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Dec 05

December 5, 2019

Posted on December 5, 2019 at 11:25 AM by Jasper Kruggel

I hope everyone has managed the back to back winter storms over the Thanksgiving holiday.  As always, I can most easily be reached at jkruggel@cityoflesueur.com or by phone at 507-593-8312; now onto City business.

Property Taxes

I wanted to take some time to go over property taxes; specifically how the process of your home value works and how it relates to the City portion of your tax statement, and the homestead exclusion.

Property Valuation

Property values for your house are set by Le Sueur County through their Assessor’s Office.  Le Sueur County is required to set the estimated market value of your house between 90% and 105% of the actual value of the property.  If you feel the value of your house is above or below what the actual value is, you may dispute this at the annual Board of Appeals and Equalization hearing.  This hearing date is set by Le Sueur County and generally falls around the middle of April annually.  The actual meeting date is published on your estimated property value statement that you receive in the mail from the county in February or March each year.  Property values have an impact on your City taxes depending on the tax rate and levy amount adopted by City Council each year. 

Homestead Exclusion

The Homestead Exclusion portion of your taxes is determined by a formula that is set into law by the State of Minnesota.  The Homestead Exclusion maximum is calculated by taking 40% of a $76,000 house, which totals $30,400.  If you have a house that is valued over $76,000, then you must subtract this formula (Estimated Market Value - $76,000) x 9%).  This means that if your house is valued at $413,800 or more, you no longer receive a homestead exclusion.

Below I will go through three examples of how the City taxes are calculated for a residential property; the first one being the city taxes of a $160,000 house in 2019 using the adopted levy amount, the second one being the city taxes of a $200,000 house using the preliminary levy amount, the third one being the city taxes of a $200,000 house using the proposed final levy amount, and the fourth being the city taxes of a $200,000 house with a 0% levy increase.

Example 1 – 2019 Rate at $160,000 (81.18% tax rate)

Estimated Market Value: $160,000

Homestead Exclusion: $30,400 – (($160,000-$76,000) x 9%) = $22,840

Taxable Market Value: $160,000 - $22,840 = $137,160

2019 City Tax Rate: 81.18%

City Taxes:      Taxable Market Value x Class Rate1 x City Tax Rate = City Taxes

                        $137,160 x 1.0% x 81.18% = $1,113.47

Example 2 – Preliminary Tax Levy 25% Property Value Increase - 9.47% Levy Increase (78.81% tax rate)

Estimated Market Value: $200,000

Homestead Exclusion: $30,400 – (($200,000-$76,000) x 9%) = $19,240

Taxable Market Value: $200,000 - $19,240 = $180,760

City Preliminary Tax Rate: 78.81% (9.47% levy increase)

City Taxes:      Taxable Market Value x Class Rate1 x City Tax Rate = City Taxes

                        $180,760 x 1.0% x 78.81% = $1,424.57

Example 3 – Proposed Tax Levy 25% Property Value Increase - 5.71% Levy Increase (75.94% tax rate)

Estimated Market Value: $200,000

Homestead Exclusion: $30,400 – (($200,000-$76,000) x 9%) = $19,240

Taxable Market Value: $200,000 - $19,240 = $180,760

City Proposed Tax Rate: 75.94% (5.71% levy increase)

City Taxes:      Taxable Market Value x Class Rate1 x City Tax Rate = City Taxes

                        $180,760 x 1.0% x 75.94% = $1,372.69

Example 4 – 0 % Levy Increase 25% Property Value Increase -  (71.60% tax rate)

Estimated Market Value: $200,000

Homestead Exclusion: $30,400 – (($200,000-$76,000) x 9%) = $19,240

Taxable Market Value: $200,000 - $19,240 = $180,760

City Proposed Tax Rate: 71.60% (0% levy increase)

City Taxes:      Taxable Market Value x Class Rate1 x City Tax Rate = City Taxes

                        $180,760 x 1.0% x 71.60% = $1,294.24

1State of MN 2020 Class Rate Schedule:

2Le Sueur County may round items to the nearest hundred dollars
tax_table_2020

Summary

As you can see, a lot goes into how your property taxes are calculated.  The overall takeaway is that is all starts at the market value of your house.  If you look at the differences between the three examples, you can see that a house with an estimated market value of $200,000 will see a City portion tax decrease of $51.88 annually from the preliminary levy number to the proposed final levy number.  If you evaluate the difference between the proposed final levy number, and if we didn’t raise the levy at all from 2019, there would be a $78.45 decrease annually.  A 0% levy increase is not obtainable without cutting from services due to inflationary factors.

I have been communicating with the County Assessor’s Office, and here are some facts that I’ve received from them:

  • The City of Le Sueur came in at 76% of the estimated market value prior to the 2018/2019 exercise of evaluating all properties in the City of Le Sueur; keep in mind that the County has to be between 90% and 105%
  • The average residential increase in the City of Le Sueur was 19.4%
  • The City of Le Sueur estimated market value ratio is currently at 96%; this falls within the compliance guidelines

City Council does a very good job of balancing budget items to complete tasks identified as priorities.  One example of this is the dollar allocation toward street maintenance.  In 2017, that amount was $30,000 for some basic crack sealing and seal coating projects.  In 2020, the amount proposed is $450,000 which will help maintain streets until a major rehabilitation project occurs.  Keep an eye out for the comprehensive street maintenance plan which will be evaluated and eventually adopted by City Council in 2020.  This plan will show what kind of project and what year can be expected for every street in Le Sueur.  I feel this is something that will be a great planning and communications tool related to streets in Le Sueur.

This is complicated stuff; if you ever want someone to go over your proposed tax statement, please feel free to reach out to myself and I’d be happy to go over it.  The number on your proposed property tax statement will decrease for the City portion.  If you’d like to know what that is based on the proposed final levy, please reach out and I can calculate that for you very quickly. 

The Truth in Taxation Public Hearing is on December 9, 2019 at the Le Sueur City Hall, at 6:30 PM.  I hope to see you there!

2020 Capital Improvement Projects

In 2018, the City of Le Sueur started a fund dedicated to capital improvements and capital equipment purchases.  The CIP/CEP for 2020 continues to build on that concept of thoughtful planning and sound fiscal management.  Here is a list of projects proposed in 2020 that are funded using proceeds from property taxes:

Airport Taxilane Extension Project (Contingent on State, Federal, and EDA Funding) - $47,000

Library Air Conditioner Replacement - $5,000

Community Center Locker Room Renovation Planning - $5,000

Community Center Gym/Fitness Wall Project - $30,000

Indoor Pool Resurfacing Project - $125,000

Ice Arena Water Heater Replacement - $7,000

Outdoor Pool Diving Board Replacement - $20,000

Outdoor Pool Bath Floor Project - $5,000

Ice Arena Acoustic Panels (Contingent on local hockey group fund raising) - $7,500

Ice Arena Coolant - $10,000

Annual Street Maintenance (Portion of this will carry over to future years to fund larger projects) - $450,000

Bruce Frank Field Rehabilitation (Contingent on local baseball group fund raising) - $100,000

1998 Public Works Vehicle Replacement - $35,000

Outdoor Pickleball Court (Contingent on local support group fund raising) - $20,000

Parks, Open Space, and Trail System Master Plan Contingency Fund - $50,000

Overall Thoughts

Again, if you would like additional information on anything City related, please feel free to reach out!  I can be reached at 507-593-8312 or by email at jkruggel@cityoflesueur.com.  Also, Christmas on Main is on Friday, December 6th at 6:00 P.M., I hope to see you there!





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