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Duluth raises millage rate

DULUTH -- The Duluth City Council on Monday adopted a tax millage increase of 0.8 mills for 2010 and approved a $36.1 million fiscal year 2011 budget.

The vote on raising the tax millage rate from 5.191 mills to 5.991 mills was 4-1 with Councilman Billy Jones voting against it. The vote in favor of the new budget was unanimous.

City Administrator Phil McLemore reported that the city's 2010 tax digest reflected a 10 percent average drop in property tax values on reassessed homes resulting in less operating revenue for the city. Duluth's tax digest is expected to continue decreasing through 2012, he said.

Duluth's FY 2011 budget includes $17.9 million in operating expenses, down from 21 million in 2008, McLemore said. With the just-approved millage increase, the city will only have to use about $1.3 million to $1.4 million in reserve funds to make up the revenue shortfall. Without the tax increase, the city would have had to use about $2.1 million in reserve funds to balance the budget.

McLemore noted that there had not been a millage rate increase in Duluth in 25 years. The affect of the millage rate increase would be about $12 more per year or $1 more a month on a home that had been valued at $150,000 but now had dropped to $135,000, he said.

"We really sharpened our pencils and got our expenses down without risking services to the community," Councilwoman Marsha Bomar said. "We've tried to come as close to neutral as possible. We're just taking funds we need to operate the city."

"It was a tough decision," said Councilman Jim Dugan, "but if we don't do it this year, it would be a lot more than 0.8 of a mill next year. It would be a double hit next year."

The $36.1 million total budget includes operating expenses, capital expenditures, debt service and other costs. The city's fiscal year runs from July 1 through June 30. A public hearing on the budget was held May 24.