Elk River body takes bite out of proposed budget driven by sustainability effort
Elk River City Council members took another bite out of the city’s budget for next year, suggesting the levy increase by 10.5 percent or less instead of the near-17 percent hike that is in the current draft of the city’s budget for next year.
Council members spent 90 minutes reviewing spreadsheets of the income and spending proposed for next year and discussed ways to get the proposed property tax levy down. They looked at moving requested items out of the proposed general fund budget and using other sources for proposed positions and purchases, but found in many cases that many of the costs are fixed items.
City staff also cautioned the council that several factors that affect the budget, such as fuel costs, aren’t yet known.
The discussion, held during the council’s work session, was meant to get direction from the council regarding next year’s property tax levy. The council held two special meetings at the end of July to review budget requests, department by department, with the heads of each city department, but did not make any formal changes at those hearings.
Monday night’s discussion was the first time council members publicly took a critical look at making changes for next year. The council is scheduled to set the levy ceiling on Sept. 9.
City Finance Director Lori Ziemer reviewed some of the assumptions city staff made when determining the preliminary levy — the county would give a 5.5% increase to Elk River’s net tax capacity, construction bonds will be paid off in 2022 and officials could move public works bonds onto the city’s debt service levy. She said the general fund budget for next year is a 7.6% increase over the current one. She told the council staffing for the new multipurpose facility can move to the Parks and Recreation Fund and $106,000 could go into the multipurpose facility budget from the general fund.
Mayor John Dietz started the search for ways to reduce the levy after realizing property values will be increasing, which means the city will be collecting more taxes than it planned for.
Council Member Garrett Christianson suggested looking at some of the new positions some city departments included in the budget requests, including the three positions requested by the Fire Department.
City Administrator Cal Portner said he isn’t recommending those positions because he thinks the city needs to rework numbers from a fire department task force report from six years ago.
Dietz said he wants analysis of fire department positions.
After Portner explained the purpose of those requests, Dietz wanted to review other expenses.
“We can’t have 16 percent increase or people will be very upset,” the mayor said. “Since (city salary increases are) all set, we can’t do anything about it.”
Council Member Nate Ovall suggested the city could look at earlier retirement for city employees reaching the top of the pay scale.
“I’m not saying we should do it, but it’s something we could look at,” he said.
Dietz wondered if the only way to bring the proposed levy down is to take money out of the city’s general fund reserve.
Portner resisted the idea, calling it “a quick fix because we still have to pay the bill” and recognized the proposed budget looks gaudy but said that is because the city is trying to create sustainable funding.
Council Member Jennifer Wagner felt that the budget wasn’t showing that Elk River’s growth is absorbing budget increases.
Portner replied that Elk River has pushed its tax rate down every year but once since 2013, so it took less and less money, but has now updated its comprehensive plan and is aiming to create sustainable funds.
Dietz suggested taking parts of the budget, like the $260,500 for capital outlay, which is used for equipment replacements in city departments, to lessen the rise of the levy.
The council also looked at the requested positions for the police department.
Police Chief Ron Nierenhausen said he’d be willing to delay hiring for six months to help the council meet its goals.
The council looked further into places where the proposed budget could be trimmed. Wagner raised the question about the aims of the exercise.
She asked the council if it was budgeting to maintain a level of service or maintain a tax levy. Portner answered that the proposal is “making up for pay no one got from 2008 forward. The increases aren’t add-ons, they’re make-ups.”
Dietz asked for more ideas. Portner replied that many parts of the budget are not yet fully developed and that he doesn’t feel comfortable making cuts right now.
Ziemer suggested the council could transfer profits from the city liquor stores into the general fund, but mentioned that would take from the Park Improvement Fund.
Dietz suggested cutting the proposed $150,000 for an asset sinking fund, which would pay for unexpected repairs, hiring an investigative assistant halfway into the year that would save $30,000 and paying for election equipment out of the capital reserve fund, which would save $300,000.
Council Member Matt Westgaard suggested keeping the sinking fund but agreed with Dietz on the other items.
At the end of the discussion, Portner suggested city staff can come back on Aug. 19 or in September and have further discussion if the council wants.