Monticello council gives levy, budget green light
Monticello council members unanimously signed off on the city’s 2013 property tax levy Monday night, adopting a resolution to approve a $7.9 million city tax levy.
The vote by city leaders later in the evening to approve the budget for the coming fiscal year wasn’t unanimous, however.
Councilmember Tom Perrault cast the lone dissenting budget resolution vote. He cited his displeasure with two proposed capital expenditure items – $70,000 for west and east bridge lighting and $550,000 for a Bertram Chain of Lakes land purchase.
Finance Director Wayne Oberg presented an overview of the 2013 levy and budget Monday night before council members acted to approve both agenda items.
The council and staff met several times to discuss the proposed 2013 budget and tax levy.
As a result, in early September, the council approved a 2013 preliminary levy of $7.9 million, which was certified to Wright County for the tax notices mailed in November.
However, according to additional information provided by City Administrator Jeff O’Neill, Monticello and Wright County property owners received early Christmas gifts courtesy of Xcel Energy. Xcel made improvements at regional facilities that resulted in a $163,728,100 increase in the estimated market value on just one parcel. According to O’Neill, this increase in Xcel’s valuation came as a surprise as the presence of the new tax capacity was not identified when staff checked for changes in market value with Wright County prior to the council setting the levy. Increased valuation resulted in a tax increase to Xcel Energy in the amount of more than $1 million dollars. According to O’Neill, the added value will buffer the impact of funding rising debt service payments for 2013 and 2014. Oberg reported the 2013 approved levy is $50,000 (.6 percent) more than 2012’s adopted levy. The total 2013 approved expenditure budget is $49.6 million; the 2013 revenue budget tops $35 million.
“We have kept the levy flat even though the community has grown,” O’Neill said, referring to a property tax summary slide included in Oberg’s presentation.
“The community has grown,” he added, referring to a city services growth period that spanned the years 2002 to 2007. “We can’t sustain a flat levy forever.”
Oberg said property taxes on a residential property valued at $300,000 would total about $1,250; a property valued at $135,000 would pay less than $500.
Councilmember Glen Posusta said Monticello was lucky to have a larger industrial tax base that paid the bills. The 2013 tax rate is 42.23 percent and tax capacity is $18.7 million. Without the Xcel Energy improvements, the tax capacity would have dropped to $15.4 million. When compared with other cities in Wright County, Monticello has the lowest reported city tax rate and South Haven the highest. According to Oberg, 70 percent ($5.54 million) of the 2013 tax levy was general fund, 26 percent ($2.06 million) was used for debt service and 4 percent ($295,000) funded Monticello Community Center operations.
Typically, each fiscal year, general fund revenues include property taxes, license and permit fees, intergovernmental transfers and charges for service.
Property taxes in 2013 will account for 82 percent of city revenues. Next fiscal year, top general fund expenditures will include Public Works (36 percent, $2.46 million), Public Safety (26 percent, $1.78 million), General Government (21 percent, $1.45 million) and Recreation (14 percent, $908,285). The 2013 Monticello city budget is balanced, Oberg said.
However, the city does face future budget challenges. For example, the Monticello Community Center needs to increase various fees to match the amount needed for a revenue recovery target of 77 percent, Oberg said. A 10 percent rate increase later approved by council will generate $124,000 in MCC revenues.
During his budget presentation Monday night, Oberg talked about the city setting up a capital equipment revolving fund staring next year. “It helps even out the payments,” Oberg explained. “It’s something the general fund can afford. It would be useful, for example, if the city bought a new fire truck.” He also presented a list of projects that were included in the city’s capital improvement plan: West Seventh Street, Waste Water Treatment Facility, West-East Bridge Park lighting and Bertram Park Land. The preliminary list of Seventh Street extension project costs showed some portions of the project totaling about $1.5 million.
The city has been using debt reserves to pay down the debt service while decreasing the debt levy.
Another challenge is related to a 2005 general obligation bond, which has a number of assessments. According to Oberg, third challenge is that there are no balances left in the Water Access fund to support debt in the amount of $1.7 million.
The debt payments can be supported from the Water fund for a few years, but then the city will need to find need another source.
The fourth challenge is the Sanitary Sewer Access fund, which has been used to pay down a wastewater treatment facility loan. Oberg said that fund is projected to have a balance of $677,000 at the end of 2013, but has remaining debt to support of over $5 million. Another source is needed for debt payments.
Mayor Clint Herbst said city staff had done a good job with the levy and budget. “We ended up going over it a bit more than we’ve done in the past,” he said.