MARSHALL - Commercial property owners in Marshall spoke out against proposed city property tax increases Tuesday night, by way of a stack of signed letters presented to the Marshall City Council. And while the property owners' input was considered during council discussion after a public hearing, council members found themselves divided over whether to increase the proposed property tax levy, or keep it the same as this year's.
The council had its annual public hearing on the city's proposed 2012 budget and levy on Tuesday night. About 10 local taxpayers attended the meeting. Marshall City Administrator Ben Martig started out the hearing with an overview of property tax changes in Marshall, as well as highlights of the city's proposed budget.
The city of Marshall is currently proposing a levy of about $4.9 million, an increase of about $107,000, or 2.2 percent, from 2011.
Because of the state's new Homestead Market Value Exclusion, city property tax burdens have shifted more toward commercial properties, Martig said. Homes valued less than $160,000 saw anywhere from no change in city property taxes to a decrease of up to 8 percent, while apartment buildings and commercial/industrial property taxes were increased about 2.9 percent.
The Market Value Exclusion reduces a property's taxable market value, not its actual market value, Martig said.
"I think this is where I've seen some confusion," he said.
In outlining the proposed 2012 budget, Martig said more than two-thirds of the proposed property tax revenue would go to the city's general fund. The general fund covers expenses like general city operations, public safety and public works projects. The city's capital outlay expenditures are projected to increase in 2012, as expenses like needed equipment purchases come up, Martig said.
Russ Labat, publisher of the Marshall Independent, presented the council with 30 letters from commercial property owners and managers opposing the city's proposed levy increase. Marshall businesses have already been subjected to large increases in property taxes in 2009, as well as rising utility rates, Labat said.
"Commercial property owners would like to see a zero percent increase," Labat said.
Pat Foley of EcoWater Systems in Marshall, said factors like the economy and state taxes are also putting the squeeze on commercial property tax owners. Both Labat and Foley said the city could make use of reserves instead of raising taxes to cover capital expenditures.
If Marshall didn't increase its levy for 2012, Martig said, it would decrease the overall tax impact on commercial properties. The overall tax increase, including city, county and school taxes, would be 2 percent instead of 2.6 percent, he said.
After the close of the public hearing, commercial property owners' concerns were part of discussion during a short budget work session. As Martig and council members went through possible revisions to the 2012 budget, council members found themselves divided on whether to pursue a zero levy increase or not. Marshall Mayor Bob Byrnes and council members Dan Ritter and Charlie Sanow said they would be in favor of a zero increase.
With the growth of Marshall's tax capacity, Byrnes said, "This is a year we can justify a zero percent increase."
"I think we need some increase in there," said council member John DeCramer. A gradual tax increase, like 1 percent, would be easier for commercial property owners to deal with than being hit by larger increases when the city needs to fund improvement projects in the future, he said.
DeCramer and council members Mike Boedigheimer, Larry Doom and Jennie Hulsizer said they would be in favor of a smaller levy increase, like 1 percent.
As the difference between the zero percent and 1 percent levy increase proposals would be relatively small compared to the overall budget, Martig said he would not have a problem presenting two different budget proposals for council members to consider at their next meeting.