The city of Decorah is proposing a 12-cent increase in the property tax rate for the upcoming fiscal year.
At its meeting Monday night, the Council scheduled a public hearing on the budget for 5:45 p.m. Monday, March 4. The proposed tax rate for fiscal 2020 is $14.20 per $1,000 of taxable value.
The increase is due to debt payments since most of the city’s other levies have dropped, according to City Manager Chad Bird, who prepared financial background notes for the Council’s budget workshop held prior to and after Monday night’s Council meeting.
Decorah has outstanding debt of $4.94 million, about 17 percent of the city’s legal debt limit.
For the upcoming fiscal year, the city added debt for library, water department and fire station repairs. That debt will retire in June of 2022. The city also has incurred debt for the 2014 Highway 9 water and sewer utility project, the Decorah Fire Department’s aerial ladder truck, interest on the new Gundersen hangar project at the Decorah Airport and the 2018 Highway 9 and 52 water and sewer project.
The city’s total debt levy for fiscal 2020 is $2.18 per $1,000 of taxable value, up from the current year’s $1.67 levy. The debt levy is part of the city’s overall $14.20 tax rate proposed for fiscal 2020.
“Each year, the proposed budget is compiled with a desire to minimize the tax burden on residents and keep the city’s levy rate as low as possible while still funding the Council’s priorities,” Bird said.
Decorah’s taxable valuations have increased by 2 percent or $7,376,165, Bird reported.
“This compares with an increase in fiscal 2019 of 8.4 percent ($27,066,549) and 1.8 percent in fiscal 2018 ($5,695,992),” he said.

Offset
Bird said fund balances from the employee benefits fund have been utilized to help offset pressures on the city’s overall tax rate.
“However, as employee benefit demands continue to increase, use of fund balances to offset levies cannot continue indefinitely, as the benefit levy will most likely eventually bear the full cost of benefits, especially the police and fire fund,” Bird said.
The city manager commended staff members for working hard and recommending only increases that were prudent, such as equipment repairs and upgrades, safety-related equipment and costs beyond the city's control, such as utilities and fuel.

Water, sewer
Water and sewer funds have made “great strides” and will show improved balances at the end of fiscal 2020, pending any emergencies, Bird said.
Last April, the Council approved a 20 percent increase in water rates and a 12 percent increase in sewer rates to make up for negative balances.
“The Council’s efforts to address fund balance issues in previous years is starting to show results, do not let up now,” he advised the Council.
“It is sound business/fiscal practice that these enterprise funds provide the revenues necessary to maintain operations and to service their own debt and build reserve funds to handle emergency situations,” Bird said.
A 1.95 percent “cost of living adjustment” is recommended for both water and sewer rates in fiscal 2020.

Wages
The city uses the Midwest consumer price index (CPI) for staff wages. This year, the Midwest CPI is 1.95 percent and 1.95 percent raises are being budgeted for non-union and administrative salaries, plus any merit increases, Bird said.
The current union bargaining agreement adjusted union wage increases at 2.5 percent for fiscal 2019, the last year of the current bargaining agreement. Union bargaining is currently ongoing for the upcoming fiscal year, Bird said.
The city’s union employees include water, sewer, waste water treatment plant, street, police, fire and library personnel.