Tax Levy and Your Property Taxes...So much to know.
A question or comment I have read in the paper and was asked at the League of Women Voters Meet and Greet might deserve a little more time. The gist is, how fiscally responsible is Red Wing being with spending if the tax levy has gone up 62% since 2013? I believe this information is being presented in a way that is intended to mislead individuals.
As many of us know Xcel’s Prairie Island Nuclear Power Generator contributes to our tax base. Xcel made significant upgrades in the recent years. Like a homeowner, if you make improvements to your home your home value will go up therefore your property taxes will go up. And that is what happened here. Currently, Xcel covers 55% of the property taxes, and that is expected to grow for several more years as they continue more improvements to the plant. Xcel and the city of Red Wing knew that Xcel’s upgrades would increase their property taxes. The upgrades contribute greatly to the tax levy-the taxes we collect to pay for our city services. The city knows this property tax increase from Xcel won’t last indefinitely, so they’re using this boost in the tax levy to update backlogged infrastructure projects. Most cities have this same backlog from many decades, exacerbated by the 2008 recession. But Red Wing gets to start catching up.
Yes, that means we’re seeing more construction last year, this year, and next year, but that’s using this tax levy as an investment into Red Wing’s future: safer neighborhoods and stronger infrastructure in our 150 year old city. Other cities don’t have this investment opportunity, and will need to pursue more short term fixes. Red Wing’s use of this bump in the levy from Xcel, not from residents, will set Red Wing up for an even stronger future for residents and business owners. Bonding for these investments while we have the growth from Xcel and historically low bond interest rates make this a strategy that is smart and in the best interest of our community.
In short, the tax levy increased because the city is collecting more from Xcel, not from residents. You maybe have seen an increase in your property taxes over the last few years, that’s due to the housing market coming back up. The value of your home has recovered since the recession, which is a good thing. And the city has kept increases to the tax rate-the percent applied to property value under the rate of inflation. The city has worked to keep the tax burden off residents, while investing in our infrastructure.
With the housing market recovery, housing values (the basis of property tax amounts) are expected to go up by 15-18%. This increase in property value could lead to a rise in property taxes. It is City Council’s task now to consider this increase in property values and determine how to set the tax rate considering its affects on residents, landlords, business owners, and others. Council members must also consider how we balance our needs for a strong Red Wing and our desire to keep our taxes low, not forgetting other burdens like the school referendum.
I know taxes are always made into a hot topic--but I don’t think they have to be. I would be happy to talk over any of this with you in person. You want and deserve a council member who understands how we need to find the balance in fiscal responsibility and investing in our Red Wing. I will be that trusted voice for you.