Dealing with a projected 4 percent loss in revenue during 2012, the Albert Lea City Council on Monday approved a proposed 2 percent tax levy increase.

While the levy can be lowered between now and December, it cannot be raised.

Albert Lea City Manager Chad Adams said the proposed increase equals about $8 to $10 in the city portion of taxes for a homeowner with a house valued at $100,000. That’s on top of other automatic property tax increases that are expected because of state changes to the market value credit program.

Adams said even if the city approved no increase in the levy, there would still be tax increases because of changes to the market value credit program. Commercial and industrial businesses, along with higher-valued nonhomestead properties, will probably face the highest increases.

Actual figures from the state and county are expected later this month or in early October.

In the meantime, the total proposed city levy was approved at about $5.33 million, including $4.7 million for the general fund levy and about $600,000 for the debt service levy.

Of the increase, 1 percent is dedicated to the debt service levy for road improvements, 0.5 percent is dedicated to run the city’s elections in 2012 and the remaining 0.5 percent includes other inflationary increases in the city’s budget, including health insurance increases, Adams said.

The proposed 2012 general fund budget is about $13.8 million, down from more than $14 million in 2011.

Adams said this includes a $600,000 decrease in local government aid compared to 2011. It also includes a projected 12 percent health insurance premium increase for the city’s portion of insurance coverage for city employees, along with a 1 percent cost of living adjustment increase.

To make up for these changes, the city has tried to reduce expenditures through decreasing the city’s contingency line item, delaying or not replacing vacant positions, reducing or deferring capital replacements, reducing consultant fees and through utility savings.

Holiday lights and banners in the downtown will also not be funded by the city, and one sheet of ice at City Arena will be taken out during the summer. Likewise, the city will utilize a surplus from the 2010 budget.

Adams said the goal of the budget was to maintain levels of service without layoffs.

There have been no major changes to the city’s fees, and departments are trying to utilize grant funds to purchase equipment, he added. The city is also working to develop a strong capital improvement plan to avoid any major spikes in major expenditures.

Forty-one percent of the proposed budget will be dedicated to public safety, while public works will receive 19 percent and culture and recreation will receive 24 percent.

The council is expected to vote on the final budget Dec. 12. At that same meeting, the public is invited to share opinions about the proposals.