Hutchinson’s tax rate trend has decreased 20% during the past 10 years. The tax rate is determined by taking the city’s tax levy and dividing it by its total tax capacity.
According to the Minnesota State Auditor’s analysis of municipal liquor stores in 2018, Liquor Hutch ranked 11th by gross sales among the state’s 190 stores, and second among outstate stores.
Ardis Tobinson takes a walk around the Hutchinson Recreation Center’s gym. The facility is regularly used by residents for walking and informal sports. The Parks, Recreation and Community Education Department is currently gathering feedback to nail down community needs and priorities for parks and facilities such as the Rec Center.
Debt service for the construction of the new Hutchinson police facility north of Liquor Hutch contributed to a proposed Hutchinson property tax levy.
Matt
Jaunich
For the second time in two weeks, the Hutchinson City Council reviewed its financial plans for 2024 and once again the public showed little interest.
The annual Truth-In-Taxation hearing last week drew a couple of residents and one business owner.
“The reason that hopefully you’re here tonight … is to enhance the public participation in the property tax system by allowing the public forum to discuss the proposed budget, proposed tax levies, talk about increase of or explain increases in the bulk of budget,” City Administrator Matt Jaunich said.
The preliminary tax levy, initially sent out in September, proposed a city tax increase of 9.3%, with a balanced budget. However, revisions have been made, and the revised budget includes a 7.2% tax levy increase. This adjustment reflects changes in revenue and expense projections, resulting in the elimination of approximately $178,000 in taxes since the adoption of the preliminary budget in September.
A home valued at $250,000 will see a $131 increase in taxes next year.
Jaunich compared Hutchinson to other cities in McLeod County, highlighting Hutchinson’s position in property tax rates.
“Hutchinson had the second lowest tax rate in 2023,” he said.
In McLeod County for 2023, Biscay had the lowest city property tax at 44.65%, Hutchinson was the second-lowest coming in at 53.65%, while Stewart had the highest property tax at 131.65%.
“One thing I do like to note because the question comes up is that the city taxes are extremely high and my question is compared to what or compared to who,” Jaunich said.
When comparing 19 outstate regional centers for 2022, Hutchinson ranked in the middle of the pack with a 60.41% tax rate, dispelling the notion that the city’s taxes are exceptionally high compared to others.
“The average city tax (state-wide) is 74.65%. So, when you look at overall, we’re below the state average, we’re kind of middle of the pack in regards to outstate regional centers and we’re on the low side when it comes to other cities within the county.”
The proposed budget for 2024 revealed a 9.1% increase in the general fund tax levy, marking the ninth consecutive year of increase. Juanich reminded the council of the city’s mission statement and core values, emphasizing the alignment of budget decisions with key focus areas.
“The city of Hutchinson exists with our residents, businesses and property owners and visitors are provided with quality services and programs that support a safe, healthy, sustainable and business friendly community with a small-town atmosphere for our possibly government, similar to our less than comparable outstate Minnesota cities,” he said.
In terms of expenses, the city projected a 3.7% increase in the general fund, allocating funds to various departments and highlighting the impact of rising wages, benefits, and supply costs.
“Once again, that (wages and benefits) is our highest expenditure within our fund is the cost for the employees,” Jaunich said. “We see an increase in supplies of about 8.7%. Once again, that’s directly related to inflation and as most of us are seeing in our day-to-day lives, the costs to operate at the city, those fees or those expenses are higher than what we’ve been seeing in the past. It’s the same for services and charges.”
The enterprise funds were also discussed which included Hutch Liquor, Creekside compost, refuse, water, wastewater and stormwater system.
“I like to highlight some of our enterprise funds just so the public is aware of that, Juanich said. “Once again, no tax dollars go into these funds. These are all funded by the service fees that the various different departments collect.”
Jaunich outlined the proposed revenues and expenses for the each of the enterprise funds for 2024.
“The liquor store, we need to buy a new refrigerator freezer, we need to make upgrades to the counters,” he said. “That’s where if you see a negative cash balance, it’s done by design, it’s on purpose. We’re using cash to pay for those needed improvements.”
Quick facts about enterprise funds were shared, indicating that the liquor store and Creekside funds continued to perform well, contributing over $670,000 to the general fund. However, a 5% increase in garbage rates for 2024 was proposed due to rising costs, including increased hauling and disposal rates. Other enterprise funds maintained healthy balances, with only a slight increase in stormwater rates.
“With those transfers-in, the creekside and the liquor store and stuff, that really helps us to keep our services up at a high level,” Mayor Gary Forcier said.
The meeting also delved into the city’s 2024-2028 five-year capital improvement plan, highlighting investment of approximately $70 million in various city aspects. The breakdown included allocations for:
• Infrastructure $23.35 million
• Enterprise funds $19.99 million
• Public Works $15.2 million
• Parks and Recreation $6.36 million
• Public safety $3.28 million
• General government $1.18 million
Funding sources for these capital improvements were a mix of state aid, federal aid, donations, enterprise funds, new debt, taxes, special assessments, and special fund reserves, Jaunich asked.
