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Struggling Ely taxpayers confront city leaders

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John Fossum
Ely-Bloomenson Community Hospital Administrator John Fossum explains how similar running a hospital is to running a small city, when it comes to revenues and expenditures.
Special for MPR/Steve Foss

When city leaders in Ely set their preliminary budget back in September, they decided to raise their tax levy by 26 percent. On Tuesday night at a Truth in Taxation hearing, they felt the blowback for that decision.

"I'm here tonight because I got this tax statement like everyone else did in the mail, and I'm flaming," said Todd Larson, who saw his proposed city property taxes climb a staggering 41.5 percent. "I don't know if my face is red right now, but I'm burning up."

Larson said he expected the taxes on his home would go up, after making some improvements that raised the estimated market value by close to $5,000. But he wasn't prepared for the size of the increase, and he said it's enough to make him want to leave town.

"We were going to stay in Ely until our kids could drive or at least graduate high school. But we've already started looking for a home out of town," he said. "And that's what's going to happen more with this. It's going to tax people out of Ely."

Part of the tax increase is the result of a change in state tax law. The deal that ended last summer's state budget stalemate included the repeal of a tax relief program called the Market Value Homestead Credit. That's driving up property taxes by itself. But Ely officials said they needed to collect more in taxes next year to make up for the loss of local government aid over the past few years.

Ely Mayor Roger Skraba
Ely Mayor Roger Skraba explains that when state aid goes down, taxes go up unless more cuts are made to city services.
Photo for MPR by Steve Foss

That's not acceptable for Ely homeowner Geri Koschack, who said that even though the value of her home stayed the same, her proposed city taxes for next year are up by 60 percent. That's more than a $1,000 increase.

"I can't live with that. It's just too much," she said. "The city is going to have to do something. Where are we going to get this money from? You're trying to squeeze blood out of a turnip and there isn't any more to be had."

There's some relief for Ely property owners. Since those tax statements were mailed out, city leaders reduced their proposed levy from 26 percent down to 20 percent. Still, Ely faces some unique circumstances that are pushing local property taxes higher than most other cities in the state.

Ely Mayor Roger Skraba says the city is in desperate need of infrastructure improvements that have been put off because of cuts in state aid. An aging city hall is down to its last working boiler. Roads need repair. And a leaking roof on the community center can't wait any longer to be fixed. And along with state aid cuts, the city's population has been dwindling for the past several decades. That means fewer taxpayers.

Gary Kovall
Gary Kovall shares with the audience and Ely City Council members how important it is for city leaders to get a handle on budget cuts. Kovall was born and raised in Ely, lived much of his life in California, and has moved back home. He passionately suggested that city leaders not blame St. Paul for cuts to Local Government Aid, but take charge of their city's destiny lest it go as far downhill as California.
Special for MPR/Steve Foss

"My community is dying. I don't like to say that. But it's a fact," he said. "And is it my job to bring it back? Yeah. Hell, I'm trying to keep it sustained right now. I used to think I wanted to grow it, but I just want to keep it. What we did this year is try to stabilize this community, physically stabilize it, just to stop it from falling apart."

But it was clear at last night's meeting that taxpayers want city leaders to find more cuts. Gary Kovall was born in Ely but spent most of his life in California. He just moved back last spring, just in time to see a nearly 41 percent proposed tax hike on his newly remodeled retirement home.

"If our taxes are going to go up, and you're going to continue spending money the way we are, saying 'oh, it's St. Paul, oh, the state did it to us. We can't do anything about it.' Well, I don't know what to tell you, but it isn't going to work. It's just not going to work," he said.

Ely city officials said they heard taxpayers loud and clear and they'll continue to whittle away at the budget until Dec. 20, when they're expected to give the budget final approval.