OK’d for now: 4.5% city tax levy increase for 2023

A preliminary 2023 budget and tax levy that would increase the city portion of property taxes on a $513,200 home by $106 were set Tuesday, Sept. 6, by the Eden Prairie City Council.

The council expects to hold a public meeting on the final tax levy and budget Dec. 6, and make final decisions at that meeting or by Dec. 28. The city is only one portion of the property tax bill received annually by homeowners; the schools and Hennepin County are also major parts.

Approved unanimously Tuesday was a preliminary 2023 city tax levy of $44.9 million and a budget of $57.4 million.

With a staff of 235 full-time employees, the city dedicates the largest portion of its budget – more than $34 million of the $57.4 million – to wages and benefits. Wages are proposed to increase by 4.7% in 2023. This includes the additional staffing of a police officer and a fire administration assistant position moving from part-time to full-time.

Property taxes are the single largest source of revenue for the city’s budget, contributing 77% of the needed funds. Charges for services are second, and license and permit revenue is third.

There is a $1.1 million difference between revenues and expenses for 2023, and the city anticipates using American Recovery Plan funding to offset the shortfall.

If the tax levy increases 4.5%, the city portion of property taxes on a $513,200 home – the new median value in Eden Prairie – will go up 7.4%, or $106. The tax increase may not be the same for homes of other values.

Also, the $513,200 reflects the average market-value increase of 19% among Eden Prairie homes this year. If you own a home like this and its value went up only 10%, however, your 2023 city tax is projected to increase by 1.6% or $22;  if your home’s value went up 25%, the city tax is projected to increase by $197 or 13.8%. Properties across the metro area this year saw significant increases in market value because of the hot real estate market.

Eden Prairie City Manager Rick Getschow explained Tuesday that the proposed 4.5% increase in the tax levy is lower than preliminary tax-levy increases being considered in 14 other metro-area cities; lower than Blaine, Bloomington, Brooklyn Park, Burnsville, Coon Rapids, Eagan, Edina, Lakeville, Maple Grove, Minnetonka, Richfield, St. Louis Park, Plymouth, and Woodbury. He cautioned that these are preliminary levy numbers, so they may change before the end of the year.

Getschow said Eden Prairie’s anticipated tax-levy increase may be lower because those cities are catching up on staffing, or because Eden Prairie’s attention to long-range capital planning helps eliminate any costly surprises in the budget. Mayor Ron Case said it may also be a pay-off from innovation and sustainability efforts – such as measures to reduce city energy costs with “green” solutions.

Council Member Mark Freiberg lauded city staff for holding the tax-levy increase to 4.5% while increasing public-safety staffing.

“I think we have almost perfected our process of budgeting,” said Council Member PG Narayanan.