Ferndale could increase property taxes by 2 percent

City Council could vote to approve either a 1 or 2 percent increase in the property tax levy during a meeting Monday, Nov. 17.

The city collected $2.3 million from the property tax levy in 2014, and the 1 percent increase would generate $23,603 in additional revenue. The 2 percent increase would generate $47,205. City Council could approve one of the two ordinances.

The owner of a $250,000 home would pay an additional $5.26 for the 1 percent property tax increase, or an additional $10.51 for a 2 percent increase, according to city documents.

The state allows cities to increase property tax revenue by up to 1 percent a year, but cities can use “banked capacity” from years that they didn’t increase the tax. The city took the 1 percent increase in the property tax levy in 2013 and 2014 but did not take an increase from 2010-12.

Sam Taylor, city clerk, said Ferndale faces a $15,000 deficit for 2015 even when factoring in a potential 1 percent property tax increase. If the city approves the 2 percent increase, they would have a surplus of roughly $9,000.

The property tax levy is one way the City Council would help address the deficit, he said, even though the city has reserve funds. The city is also anticipating increased health care costs for employees and a 3 percent increase in costs for fire services in 2015.

“We clearly have some fiscal challenges that we need to address,” Taylor said.