Minot homeowners would see an 18.5 percent increase in city property tax under a preliminary budget released to the Minot City Council Monday.

The owner of a home with the median value of $178,000 would pay about $162 more a year, or about $13.49 a month.

The $180 million preliminary budget is up $37 million from this year. City Manager Tom Barry explained the increase is due to spending on the Northwest Area Water Supply Project and $4.9 million in spending on the flood protection projection beyond 2018 spending. In addition, the city projects spending $10.5 million on property acquisitions for flood protection.

Spending in the general fund would go up $4.6 million to cover levee maintenance and acquisition of a city software system, “which we have been desperately needing for many years,” Barry said.

He said the preliminary budget proposes cutting $700,000 from the operations budget. The city had cut $5 million in the 2018 budget. The proposed budget continues to delay the new northwest fire station and pulls back $570,000 in grants to other organizations.

Overall, spending was cut by $1.3 million to avoid an additional 6.5-mill increase, Barry said.

“We have continued to be as lean and as efficient as we can. It has been difficult but we know it’s important and it’s something that our staff takes absolutely seriously each and every day,” Barry said.

Barry said reductions in property valuations and city sales tax collections are driving the mill levy increase from 106.65 mills in 2018 to an estimated 129.26 mills in the preliminary budget for 2019.

A penny of sales tax raises about $10 million. Barry said NAWS will require about $4 million of the second penny of sales tax that now goes to other uses. That’s a reduction of $1.2 million in sales tax going to buy down property taxes. It’s $1.2 million less for community facilities, which this past year shifted to flood protection. It’s $1.6 million less for infrastructure improvements. Making up those lost funds adds 19.43 mills to the tax levy.

The city council of the past used sales tax to replace property taxes. With the decline in sales tax collections, there needs to be a shift back to property taxes to maintain the same level of services, Barry said.

“It’s not a matter of reducing budgets and eliminating programs and services. It’s a matter of what was the revenue source that we used? We moved from property taxes to sales taxes. Now the line has been crossed. Sales taxes are no longer there. We have to move those activities back into property taxes,” he said.

Residential property valuations are down on average by 2 percent and commercial valuations by 5 percent, for a 3 percent overall decline. As a result, the mill levy would need to go up by 3.37 mills to collect the same amount from property owners and keep revenue stable.

Barry added, based on preliminary budgets of other taxing entities in Minot, the consolidated tax increase might be around 6 percent. Minot’s levy accounts for only about a third of the overall property tax.

The preliminary budget includes about a 3 percent increase in the sewer charge. Other utility fees would be unchanged.