The members of the Assembly Finance Committee began to chew on some of the more difficult policy questions they’ll face this budget season at it’s meeting Wednesday evening. Setting the mill rate was among the agenda topics, and to nobody’s surprise they had to stick that one behind their ears to save for later.
“The manager (Kim Kiefer) has presented her idea on what we should do, and we’re starting to chew on that now,” Finance Committee Chair Jerry Nankervis said during the mill rate discussion. “I don’t know that we are going to get those policy type decisions made tonight, but we are throwing out ideas, and that’s good.”
This year, the city finance director Bob Bartholomew recommended lowering the mill rate for the first time since 2010. The rate determines how much residents pay in property taxes based on their assessed property values. Under Bartholomew’s recommendation, the rate would drop from 10.76 mills to 10.51 mills.
This means that the owner of a home valued at $300,000 would pay $75 less in property in the coming fiscal year than last year, provided that the assessed value of the home hadn’t changed. That may not seem like much, but this year the average assessment value of residential property in the city went up by an average of about 6 percent. Any reduction of the mill rate will help soften the blow of the rising assessments when it comes time to pay property taxes.
Outgoing city manager Kim Kiefer — and incoming city manager Rorie Watt — have recommended that the Assembly heed Bartholomew’s recommendation, which he made in response to the rising property assessments.
In December when Bartholomew was beginning the budget process, he planned for a 2 percent increase in assessed property values. If the mill rate remained unchanged, this would have yielded a $1 million increase in property taxes for the city.
When Bartholomew found out the assessed property values had actually increased by 4.4 percent across the city, yielding a potential $2.2 million increase in tax revenue under last year’s mill rate, he decided to recommend lowering the rate.
“We didn’t need that much revenue to balance the budget so we backed off the mill rate,” Bartholomew told the Empire earlier this month. “The average person will see property tax increases, but they won’t be as large as the change in their property values.”
Assembly member Jesse Kiehl shares Bartholomew’s outlook. Wednesday was the committee’s first stab at setting the mill rate, and Kiehl and others sharing his view might be out numbered.
“I think the manager’s recommendation of lowering the mill rate a quarter of a mill was a good one,” he told his peers, after listening to several of them talk about leaving the mill rate where it currently sits. “When we put that together with the average assessment increase of 6 percent, it is not enough change in the rate to hold property owners’ taxes flat, they still go up a little bit. I don’t necessarily think it’s an evil. I’m reluctant to pull from the community more than we need to.”
Mayor Ken Koelsh was the first committee member to float the idea of leaving the mill rate unchanged, a decision that would end up raising an additional $900,000 in property tax revenue for the city over the manager’s recommended rate. Facing down the state’s uncertain fiscal future, Koelsh and several other committee members — Debbie White, Kate Troll, Maria Gladziszewski and Nankervis — argued that now might be the time to take advantage of extra revenue.
“We incur debts for our generation but also for the next generation, so it would be nice to take care of some of that while we can,” Koelsch said.
This issue will be back before the Finance Committee again before it ultimately determines the mill rate and moves that, along with the full budget, to the Assembly for approval. The committee will likely set the mill rate at its May 11 meeting, Bartholomew said.
