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Rushford Council looks at tax swings

Fri, Dec 12th, 2008
Posted in Government

Taxes in Rushford have become akin to the weather: if you don't like them, stick around and they'll change. Sometimes wildly.

"Until we get things back to normal, it's going to take a few years" of some crazy swings, city administrator Windy Block said to the council and a small crowd of interested citizens at the December 8 city council meeting.

This meeting included the first public hearing on the city's proposed 2009 budget. Another hearing will be held December 22, and the final vote taken then.

Back in September the council authorized the maximum levy of 8%, knowing they could change it in the future.

City staff had a line item budget ready, representing the 8% increase, that city clerk Kathy Zacher defended as "not having much fluff in it."

"On most of the funds, we're trying to hold steady," Zacher said. "but some things are always changing." She used the example of diesel fuel and gas as an expense that is difficult to predict.

Zacher also defended the need for a general fund by telling the council, "Sometimes, when there are things you want to do, we have to find the money for it." Zacher added that sometimes there's no choice but to proceed somehow certain projects come up, for example, the demolition recently of condemned houses.

At different times during the evening, both Block and Mayor Les Ladewig reiterated that city hall does not determine property value within the city; that function is served by the county assessor, and officially, the time to protest an assessment is in April during a meeting that a representative from the assessor office attends.

Still, when you're talking about taxing people to support a city budget, the talk inevitably turns to assessed property value, and a handful of citizens were present to talk about just that.

There are a number of reasons that taxes seem to have fluctuated wildly this year in Rushford, and all of those reasons stem from the great flood of '07.

Block explained that it would be fair to say those citizens not flooded sort of "carried" those who were in the 2008 tax year, and experienced a significant tax increase.

But now, as recovery continues and new or upgraded homes sit on lots that might have been empty a year ago, awaiting construction, taxes have jumped for many going through flood recovery.

In addition, many property owners affected by the flood received tax abatements last year, so by comparison, this year's taxes seem to have taken an enormous increase.

Still, Block retains a guardedly optimistic view over all, as previously flood-damaged properties come back onto the tax rolls.

"The tax structure in Rushford is straightening itself out," Block said. "People are getting value out of the government that they're paying for. The best thing we have going for us is the flood recovery, with homes being rebuilt and businesses reopening."

Councilwoman Laura Deering balked at the idea of an 8% increase in the city budget during these unsure economic times. Deering expressed an interest in looking at just a 4% increase.

Zacher reminded the group that an 8% budget increase doesn't translate into an 8% tax increase, mostly because of properties returning to the tax rolls.

Councilman Robert Dahl expressed his discomfort at the budget increase as well, and recommended possibly a 6% increase. Block said staff would come up with numbers that would represent both of these outcomes, but also cautioned that many items in the budget, like debt payments, cannot be changed.

To "hunker down" or take

a chance?

The other long discussion during this meeting involved the proposed motel development in Himlie Business Park and the size and location of a new community center...somewhere.

The issue has long been under consideration by the EDA who held an informal public meeting November 24 where a number of vocal citizens expressed a negative opinion about placing the community center in Himlie Park and expressed the hope that a location could still be found downtown.

This desire becomes problematic when coupled with the near universal interest in a larger, 400 seat center with adequate parking.

The EDA's recommendation to council was to move ahead with developer Tom Serie's Guardian Inn Motel in the Himlie Park and to research locations for the community center.

Laura Deering expressed her belief early on that it "might be prudent not to do this project" right now, given what she called the "bookends" of the bad economy and ongoing flood recovery.

"The timing is bad," Deering said.

Ladewig invited the EDA members present to speak, and Gordon Hatlelei expressed his exasperation over the fact that he and others have been seeking a motel developer for twenty years, they finally have one in the person of Tom Serie, and if the project dies this time, and comes up again, he wants "nothing to do with it."

Block acknowledged Deering's concerns about the timing, and then took the opposite view.

"You'll never have a better opportunity," Block stated.

Block said he believes now is the time to catch the tide of flood recovery growth.

"The more we expand the tax base of this community, the more of a positive impact it will have on everyone," he stated.

Block had spoken with a city financial advisor who believes there are ways to bond for the community center while keeping the level of debt service the same as it is right now. Among other factors, the Tyrol Hills and Scenic View bonds are nearly paid, according to the budget spread sheet.

Block also mentioned the fact that President elect Obama is proposing a large economic package to work on infrastructure in the country, and Himlie Business Park would likely qualify for this program, in Block's opinion.

Block wants a chance to start working the numbers to see if there's "a way to build a community center and not have the (debt) exposure for the city."

This led into Nancy Benson's motion to approve motel development in Himlie Business park and to conduct research on locations for the community center.

Deering was still reluctant.

Benson spoke directly to Deering, "but we're not committing any dollars at this point (for a community center). We're just going ahead with a feasibility study."

Benson expressed her confidence in the EDA and the hours they've spent working on the issue.

"How much is a feasibility study going to cost?" councilman Larry Johnson wanted to know.

"At this point, nothing except my time," Block answered.

"It's a lot of risk," Deering said.

"What if there wasn't risk?" Block countered. "What if we could find a way to do it without risk and exposure?"

"Well, I'd need to see that in writing and documented," Deering said.

"I agree," Block said.

Johnson seconded Benson's motion to study locations for the community center. The motion passed with Deering voting opposed.

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