Preliminary budget ups property tax 5.5%

city council

Nancy Edmonds Hanson

Moorhead’s property taxes will be going up 5.5% in 2022 if the preliminary budget approved by the City Council Monday is finalized in December. It amounts to an annual increase of $42.70, or $3.56 per month, on a home with the city’s median value of $191,000.

Taxes paid by owners of commercial, industrial and utility properties are capped at 1.6% of taxable market value by the state’s border cities legislation, the Disparity Reduction Credit. That means their tax payable will see a change only if their market value increases or decreases. The remainder is picked up by state funds.

Former finance director Wanda Wagner noted that, while the 5.5% tax levy increase is the largest since 2015, it represents “playing catch up” after last year’s boost of just 0.15%. That rate was kept to the bare minimum to help residents during the height of the pandemic. Increases have averaged 3 to 4%. She attributed most of the need to increase the levy to increases in wages and benefits.

Property taxes represent 34% of the city’s projected 2022 operating budget of $34.6 million – a total of $11.7 million. Other sources include the transfer of $9 million from Moorhead Public Service (26% of total); $7.3 million from state-provided Local Government Aid; and $6.4 million from all other sources. Public safety accounts for the largest expenditures, including 34% for police ($11.6 million) and 16% for the fire department ($5.4 million).

Wagner noted that property values within the city have increased 2.5% in the past year – building the tax base for 2022 by $371,039, compared to the previous year’s growth of $239,958.

Residents can comment on the proposed budget at council meetings over the next two months. The final budget will be approved on Dec. 13.

Taxes paid by property owners in the city account for just one-third of the tax bill they’ll receive next year. In 2021, 33 cents of each total dollar represented the city’s share. Clay County collected 38 cents and Moorhead School District 152, 27 cents. The Economic Development Authority and Buffalo Red River Watershed District each amounted to about a penny.

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