Most Shakopee residents would see a slight increase in their annual property taxes, while their tax rates — or the percentage of taxes paid based on property value — will decrease under the city’s preliminary 2021 budget.
If approved, the city’s tax rate would decrease for the fourth year in a row, this time by 2.08%.
On average, Shakopee homes will see a 6.7% increase in property value. This means a $251,000 home will see its property value increase to $266,800 in 2021, adding $6 in additional property taxes on the year.
Because of the COVID-19 pandemic, a memo attached to the Shakopee City Council meeting agenda said “it is anticipated the city is not likely to sustain the growth it has for the last few years.”
But new growth is still playing a role in the decreased tax rate. The $21.39 million budget is up $662,300, or 3.25%, from 2020. New growth will take the majority of that pie, contributing $420,000 toward the levy.
If a full-time fire department staffing model is approved for 2021, $175,000 would be added to the levy. Council expressed support for the full-time fire department staffing model, but it has not yet been added to the preliminary budget.
Increased wages and benefits and an increase in internal rent charges to pay for future equipment replacements account for a large portion levy increase, according to Finance Director Nate Reinhardt.
Routine expenses include $2.1 million toward debt service, $700,000 in capital improvements and a $200,000 park development levy, which is part of the city’s 2040 Parks and Recreation Capital Improvement Plan.
Council member Matt Lehman said he wasn’t opposed to the proposed full-time fire department staffing model, but said he wants to get rid of the $200,000 park development levy for a year to offset the cost due to the economic uncertainty from COVID-19.
“I don’t think it’s asking a lot to remove the park (development levy) for one year,” Lehman said.
Other council members, along with City Administrator Bill Reynolds, supported Lehman’s suggestion and gave staff direction to include the full-time fire department staffing model with a one-year sabbatical of the park development levy.
Union contracts, which expire this year, previously included an annual 3% cost of living increases. The preliminary 2021 budget has been built in lieu of those increases. City staff also recommended administrative staffing reductions resulting in a $94,700 cost savings.
The preliminary budget for 2020 was $20.38 million, which was an increase of $1.15 million from 2019.
The city council will vote on the maximum tax levy at its next meeting Sept. 15.