The Pequot Lakes City Council on Tuesday, Dec. 3, unanimously passed the 2014 budget and general revenue tax levy, which reflect recent action to equalize the city portion of taxes residents in the urban and rural tax districts pay.
The general revenue tax levy is $1,457,418, plus a $30,955 tax abatement levy, bringing the total levy amount to $1,488,373. That’s .13 percent more ($1,941) than the 2013 total levy, which was $1,486,432.
Despite the minimal increase in the city tax levy, residents in the rural tax district (former Sibley Township) will see a 9.428 percent increase in the city portion of their taxes because of the city’s move to equalize taxes over the next three years.
Urban tax district residents will see the portion of their city taxes decrease 4.479 percent.
The urban tax rate decreased from 75.464 percent in 2013 to 70.985 percent in 2014. The rural tax rate increased from 38.282 percent in 2013 to 47.710 percent in 2014.
The disparity in city taxes resulted after the city of Pequot Lakes and Sibley Township merged in 2002, when two taxing districts were created. The rural district has paid about half the city portion of property tax as the urban district since then.
The city council voted 3-2 in August to phase in city tax rate changes over three years, starting in 2014, so that by 2016, all Pequot Lakes taxpayers will pay a fair share of city property taxes for equal properties.
Council members Scott Pederson and Jerry Akerson favored a six-year phase-in to equalize property taxes.
The city council has worked since September to reduce its budget and tax levy, with the most recent levy reduction of $4,000 resulting from shifting office supply costs from certain department’s budgets from the tax levy to the fund balance.
The city’s tax abatement levy pertains to the Pequot Lakes Supervalu project. This is the third of 13 years for that levy. Before the store was built, the city agreed to abate the city’s portion of taxes on the increased value of the development back to the developer from 2012-24.
The council also approved the HRA budget and levy at $38,250, the same as this year.
Dec. 3, the council approved the 2014 tax levy fund budgets and levy, 2014 special revenue fund budgets, 2014 enterprise fund budgets and the 2014 HRA budget and levy unanimously.
Several people spoke at the public hearing regarding the urban and rural tax district equalization.
The council also approved a 2.5 percent wage increase for non-union employees in 2014.
Council member Tyler Gardner was absent.