Q&A: Talking Taxes with Golden Valley's Finance Director

Like it or not, Golden Valley residents will have to pay higher taxes in 2011, but they won't have to pay as much as originally thought. Golden Valley Patch sat down with Golden Valley Finance Director Sue Virnig to talk more about the increased taxes and what people can expect once the Golden Valley City Council adopts the budget on Dec. 7.

Golden Valley Patch: How difficult has the budget process been this year?

Sue Virnig: This has been one of the toughest years in budgeting due to the economy and the impact on the taxpayer. The City Council reviews the budget and cost of its services. The final decision for the levy and budget will be Dec. 7 at a public hearing.

The original concept budget for 2011 is lower by $419,905 from the proposed budget that was approved in September, 2010. Many cuts were made including two employees.

Golden Valley Patch: Property values have gone down, yet property taxes have gone up. Why?

Virnig: The city comes up with a list of needs that they have to fulfill, whether it's federal mandated or state mandated, or what the local community needs. And so we come up with that level of service—and there's a cost to it. So that service with that cost then is divvyed up amongst the properties because that's their share of what they pay of that total picture.

And so when you have a property, like we have a median home at $270,000 that went down to $250,000 because their value dropped, [that] doesn't mean that our services here need to drop to help them out...But this year because all of the values in the whole community went down it meant that they're all going to take a different percentage of that pie.

As we all know the economy is going through a turn right now and we've tried to reduce our costs, but fire services in itself, you have the same amount of fire calls usually, you can't say OK we're going to respond to 300 calls versus 500 calls because we're out of money. It's not gonna work. Nor should it work.

And the same thing with police, more calls for service may happen during those times. So you kind of make it all work for the people in your community. And I should say businesses too, because they pay quite a bit of the share.

That is the no. 1 question we get: 'My property values went down; why did my taxes go up?' We used a median home; there are some homes that stayed the same in value. The assessors keep telling us you used to have your pocket areas, and now it's all over the board where they go up and down because some people had improvements, some people had foreclosed homes in their area, so it's totally a different ballgame.

Golden Valley Patch: What is the city council doing to ease some of the tax burden on people?

Virnig: One of the things that we are doing in the City of Golden Valley, we're going through the whole city to redo streets.  And, we based them on a ranking, it's called a PQI, Pavement Quality Index...because it is cheaper to do neighborhoods than it is just to do one street and then go five blocks away and do another street, they came up with the plan and they're going through this plan.

We have 87 miles done... and what we did, knowing the economic climate, we reduced the number of streets. Well, we still have to do the remaining streets, but because of the future debt, it would go up if we actually constructed more streets. So what we tried to do is lower that debt for the next two years. And that's also where the city council—because we got that amount back from Valley Square tax increment district—they reduced the debt payment for next year and that will reduce overall tax burden too. 

Golden Valley Patch: How big of a tax increase is it for the people of Golden Valley?

Virnig: On that median home, it was originally on the proposed statement $25 for the year. And now it's down to $13.

Golden Valley Patch: What can people expect this next year in terms of service? What changes might they see?

Virnig: We're looking at reducing the number of hours at park and rec, their community center where there's a staff member on, they would go 8am - 4:30pm instead of 8am - 5pm. The winter brochure will be done differently to reduce costs. And then we've switched our dispatch, we're going to Edina in 2011 and that will have a savings. Also, we just decreased supplies as much as we could. Fuel costs didn't go up so that helped us.

Golden Valley Patch: Does the city ever find itself realizing they need to make midyear budget cuts to balance the budget?

Virnig: One thing with local governments, we get our money in July and December—the $16 million in debt levy—we get half of it in July and half of it in December. So we kind of have to make it work in between, because we don't see it until July. So we're running at a negative until we get that money.

We do make adjustments through the year. Like last year building permits went down so we had to make some cuts. And we knew going into this year building permits probably aren't going to increase yet this year. Those are the other revenues that the city gets in that help us. It helps the taxpayer too. But when those go down and we have levy limits, then the expenditure difference has to happen.

Golden Valley Patch: When can people expect taxes to stop increasing?

Virnig: Right now Hennepin County does our appraisal work and they're looking at values based on the last two years of comparable sales. And they get the runs from the state of who sold their home and they evaluate that, and they go out and physically look at homes and they come up with that value.

They give us that value in March of next year so we don't even know at this point.

We do a two-year budget. But, that second year budget is a concept only. And that's because we don't know things like that. We don't know where the values are going. It's just kind of like, OK here's a snapshot of where we could be at... and it gives us a good running start to know what's down the pipe next year.