes.
“That’s nearly $200,000 of costs we won’t incur in our general fund, and don’t have to pass on to taxpayers,” Callister said. He added that lifting the sales tax is an equitable way to provide cities with budget relief. “All cities have been paying those taxes since 1992 so we’re all benefitting from the change, not just some,” Callister said.
Callister also sees the change as improving transparency. “When one level of government taxes another, the cost gets passed on to taxpayers. It’s not a transparent way to raise revenue,” he said.
