The preliminary property tax levy for 2021 was set at $1,167,091.19, during the regular Wadena City Council meeting, Tuesday, Sept. 8.

This amount is derived from the need for $395,000 for the city’s general fund and another $772,091.19 needed to cover the costs of bonds the city is indebted to pay including payment for a new fire truck, and Public Finance Authority (PFA) bonds for the SE sewer, SE storm water and SE water projects from 2015. It’s an increase over the last two years.

Revenue is expected to be down by about $392,000 in 2021 to $3,565,132. Expenses will balance out that revenue with some noticeable dips and rises compared to 2020.

For the residential taxpayer, a property with an estimated market value of $105,000 with a homestead exclusion would see a tax impact of about $386. That’s up from $349.47 in 2020. That’s considering a city tax capacity rate of 50%, up from 45.9% in 2020.

Here's an estimate of tax impact for taxpayers based on the 2021 preliminary levy.
Courtesy City of Wadena
Here's an estimate of tax impact for taxpayers based on the 2021 preliminary levy. Courtesy City of Wadena

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Some decreases to help lower the increase included an adjustment to pay increases for city employees. A planned 2.5% increase to employee pay was decreased to 1.5%. That along with a reduction in health insurance costs shaved about $50,000 off the expenses. Mayor and council pay went unchanged from 2020.

Noticeable additions and reductions were made in the capital expenses, including:

Police

  • $63,000 in capital costs brings their budget to $1,167,754. That cost includes paying three lease payments for vehicles ($33,000), costs of equipping vehicles ($10,000), costs for portable radios and a base station ($20,000). A drone originally budgeted for $6,000 did not have to be a part of the 2021 budget because the department found they can afford to buy it this year.

Fire

  • The Fire Department requested $21,426, mostly to cover costs of equipping an otherwise empty fire truck, which was funded last year and expected to arrive in November. That amount was lowered by $8,300 as the department will use other funding planned for an epoxy floor covering in the garage bay.

Parks

  • The parks will see a boost of about $93,000 in capital expenses. That includes $20,000 to remodel the north Sunnybrook restrooms; $5,400 to pave an area of trail in north Sunnybrook Park; and $68,000 for a new 10-foot mower to keep those parks mowed. A request to add $70,000 to replace the play structure at Tapley Park did not make it into the budget. Instead, parks director Dan Kovar was asked to seek other means of funding the project. The Parks advisory board is looking into what that might look like.

Streets

  • A used plow truck ($60,000) and a tractor mower ($22,000) make up the capital expenses. That was lowered $266,000 when a clam bucket and grader were removed from the budget.

The 2021 budget shows general fund expected revenue is lower than the last two years, at $3,565,132.

One small increase was an increase from $2,000 to $4,000 to the Hilltop Kitchen. That's the amount the organization has requested in the past. Bower said it was an important to give them that full amount because of the service they provide in Wadena, including providing warm meals almost daily for residents in need of a low cost prepared food option.

How are your taxes determined?

First, your local jurisdiction determines how much property tax revenue is needed. Officials calculate the local tax levy by subtracting all non-property tax revenue from the total proposed budget. Total Proposed Local Budget - Non-Property Tax Revenue (state aid, fees, etc.) = Property Tax Revenue Needed (levy).

The levy is spread among all taxable properties according to their tax capacity. (A property’s tax capacity is calculated by multiplying its taxable market value by its class rate.) Tax Capacity = Taxable Market Value x Class Rate. The local property tax rate is calculated by dividing the property tax revenue needed by the jurisdiction’s total tax capacity.

Finally, the county auditor calculates and applies any credits, voter-approved school referendum levies and the state general tax (for certain types of property). By combining the above calculations, you get the basic formula to determine the tax due for an individual property, according to the Minnesota Department of Revenue.

With a preliminary budget set, the levy amount cannot increase, but it can decrease before approval at the Truth in Taxation meeting planned before the end of the year.

Truth in Taxation notices are sent to all property owners each November, before local governments finalize their budgets for the coming year. This notice is meant to help you understand how property taxes are determined and how you can get involved with local budgeting and taxation. It provides information about your property’s:

  • Value and classification.

  • Tax amounts for the current year.

  • Estimated taxes for the coming year under the local budgets being proposed.

The notice also tells you when local officials will hold public meetings to discuss and finalize their budgets. These meetings are an opportunity to voice your opinion about the proposed spending. You cannot appeal your property’s market value, classification, or proposed taxes at these meetings.