Hermantown mayor addresses city’s challenges

Hermantown Mayor Wayne Boucher identified his community’s biggest challenge Thursday during his State of the City address: “How do we keep the quality of the services we provide where they are today and do that with shrinking revenues?”

State aid payments have eroded severely in recent years, he said, forcing Hermantown to become more reliant on local property taxes. In 2010, property taxes accounted for about two-thirds of the city’s revenues, but in 2013 Hermantown expects to derive 83 percent of its revenue from property taxes. Residents this year will see property tax bills that are 4.8 percent to 4.9 percent larger than last year.

The city is slated to receive $331,873 in local government aid from the state this year and is scheduled to take another 29 percent cut in 2014. But Gov. Mark Dayton’s budget could provide a sunnier outlook. If his proposal wins approval, Hermantown would receive an 86 percent bump in LGA in 2014, boosting state support to more than $618,000, according to data from the League of Minnesota Cities.

Hermantown would reap additional benefits if the governor’s plan to broaden the sales taxes gains approval. The city increased its local sales tax from 0.5 percent to 1 percent last election to pay for water and sewer improvements. Should the sales tax be broadened, Boucher said the city could more quickly build up a reserve that would allow it to tackle projects such as a new water tower as service is extended up U.S. Highway 53 toward Pike Lake.

The local sales tax is dedicated to pay for sewer and water infrastructure and the local government services center and cannot be channeled into Hermantown’s general fund for other uses, Boucher said.

Despite recently rising property taxes, Boucher said Hermantown continues to boast lower rates than many of its neighbors, including Duluth and Proctor.

He said the owner of a $150,000 home in Hermantown will pay $1,522 in city property taxes this year, compared to $1,811 for the same-valued property in Duluth.

“We are still perceived as a high-tax community, and we’ve got to fight against that image,” Boucher said.

He speculated the reputation may be due in part to the fact that Hermantown is home to a number of higher value residences.

Boucher urged Hermantown residents to consider what they value most in their community. Although it’s an issue that remains outside his direct purview, he asked people to step up in the coming year and join in a discussion about how to better support their schools. Hermantown voters rejected a school bond referendum in 2009, but Boucher said the district’s need for improved facilities has not gone away.

“We don’t know what the solution is going to look like, but we need to find a solution we all can live with,” he said.

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