Litchfield City Hall

Litchfield City Council approved a preliminary 2022 budget and levy Sept. 7 that calls for a 6.4 percent increase in property tax levy next year.

Final approval of the budget will take place at the Council’s Dec. 6 meeting. The budget and levy can be reduced from the preliminary numbers approved last week, but they cannot be increased. City Council approval came on a 6-0 vote, with Betty Allen absent

The down-not-up adjustment restriction seemed to be what motivated councilors’ support for what even City Administrator David Cziok said was a significant levy increase.

“After thinking long and hard, I’m actually in favor of 6 percent … because we can’t do more,” once the preliminary budget is approved, Councilor Eric Mathwig said. “I would rather be cautious on the strong side, and I know some people don’t want to hear that, but I would rather be that way than not able to make ends meet.”

Councilor Darlene Kotelnicki agreed with Mathwig, but said she wanted to be sure that the levy was actually revisited this year prior to approval — something she has said did not happen when the 2021 budget was set.

“I just want to know when we get that final budget and we look at it, is it going to be clear to us what that tax increase is going for,” Kotelnicki said. “We all agree we are short-staffed. (We) have to have a discussion, then, about what our needs are. I would say go with 6.4 percent for the same reason. And I don’t want to increase it 6.4 percent, but I think we need that flexibility.”

Cziok gave the City Council four options for budget and levy as part of a memo. Included was a “No New Taxes” option, as well as “Public Works Support” and “Planning Assistance”.

The preliminary levy of 6.4 percent is a combination of the public works and planning options, and would result in total levy of $3,163,400.

The public works support option would add a person to the street department, as well as fund the promotion of two sergeants in the police department at a cost of $100,735 or upping the tax levy 3.4 percent.

The planning option increases the budget $88,665 and the levy 3 percent, and would add a position in the planning and zoning office.

While the property tax levy would increase by 6.4 percent with the combination of the two options, Cziok explained that the average homeowner would likely not see anything close to that type of increase in city property taxes, due to the city’s net tax capacity, which has risen 4.6 percent.

While impossible to predict what individual property tax statements might read, the increase in the city’s net tax capacity — due to an increase in commercial and industrial construction and a change in rental unit programs — means that a 4.6 percent levy increase likely would mean no increase in the average homeowner’s property tax bill, Cziok said.

Thus, Council member Ron Dingmann said later, the preliminary levy increase of 6.4 percent might equate to only a 1.8 percent tax increase for the average property owner.

“But it’s impossible to predict that, because individual tax values play a much bigger role in this than anything else,” Cziok cautioned.

The city’s net tax capacity has fluctuated somewhat through the years, which makes it challenging, Cziok said, for the city to achieve a “flat, predictable levy, so residents don’t have any surprises.” However, he said, the local levy has been more predictable in the past decade than the market.

Litchfield’s local levy was relatively flat from 2012 to 2016, Cizok said, but because the city’s tax capacity was declining, the tax rate increased.

“If tax capacity goes up and the levy doesn’t go up, later the tax capacity is going to go down, and we’re really going to struggle to meet the needs of our community without enough tax being collected,” Cziok added.