The Chanhassen City Council unanimously approved a preliminary tax levy of $12,066,700, a $325,332, or 2.77%, increase from last year.
Based on a Chanhassen average home value of $443,000 — a .63% increase from last year, said Finance Director Greg Sticha — a homeowner will pay approximately $12 to $13 more if the final levy is set at 2.77%.
The preliminary levy is the maximum that the council can potentially set in December. The final levy can still be lower than 2.77%, and the public will be able to weigh in before the decision is made.
The levy and budget are finalized on the same day, but both processes have been ongoing for months. As of September, the city budget has planned no increase in healthcare costs, a 2% increase for cost of living and merit pay for city staff and a 3.5% increase in police services.
There were two scenarios for the levy presented in the Sept. 28 council meeting. Under scenario one, the preliminary levy would be $12,066,700, which is an increase of 2.77% from 2020. The average resident impact would be around $12 to $13 for the year per home, and it would not have any impact on the budget’s service levels.
Under scenario two, the total would be $12,034,700, an increase of around 2.5%. The average resident impact would be around $10 to $11 for the year per home. However, the council would have to find $32,000 in levy reductions before the final levy is set in December.
Chanhassen’s 4.4% levy increase last year was lower than the majority of surrounding towns like Chaska, Shakopee and Prior Lake, said Sticha, who presented the scenarios at the meeting.
While city staff recommended adopting scenario one, several councilors were initially not in favor, with Councilor Jerry McDonald saying he would only go along with it if the city continued to search for more budget cuts.
Councilor Dan Campion requested city staff look at even more reductions to lower the levy below 2.5%, and Councilor Bethany Tjornhom said she would only support the higher increase as a preliminary levy, not the final levy. Councilor Julia Coleman also stressed lowering the budget.
Even if some budget items are higher than expected by December, the 2.77% increase allows for some extra room, said Sticha.
“It’s always hard to guess ... any economic collapse could have an impact on any number of line items, but this is a comfortable levy scenario,” Sticha said.
Scenario one passed 5-0 with the caveat that city staff continue to search for ways to get the levy at or under 2.5%. The Truth in Taxation public hearing will be held on Dec. 7, and the city will continue to discuss the levy and budget in work sessions and council meetings until its final deadline on Dec. 14, Mayor Elise Ryan said.