If Austin City Council does decide to increase the property tax levy for 2010, they’d be increasing a tax rate that is one of the lowest among Greater Minnesota cities.

The city had an effective property tax rate of 0.320 percent in 2008, or $327 on an average $102,000 home, according to data from the Minnesota Citizens League — putting Austin 19th among 22 Greater Minnesota “regional centers,” a list that includes Albert Lea and Owatonna.

During a Monday work session, council agreed a levy increase should be capped at 4.59 percent for 2010 — a number that will now go to the full council on Sept. 8 for approval.

That number could be adjusted in coming weeks, but after Sept. 15, a levy can only be lowered, according to state law.

At a work session in early August, there was some talk among council members and the mayor to bring the proposed increase down to zero.

To do so, more cuts would have to be enacted, such as a possible closure of a local ice arena, or mandatory wage freezes and furloughs for city workers.

However, Austin Administrative Services Director Tom Dankert has warned that a zero-percent increase would be fiscally irresponsible.

During Monday’s work session, Dankert said having no increase now would likely lead to higher costs later — and possibly a much larger tax spike, something citizens dislike, he said.

“Eventually, someone’s going to have to pay the bill,” Dankert said.

The administrative services director also noted that, without a tax increase, the city may have to dip into reserve funds — something he said is bad fiscal management and could lead to poor bond ratings from outside agencies.

City administrator Jim Hurm, who presented some of the Citizens League data to council Monday, said he supplied the information to give perspective.

He said the data doesn’t necessarily mean Austin is due for a tax increase, or that the city should strive to stay near the bottom of the list.

Hurm did say, however, that an increase now would not put Austin “way up there” when it comes to city property taxes.

“Our taxes are at the very low end of that range,” Hurm said of the Citizens League rankings.

The city tax used in the Citizens League report — $327 in 2008, the most recent year calculated — is before a state credit is applied.

With the credit applied, Austin’s latest property tax was $227, according to Dankert — meaning a 4.59 percent increase would come to roughly $11 a year, or less than $1 per month, extra for taxpayers.

The property tax has remained fairly stable in Austin over the years when looking at taxes compared to average property values — the effective tax rate.

According to Citizens League data, the effective tax rate for Austin in 2003 was 0.364 percent — a number actually slightly higher than the 2008 rate. At the time, Austin ranked 29th among 32 similar cities.

By comparison, Albert Lea and Owatonna ranked 31st and 18th, respectively, on the same list in 2003.

Since then, both cities have seen their effective tax rates increase past the 0.4 percent mark — and both have moved higher on the list.

“We have consistently been pretty low,” Hurm said of Austin’s taxes versus other cities. “Does that help a taxpayer who feels taxes are too high? No.”