By Mollee Francisco

The Chaska City Council voted unanimously to adopt a maximum tax levy for 2011 identical to that of 2010.

City staff has argued that to provide the same services, Chaska will need to collect the same taxes in 2011 as in 2010. However, home values are down an average of 7.43 percent in Chaska, which will mean that the tax rate will increase.

For the average homeowner, City Administrator Matt Podhradsky estimates that their 2011 city taxes will look much like that of their 2010 tax bill, perhaps slightly lower. For a median value home ($200,000), city taxes will run $467 in 2011 compared to $473 in 2010. Without the tax rate increase, Podhradsky said the average homeowner would pay about $457 in 2011.

Monday night, the city levy was set at $4,880,354. The Chaska Economic Development Authority, which the city council operates, set the Housing Redevelopment Authority (HRA) levy at $74,864 – also the same as 2010.

“I’m less concerned about next year and more concerned about five years from now,” said City Administrator Matt Podhradsky.

The city faces a budget deficit of more than a half million dollars for 2011. Raising the tax rate – the percentage a homeowner pays based on the value of their residence – from .2189 to .2335, an increase of 6.7 percent, will make up for about $300,000 of that gap. Deferments are planned to make up for most of the remainder.

Podhradsky said without the rate hike, city staff would be forced to look at what services would be cut.

City treasurer Noel Graczyk warned the council that without the rate increase, “any regression would create a five-year climb-out” for Chaska.

The measure passed relatively quickly with no residents in the council chambers to voice their opposition and little discussion among the council members, who have spent two previous work sessions looking at the budget and their options for balancing it.

Councilor Gino Businaro defended his vote in favor of the rate hike saying that they “needed to start somewhere [considering] the difficulty in the 2011 budget,” but also noting that he understood the hardship it was creating for those residents already strapped due to loss of jobs, foreclosures or those on a fixed income.

“It’s difficult to pay a tax when you have no choice,” he said.

Businaro encouraged city staff to look long and hard at any possibilities to decrease expenditures or find additional revenue streams before the council was forced to set the final levy in December.

“Any help is appreciated,” he said.

Now that the maximum tax levy has been set, it can be lowered, but it cannot be increased for 2011. The public Truth in Taxation meeting will be held on Dec. 6. The council will adopt the final budget and tax levy on Dec. 20.