An error was discovered in Brainerd's tax rate and levy numbers, it was learned Thursday.
Theresa Goble, finance director, said she found the error while she was trying to answer Brainerd City Council member Bob Olson's questions on the tax rate and preliminary levy.
"Alderman Olson was right in stating that the information provided was incorrect," Goble stated in a memo to the mayor and council members. "It's an embarrassment to me. I embarrassed the administrator. I embarrassed the council."
Olson previously disputed the numbers city staff members put together for the budget discussions and did his own calculations. Staff members and the Crow Wing County auditor's office said Olson's calculations did not include all the items that needed to be considered like tax-increment financing districts.
Olson's calculations were not exact, but Goble said his numbers were closer than hers. She said the problem revolved around incorrect information used on the calculation worksheet regarding the city's debt service levy for the 2006A bond issue.
Goble said she mistakenly gave the council wrong information on the estimated tax rate and preliminary levy and discovered the error Wednesday. She called the county auditor's office to verify the information. The error, she said, would have been discovered within days as the truth-in-taxation statements were developed, which are mailed out to residents.
Olson said he read the memo and intended to examine Goble's figures, but he still questioned how the mistake she made affected the tax rate. Olson said he expected to have a statement ready on Monday.
For the city, the error means the council meant to set a roughly 44 percent tax rate and instead set a 46 percent tax rate. And the truth-in-taxation statements homeowners receive will reflect the higher number. To reach their original goal, the council will have to cut an additional $166,500 out of the budget.
"If the council wants to get to 44 percent tax rate we'll have to reduce more than what we thought," Goble said.
Levies may always be cut after a preliminary levy is set but cannot be increased. The council, in a 4-3 vote, set its preliminary 2008 tax levy at $3,982,796. Olson, council member Kevin Goedker and council President Kelly Bevans were opposed. Olson made an earlier motion to set the city's 2008 tax levy at $3,624,523 to keep a flat tax rate from 2007, but that motion failed by a 4-3 vote. At the September meeting, Olson took issue with city staff's financial projections, saying a $3,982,796 levy would equate to a tax rate of 46.9 percent, not 44.68 percent.
The Crow Wing County auditor's office found a $3,982,796 preliminary levy results in a tax rate of 46.653 percent, not the 44.689 percent previously reported. The county sets the tax rate. The city sets the levy dollars.
A tax rate of 44.689 percent would result in a levy of $3,816,296. Department head requested budgets would have required a levy of $4,164,822. The 2007 city levy was $3,509,766.
Goble said she deeply regrets giving the council the wrong information to base its decision on. She plans to publicly apologize at the Oct. 1 meeting. The council will meet in a budget session on Oct. 22.
Mayor James Wallin, who previously asked Olson to apologize for publicly chastising city staff members on this matter, said the mistakes did not change his opinion of Goble as an honest and dedicated staff member.
For a home with a $150,000 market value, the city tax in 2007 was $640. If the tax rate was 46.53 percent, that same home's tax would be $699. If the tax rate were 44.689 percent the tax would be $670.
Olson said he was bothered by sending requests to the administrator's office since Sept. 13, requesting information on the tax levy and rate and had sent the city staff a memo saying he'd file a complaint with the state if the information wasn't received by Monday. Olson said he received the information Thursday afternoon. In a Sept. 27 memo, Olson questioned whether Goble was honest and forthright with the council and others on this matter.
Bevans said he was thankful Goble caught the error in the percentage, but the vote on the preliminary levy was to set a dollar amount that can be trimmed further. And he wouldn't be surprised if council members took a harder look at places where they could hold the line.
"The error in the accounting is minimal," Bevans said. "The tax rate on the vote was not the issue at all."
The No. 1 issue is what the levy dollar figure will end up being in December, he said. If a council member feels something is wrong they are elected to try and fix it, not chastise an individual or make a personal attack, Bevans said.
"I voted against the preliminary levy," Bevans said. "I didn't chastise or belittle or publicly humiliate anyone who voted for it."
Regarding the dispute over the numbers, other issues and personality clashes between Olson and Wallin, Bevans said the discussion - while it may be heated - needs to be courteous. Having diverse views is probably good for the council overall, Bevans said.
"I can't say enough good about our staff," Bevans said regarding dedication throughout the city departments. "I often appreciate (Olson's) conclusions but many times question the delivery. Sometimes the delivery obscures the message and that might be the case in this instance."
RENEE RICHARDSON may be reached at firstname.lastname@example.org or 855-5852.
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