The State of Minnesota’s constitution outlines the parameters for how cities can fund their operations. One of these sources of funding is in the form of tax revenue — and cities generally have just one source for tax revenue: property tax. 

To determine how much it needs to levy for property tax, a city must first determine how much money it can accrue from all its non-property tax sources. It then subtracts that total from its anticipated expenditures. The left-over amount tells the city how much it will need to raise through property taxes. That number is usually presented as a percentage increase over the previous year’s tax levy.

At its regular meeting of the Ogilvie City Council, three different levy increases for 2022 were proposed and discussed, and the final budget for next year was adopted. The first levy showed an increase of 5% over the previous year, including approximately $85,000 for the general fund and $33,000 for repayment of a state loan, also known as the Old School Levy. The second proposed increase was for 5.5%, which included approximately $86,000 for the general fund, while the Old School Levy repayment remained the same.

The final proposed levy — and the one the council ultimately adopted — is a 6% increase over the previous year. Again, the Old School Levy cost remains constant, but the general fund increased to $86,671. According to Mayor Mark Nilson, the rationale behind going with the larger tax-levy increase lies in the inability to predict the future.

“I think after going over the numbers and the difference between 5% and 6%, the council felt that it is better to go with the 6% increase due to the uncertainty of inflation and the costs that lay ahead,” Nilson said. “We would rather do a one-time increase and have it good for more than a year at a time, than have to do increases every year. 

“Of course, there is no guarantee that we won’t have to look at another increase next year, but hopefully not,” Nilson added. The 6% increased passed unanimously, and there was no public comment on the levy increase.

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