On Monday, Liberty Grove voters can vote to allow the town to exceed its levy limit, or the amount the state allows it to tax, by $200,000.
The state allows municipalities to increase taxes if new construction occurred in the community, and requires them to reduce taxes as they pay off debt. Voters can allow municipalities to increase levies.
The state has set Liberty Grove’s levy limit at 0 percent, and as the town continues to pay its debts that levy decreases even as the costs of utilities and wages increase.
The town has two bonds, one for $1.07 million and one for $1.08 million that will both be paid off in 2018, and a $46,692 loan to be paid off next year.
“The levy cap allows us to basically not tax as much as we did the year before,” said town chair John Lowry. “That’s the catch 22 in the levy cap. You don’t have the expenditures from the year before that you had to pay off the principal and interest on loans, so that brings your levy down.”
To pay for increases in other expenses, the town has used money earmarked for other projects.
“There were areas in the budget you rob Peter to pay Paul, and roads have been one of those because it’s the most expensive thing the town does,” Lowry said.
A $200,000 levy increase would happen just once, but the money generated over 2014 and 2015 would add up to $400,000, enough to keep the town in line with its budget. For a piece of property worth $200,000 that would mean a tax increase of $37.18.
Liberty Grove typically gets $58,000 in annual room tax revenue, which municipalities are allowed to use however they want. This year, $20,000 of it went to Door County North, the town’s business association, to pay for a community coordinator.
Lowry said that $20,000 is likely safe for 2014, but if the town votes against the levy limit future funding is uncertain.
“I’m sure that’s going to be a tempting $58,000 to help offset the shortfall in taxes,” Lowry said. “I’d hate to see that happen, but that’s $58,000 that would help offset that $400,000 shortfall.”
The town’s budget is posted here on its website. The levy limit hearing and voting will take place at the town hall on Monday, Nov. 18 at 6 pm.