By Logan Wells, News Director | Logan@kymnradio.net
In the beginning of December the Northfield City Council passed the Budget and Tax Levy for next year. The city council voted to approve a 15.8% tax increase. The city budget funds items like the 78 miles of city streets, 23 miles of trails, 71 miles of sidewalks, 5 wells and 3 water towers, stormwater ponds, playgrounds, and many buildings and vehicles, along with city services like police, fire, the public library, and more.
Most of Northfield’s tax base is residential, and the average home in Northfield is valued at $350,000, which would see an increase in their city portion of property taxes by about $164 a year. However, home values change yearly, which can also fuel a larger increase in one’s taxes. In the Rice County portion of Northfield, the average home value went up 3.8%, and in the Dakota County portion of Northfield, the average home value went up 5.0%. It is worth noting that this is significantly lower than the previous year’s increases; in 2023, the value increase was 8.4%, and in 2022, the value increase was 14.2%.
A table showing the estimated impact of the levy increase on the average home in Northfield. From the 12/3/2024 City Council packet.
A chart showing the increase in housing values in the last four years in Northfield. From the 12/3/2024 City Council packet.
Northfield City Administrator Ben Martig stated at the council meeting that the tax increase hit residents in Northfield harder than most comparable cities because of the small Industrial Tax Base:
“We can grow that tax base than that rate of taxes can be lower. Our spending really is in in line with our peer groups if you look at just the city operations, but our rate of taxes is high because our industrial rates are lower. Again, you can try and cut back on the spending side, but you can also try and work on the other side of the Ledger to grow our tax base to reduce the burden of all existing property taxpayers.
…. Both the reason why I think if people are concerned about property tax. They should be equally voicing their concern around what are we doing around economic development and growing our tax. Because to me, I think from my seat, if you look at the data, the data says that’s a greater impact to this community than the spending is.”– Northfield City Administrator Ben Maritg at the 12/3/2024 City Council Meeting
1st Slide: Showing a comparison of the total levy to similar cities to Northfield. Shows that Northfield’s tax levy is about the average amount for comparable cities.
2nd Slide: showing a comparison of the levy increase this year to similar cities to Northfield. Northfield has one of the largest increases in their tax levy this year.
From the 12/3/2024 City Council packet.
Based on data from the city’s 2024 Bond Sale Documents, approximately 61% of Northfield’s tax capacity is residential, and 20.5% is commercial or industrial, which is taxed at a higher rate than residential. In Northfield, the largest taxpayers are Post Consumer Brands (formerly Malt-o-Meal), Northfield Gegenes Apartments, McLane, St. Olaf College, and Xcel Energy.
The Final Offical Statement of the City of Northfield’s General Obligation Bonds from 2024 detailing the city’s tax capacity. View the full report here.
The city’s total levy is $17.7 million, split primarily amongst four different funds: the general fund, the maintenance fund, the debt fund, and the Economic Development and Housing Redevelopment Funds. The general fund is the city’s largest item, making up 66% of the city’s expenses and saw an 8% increase overall. The increase in the general fund is driven primarily by the costs of wages and benefits. Here’s Martig explaining how the city determines employee wages:
“Labor demand is challenging for the private and public sector. the Council, has invested in having an independent person look to keep us in the middle of the pack of our pure cities. But to do that, there’s a significant cost that we’re looking at when you look at wages and benefits. – Northfield City Administrator Ben Martig on the KYMN Morning Show
Martig noted the competitive market to attract employees, citing the lack of applicants for a recent open police officer position. The city is also adding two positions: a budget analyst and a lead mechanic. Currently, both positions are outsourced, and the hope is to increase efficiency overall by bringing the positions into city staff.
The debt fund is seeing a 5% increase overall. Unlike the other budget funds, the costs are based on previously approved projects the city has taken on, like road construction or equipment purchases. Inflation impacts road construction costs significantly; City Engineer Dave Bennett recently estimated at the city transportation town hall that before the COVID-19 pandemic, an average road reconstruction would have cost about $4 million, but now, it would cost about $8 million. In 2024, Northfield completed projects on College & Water Streets and Jefferson Parkway. Additionally, the city saw several major purchases, including a new pumper truck for the Fire Department, a police command vehicle, and a dump truck.
The maintenance fund saw a 2.3% increase, covering all city parks, buildings, and vehicles. Like other expenses, inflation has also raised the cost of maintaining much of the city’s facilities.
By department, Public Safety makes up the largest expenses at 39% of the general fund, General Government makes up 20%, Public Works makes up 19%, and the library makes up 11%. Overall, employee wages and benefits make up 65% of the budget, the largest portion of any item.
1st Slide: Showing the breakdown of the general fund by department.
2nd Slide: Showing the breakdown of the general fund by budget item.
From the 12/3/2024 City Council packet.
This fall, the construction of a new water treatment plant was approved to address management in the water. The project is being paid for not by the tax levy but instead by resident’s utility bills. The council previously approved an increase in the utility rates of 28% each year until 2028.
PREVIOUS STORY (10/10/2024): The Cost of the Water Treatment Plant
PREVIOUS STORY (11/14/2024): City Council Approves Water Treatment Plant
Martig noted the tax and fee increases were difficult but that the city has also taken significant steps to increase the tax base of Northfield in the future to help lower the burden on residents. Martig noted that based on the city’s five-year plan, bond rating companies have signaled that Northfield is in a good place, and there is no projected downgrading in the city bond rating.
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