Property taxes fund much of the work that we—the citizens of Northfield—do together as a City. In this Note I want to highlight some of the goals and challenges that our City Council and City Staff work with as we set our budget and the tax levy that supports that budget.
Nearly 40% of our land is public or otherwise tax-exempt: schools, college campus facilities, churches, parks, municipal buildings, hospital facilities. All of these entities contribute to Northfield’s vibrancy and high quality of life and are major drivers in why people choose Northfield over other locations, but they typically don’t pay property taxes.
Residential property is ~37% of Northfield’s area. As in most cities, residential properties consume more in services than they generate in property tax revenues. Unless you live on a very small lot in the oldest parts of town, the tax you pay probably doesn’t cover the cost of providing the services that you and your family count on every day.
The remaining 23% of Northfield is commercial property which bears most of the burden for property tax revenue. This is one more reason to support our local businesses as much as possible.
We are investigating alternative revenue options, including a utility franchise fee, that many other cities use, which would reduce our reliance on property taxes. For this year, the city portion of your local taxes is about 34% of your total property tax bill. The rest is set by Rice County and the school district.
Given that limited income, we work hard to weigh spending in terms of need, cost, and benefit. Most operating expenses are fairly fixed, so most discussion is on how much to invest in our future.
What investments will make Northfield safer and healthier? Which will attract people and businesses to Northfield? Which useful investments can we partner with others to pay for?
The new intersection between the High School, the Middle School, and Bridgewater Elementary is an example of a good investment. It will fundamentally improve the safety for people of all ages and abilities. Because 246 is a state highway over half of the project cost will be covered by state funds. All in, someone with a home of above-average value will pay less than a couple dollars a month for Northfield’s share. This safety investment is worth it.
People understand that investments like these make Northfield a good place to move their homes and businesses. As a result, our property values are increasing. Even as we control tax rates, total tax bills can still go up. That’s a challenge, but there are a variety of programs to help people with lower incomes with those. I am proud of that fact that property values in Northfield are going up. Even so, our taxes on equally valued homes are very much in line with comparable cities.
We are a place people want to come, and stay when they do. Our investments in safety and quality of life help make that possible.