Auburn City Councilor Kelly Matzen is correct when he says that a change in state law has forced the city to shift property taxes away from homeowners.

As part of L.D. 1, the Homestead Exemption was increased to $13,000, but the state only agreed to repay localities half that amount. Taxes get moved from those state residents who own their own homes to businesses and the owners of rental property.

According to Matzen, the Homestead shift accounts for about 45 percent of the proposed mill rate increase in the city.

But this unfunded mandate was not the only part of L.D. 1. In addition, state lawmakers approved about $250 million of new funding for education for the next two years. Auburn’s share of that is about $496,000 for 2006.

In the end, the new money for K-12 education hasn’t been enough to offset proposed increases in spending, including fixed costs, such as health insurance and labor contracts, that make up much of the budget.

The City Council started the budget process with a proposal to increase property tax collection by about $2.7 million. Through contentious negotiations, that number has been reduced to about $1.6 million.

On Monday, councilors passed a compromise budget. Next Monday, their second and final vote is scheduled on this budget, following a public hearing that evening.

Councilors and council-watchers will agree that it’s been a difficult, contentious process. But the ultimate result is this week’s compromise.