City Council considering 2.5% levy increase
At its Nov. 17 meeting, the New Richmond City Council spent 90 minutes discussing some of the finer points of the city’s 2015 budget, and it looks like the city tax levy may increase 2.5 percent to accommodate for a new contingency fund and a new capital replacement levy.
The budget and levy will formally be considered at the Dec. 8 council meeting, but there appeared to be a consensus among alderpersons on Nov. 17 that putting away money before major purchases and unexpected costs was preferable to continuing to borrow for them.
In his presentation to the council, City Administrator Mike Darrow stressed four specific reasons why city staff is recommending a 2.5 percent levy increase: contingency, capital replacement costs, street maintenance projects and maintaining or improving services.
The proposed budget presented to council included just over $29,000 to establish a contingency fund made up of money earmarked for specific purposes by a three-fourths major council vote, according to state law.
“We’re proposing utilizing these funds, which would be rolled over for future savings or retirements, really however the council designates them,” Darrow said. “This is done through council resolution, and really the council has control over how these funds are utilized.”
In addition to the $29,000 to establish a contingency fund, the proposed budget included more than $96,000 for a capital replacement levy.
“Each year, as you all know, we talk about new squad cars or a firetruck or a city vehicle or a plow truck or maintaining a building. The list goes on and on. Most often, in a lot of cases, we’re needing to borrow money,” Darrow told the council. “Having this capital replacement levy gets us those funds needed for the purchase in cash rather than borrowing. Having cash available is something very advantageous to the city.”
Another big increase in the proposed budget is for street maintenance. Typically, in recent years about $25,000 to $30,000 has been budgeted for street maintenance, but Darrow’s presentation laid out a recommendation for nearly $72,000 in 2015. He said that amount of money could get the city about six miles of crack sealing, or about two-and-a-half miles of sealcoating or a half mile of complete mill and overlay.
According to Darrow’s presentation, the 2.5 percent levy increase being proposed for 2015 would be the first levy increase for the City of New Richmond since a 1.2 percent hike in 2011. The city’s levy went down 0.6 percent in 2012, 2 percent in 2013 and 1 percent in 2014.
During discussion, District 6 Alderman Jim Zajkowski spoke in favor of the proposal.
“I think we’ve been overdue putting money away. We’ve talked about it every year for the last 10 years, but we never do anything,” Zajkowski said. “It’s nice to have our tax levy even or go down a little, but we see what’s happening. The infrastructure is falling apart. It’s going to hit us hard for streets and other projects coming up. I think we have to start that fund. We can’t keep talking about it. We have to do it.”
Mayor Fred Horne also appeared to be in favor of the proposal.
“I think levying for it is a bit more honest than borrowing, but we have to keep in mind that we can’t borrow and levy,” Horne said. “If we’re going to directly tax for it, then we have to cut back on the borrowing.”
According to city staffers at the meeting, the city currently stands at about $18 million in debt, which is down from a high of about $24 million a few years ago.
“I’ll give credit to this council,” Horne said. “We’ve done a real good job in the last few years paying down our debt.”
District 1 Alderman Craig Kittel said the council would need to proceed with discipline when earmarking funds for specific future projects.
“Then we can keep an eye on it. We’re going to save for something, not just a pot. It’s too easy to grab out of a pot,” Kittel said.
District 4 Alderperson Jane Hansen also expressed positive comments about the proposal.
“I think it’s a good budget,” Hansen said.
The council approved the budget recommendation for formal consideration at the Dec. 8 council meeting. If approved at that meeting the budget will be adopted for 2015.
The Dec. 8 meeting will take place at the New Richmond Civic Center at 7 p.m.