Resident Jim Lauer asked about the city’s enterprise funds, particularly focusing on the utilities sector. He noted that despite revenues being consistently less than expenses in the annual budget reports, there is a surplus being transferred back to the city.
“Where’s that magic math happen or is it somewhere else,” he said.
City Finance Director Andy Reid explained that depreciation is a necessary accounting practice used to reflect the decreasing value of facilities and infrastructure in financial statements. He said that, in the case of utilities like wastewater, the annual depreciation expense can be significant, such as $1.8 million. This depreciation cost contributes to a negative net revenue on the profit and loss statement, but it’s crucial to understand that depreciation is not an actual cash expense. Instead, it represents an accounting measure to set aside funds for future replacement of facilities and infrastructure.
“You pull depreciation out of our profit and loss statement and all of a sudden we’ve got cash flow of maybe a million dollars,” he said.
Lauer also expressed interest in obtaining detailed departmental budgets to better understand the allocation of funds, particularly in relation to personnel, such as the police department.
The next step is for City Council to approve the final budget and levies a its Dec 19 meeting and then certify the final levies to the county by Dec. 30.
“One thing is we all live here, we all pay the same taxes, so we make sure we’re doing the best we can to keep the taxes low,” Forcier said.
In what commissioners said was a response to state increases for public defenders salaries, the McLeod County Board approved a 43% pay increase for its county attorney.
Ryan Hansch, who was elected in November 2022, will see his salary jump jump from $135,935 this year to $195,000 for 2024.
The state and the union representing public defenders reached an agreement earlier this year for attorney’s pay increases of 26% to 72% depending on seniority. The increases affect approximately 470 attorneys statewide and address longstanding wage stagnation issues that have led to high turnover and a significant pay disparity between public defenders and county-employed prosecutors, according to the state.
“Obviously, this is a shocker,” Commissioner Doug Krueger said of the county attorney’s pay jump. “It was shocking to me because of the short notice — in my words — of having to do this. This was triggered by the public defender office of the state of Minnesota, the public defender’s salaries.”
As part of the tentative agreement, the salary for first-year public defenders will rise from $70,146 to $88,380. Senior attorneys, currently earning between $91,917 and $123,093, are expected to experience the most substantial salary increase, bringing their compensation to $158,500.
McLeod County Administrator Shelia Murphy emphasized the longstanding issue of being behind in county attorney wages.
“Obviously, as a county, if somebody else raises your wages, you raise your wages. We can’t do that,” she said. “However, we have been behind in county attorney wages for a significant amount of time. We had to make a change in 2018 and review the job, and you can only change so much at once. Sometimes we were pretty far behind the scale. When you look at the surrounding county attorney and assistant county attorney salary, sometimes we are not competitive, and especially in private practice.”
County Attorney salaries for 2022 in counties of similar size were:
• Becker, $122,025;
• Carlton, $134,005;
• Steele, $150,408;
• Mower, $149,000.
Krueger defended the proposed increase, highlighting the disparity in salaries that could lead to a mass exodus of experienced attorneys. He expressed concern not just about the county attorney’s wages but also about retaining the entire staff. The fear was that a failure to address the issue promptly might result in the department being split up, costing the county even more in the long run, he said.
Commissioner Nathan Schmalz questioned if years of experience were factored into the proposed salary structure.
“I would assume that it is embedded within that somewhat difficult on an elected position,” board Chairman Paul Wright said. “I suppose as budget committee looked at this, I mean the biggest kicker that caused us to act so quickly was where the state definitely put such a significant increase that this is leading rural counties scrambling and then all companies scrambling more to keep up and it’s very frustrating.”
Wright mentioned the importance of maintaining current staffing levels, highlighting the efficiency of their lean staff compared to to other counties.
“They’re effective because of their years of experience and leadership that they have. So those are some of the other factors involved,” Wright said.
The motion passed 4-1 with Schmalz voting against the pay increase.
Other pay increases for 2024:
• The 2024 salary for the sheriff was set at $135,962. In 2023, the salary for Sheriff Tim Langenfeld was set at $132,000. In 2022, the salary was $107,018. In 2021, it was $103,901.
• The auditor-treasurer salary was set at $115,363 for 2024. Voters selected Connie Kurtzweg for the role. In 2023 the salary was $112,000. In 2022, the salary was $91,974. In 2021, it was $89,295.
Board members also gave themselves a $2,000 raise, to $40,000 annually.
Schmalz was the only board member to vote against that increase.
“I said last year that I was satisfied with what I was receiving and I’m still going to say that my position hasn’t changed,” Schmalz said. “I’m satisfied with the compensation we’ve received, and I’ll be voting against the motion.”
A market value study and state requirements mean some segments of McLeod County property values — especially agriculture — will see significant increases for 2024.
McLeod County Assessor Sue Schulz said during last week’s Truth-in-Taxation hearing that taxes payable in 2024 underwent a sales ratio study to ensure their assessed values fell within the state-mandated 90% to 105% of market value.
