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Erik Burgess, Published September 09 2013

Moorhead council passes preliminary 11.3 percent levy increase

MOORHEAD – City council members here passed a preliminary levy of about $8.7 million, an 11.3 percent increase from 2013.

It can still be lowered before the final budget is set in December.

It passed 5-3, with council members Mark Hintermeyer, Brenda Elmer and Luther Stueland voting against. For the owner of a $139,900 home, the preliminary levy increase means an additional $32 on the yearly property tax bill.

That increase had been about $40, but the most recent report from the Clay County assessor found that Moorhead’s tax capacity increased more than $700,000. With a larger tax base, the amount on a median-value home was reduced by $8, said Financial Director Wanda Wagner.

The growth in the tax capacity is the result of $27 million in new construction, Wagner said.

Even with the levy increase, the city still faces a $400,000 shortfall in its 2014 budget. The city is looking at implementing a streetlight utility fee – a flat charge on residents’ monthly utility bill – to make up that deficit.

The final 11.3 percent total levy increase passed Monday is made up entirely of an increase to the city’s debt levy, or property taxes that go toward paying the city’s debt. The city’s operational levy, or taxes that go toward paying for city services, is virtually unchanged, Wagner said.

Elmer said with city services lacking in so many areas, she couldn’t support raising taxes if residents wouldn’t visibly see a change in services.

“I don’t know how to sell an 11.3 percent increase in the levy,” Elmer said. “I can’t tell them what they are getting when there are so many needs out there.”

Stueland proposed raising the levy by only about 4 percent, a motion that received a split vote, with Mayor Mark Voxland casting the tiebreaker vote to defeat the proposal.

After Stueland’s proposal was shot down, Councilwoman Heidi Durand proposed raising the levy by 13.3 percent, bringing the property tax increase of a median-value home back to $40.

Councilman Mark Altenburg seconded Durand, saying taxes need to be raised to help deal with the $400,000 shortfall in the budget without cutting services, but that proposal failed by a vote of 2-6.

There will be a public hearing on the levy and budget at 6 p.m. Dec. 2 in City Hall. The City Council will look to adopt its 2014 budget on Dec. 9.

Voxland directed those with questions on the budget to call the city’s finance office at (218) 299-5318 or by mail PO Box 779, Moorhead, MN 56561.

Moody’s check looms

The city plans to sell bonds on Sept. 23, meaning Moody’s, the bond credit rating service, will review the city’s credit rating.

City staff expects a conference call from Moody’s on Thursday, and Wagner said they should have the results Sept. 19.

Several council members on expressed concerns that the city’s rating of Aa3 could be lowered, which would adversely affect interest rates on the city’s debt.

Altenburg said 40 Minnesota cities have recently had their ratings lowered by Moody’s, and that Moody’s has taken a hard look at cities with large amounts of debt.

“If we have a downgrade in our rating, it will add significant cost to the city of Moorhead going forward,” he said. “We’ve taken on tremendous debt due to flood control and other issues.”

Wagner said the city has “no way of knowing” if the rating will be lowered. The last time the city sold bonds, in December, the rating remained the same, she said.

Readers can reach Forum reporter

Erik Burgess at (701) 241-5518