Council approves a zero percent levyTheir school and county tax levies may be going up, but Cloquet residents can be certain of one thing: their city tax levy will not.
By: Jana Peterson, Pine Journal
Their school and county tax levies may be going up, but Cloquet residents can be certain of one thing: their city tax levy will not.
City Councilors and Mayor Bruce Ahlgren passed a resolution setting the maximum levy increase at zero percent Tuesday. While that amount could go down — to a decreased levy — before the council passes the final budget and levy amounts in December, it cannot go up.
The zero percent increase comes despite a nearly 8 percent increase in expenditures, caused in part by an increase in health care costs, increased retirement account contributions required by the legislature and a 2 percent increase in salaries, along with any step increases.
The increases were offset by gains in other areas, including a sales tax exemption for 2014 passed by the state legislature, which could save the city up to $120,000 per year, as well as more Local Government Aid, or LGA, than had been budgeted for. Because the city had previously directed staff to plan for less LGA than the city was due to receive from the state and because the legislature actually passed a bill that added additional funds, Cloquet stands to receive $331,000 more than anticipated.
City Finance Director Nancy Klassen explained that the extra funds are being used for infrastructure and capital items and to pay off some debts for greater future savings.
“Basically, that’s how we can keep the levy increase at zero,” she said.
The Council will take its final vote on the city’s 2014 budget and levy at its 7 p.m. meeting Dec. 3.
In other matters Tuesday, the Council and mayor approved a one-year extension of a business subsidy made to Woodward Enterprises LLC, which owns Daqota Systems, one of two occupants at the Cloquet Business Park. Daqota Systems completed construction of a $1.8 million building at the business park in late 2011, with two-thirds of the building set aside for lease space and one-third for the contract engineering company. The city of Cloquet helped with that development by giving the business a $300,000 loan, and $200,000 in tax increment financing was issued for the project. Additionally, the city wrote down the cost of the land and deferred one year of loan payments.
Cloquet Community Development Director Holly Butcher explained that Daqota was asking for the one-year extension to give the business time to recover from staffing losses — which left the business with only one employee in Minnesota when they’d agreed to have 10 by Nov. 18 of this year according to the job creation requirement in the contract with the city — and lease a portion of the building or sell it outright.
The Council and mayor voted unanimously to extend the agreement one year, until Nov. 18, 2014.