“This is a state requirement, it’s not a county policy,” she said. “If we don’t make those adjustments, the state comes in and does it for us. We are monitored by the Department of Revenue to make sure that we are doing what statute says that we should.”
The study resulted in increases of 30% in agricultural property, 7% in residential property, 17% for apartments and 1% increase in commercial and industrial properties, she said.
Schulz noted the challenges, particularly in the agricultural sector, where ratios were lower than desired.
“Our agriculture is by far what I would term our worst,” Schulz said. “Our ratios there were significantly lower than the 90% minimum that we were required to be at with that fact. That’s why a lot of you guys saw a significant increase in the agricultural values that we had in our county this year.”
County Board Chairman Paul Wright asked Schulz to explain how agriculture sales affect assessed values.
“This year we fell short,” Schulz said. “I raised agricultural values 20%, we missed the ratio, and the state came in and gave us another 10%. We have to report information to the state basically four times a year, twice from my office and twice from Connie’s (Kurtzweg, auditor-treasurer) office. They take a look at our value and make sure that we are adjusting our values by what we need to meet to get to that ratio. And if it doesn’t happen, we do get a state board increase and they come in and make those changes for us.”
Minnesota is grappling with a significant increase in the value of agricultural land, which has a tiered tax system. Properties valued at less than $2.1 million incur a 0.5% tax rate, while those above face a 1% rate, Schultz said.
“We are not the only ones that are seeing these significant increases,” she said. “The state actually increased that limit to over $3 million, but they didn’t put it into effect until next year.”
In the interim, more properties fall into the 1% tax category, she said, resulting in substantial tax hikes. A similar situation applies to the homestead exclusion for homeowners, which has not been adjusted for years, she said.
In September the McLeod County Board set the preliminary tax levy increase at 5%. The average levy increase for counties across the state was 6.7%, according to Kurtzweg. In 2023 McLeod County was 0.6% above the state average.
“McLeod County ranks 35 out of 87 counties for 2024,” she said.
The proposed levies per person will be $763, according to Kurtzweg.
“The average of the neighboring counties is $853, and the average of similarly populated counties is $722,” she said. “McLeod County does fall below the neighboring counties by $90, and it falls above the similarly populated counties by $41.”
The final 2024 budget and levy meeting is scheduled for 9 a.m. Tuesday, Dec. 19 at the McLeod County Government Center, 520 Chandler Ave N., Glencoe.
Speech team member Joel Wang leads team members in a discussion about heatwave deaths in California.
There isn’t a guidebook to being a student representative for Hutchinson schools. Joel Wang, Hutchinson’s student representative, is building his role from the ground up.
“There wasn’t like a packet or a video for the student representative role,” Wang said. “I think the idea of it is supposed to be student-driven.”
Without a role model, Wang has made the position his own, using his position to talk about events and news at the school, such as TigerPath updates, as well as bringing a student voice to topics discussed at Hutchinson School Board meetings.
But Wang wanted more perspective on how he could be better at his role, so he attended the 2023 Student School Board Development Event hosted by the Minnesota School Board Association.
The event had two main parts: informative sessions and collaborative sessions.
Wang attended an information session on how to handle difficult conversations and constituents and a student-led collaborative session on how to better hear student voices.
“What I pulled out of that session was the challenges and solutions,” he said. “I learned about AAP – acknowledge, appreciate and perspective. You acknowledge when someone gives their perspective and you appreciate them because you want to make sure, especially in a democratic society, that everybody is voicing their opinions, even if you disagree with them.”
Once the constituents have been heard and given their piece, the representative responds by giving their perspective.
“As a school board, or anybody with a governing role, you’re going to get upset people who don’t like the way you’re doing things or you’re gonna get upset people who don’t like the way things are going right now,” Wang said. “And their anger might be directed at you because you are a governing body or they just don’t feel like you’re doing something right. But you have to give your perspective on the idea and that way, both you and the constituent can collaborate on making an environment that is inclusive to everybody.”
To begin discussion, constituents’ voices must be heard. Wang encourages students to attend board meetings or speak with him, but he and other student representatives at the event brainstormed ways they could hear more voices.
“The two biggest ideas were holding forums for students and social media outreach,” Wang said. “Basically, having a way and a place for students to connect with me and voice their opinions if they’re too afraid or busy to attend these meetings.”
Wang said those are just ideas and he hasn’t planned to integrate them into Hutchinson High School yet.
“I think for Hutchinson it would have to be online, as otherwise why not just come to board meetings,” he said. “Having it online would make it more accessible, which is important because you want to reach as many constituents as possible. Something like a Google form emailed out every month asking students’ opinion on topics.”
Wang said the event provided helpful information for him and he enjoyed the collaborative efforts with the various schools.
“It was very interesting to meet all these school board reps and hear their perspectives on everything,” he said. “Because I’m from Hutchinson, I have a smaller worldview on how this all works, so I get ideas from these developmental events to help me be a better student representative.”
