Monticello City Council approves 2014 levy, budget

The Monticello Council approved an $8.15 million 2014 property tax levy Monday night, $250,000 higher than last year, representing a 3.16 percent increase
Finance Director Wayne Oberg said since 2003, the city of Monticello, its staff and council have taken a “very conservative” approach to setting a tax levy.
Together, the general fund and Monticello Community Center operations account for $12,000 of the total increase of $250,000, Oberg said Monday night.
Offsetting the decline of impact fees for improvements completed in the middle of the previous decade, the remaining $238,000 of the increase is restricted to debt service. Oberg said no part of the 2014 levy is going towards debt service for FiberNet, the city-owned telecommunications and broadband network.
Retirement of equipment at the Monticello Nuclear Generating Plant created a tax base change that affected this year’s tax levy, Oberg told the city council.
“The power plant represents 50 percent of Monticello’s tax base,” he said. “If there’s a $30 million drop in plant value like there was this year, then everybody else has to pick that up. Building permits of $12 million and decertification of a key tax increment financing district ($3.5 million) also affected the tax base.
By fund within the 2014 property tax levy approved Monday night by the city council, $5.49 million (68 percent) is dedicated to the general fund, $2.3 million to debt service (including $1.04 million in Monticello Community Center debt) and $350,000 to Monticello Community Center operations, Oberg said.
In terms of taxing districts, the city accounts for 38.4 percent, the Wright County 37.3 percent and the Monticello School District 24.3 percent.
Property taxes make up 81 percent of the city’s general fund revenues.
Other city revenues come from the collection of franchise, license and permit fees, intergovernmental revenues and charges for services. During Monday night’s Truth-In-Taxation public hearing, Oberg also addressed a new sales tax exemption affecting local governments that was enacted by the 2013 Minnesota Legislature.
This exemption allows cities and counties to purchase taxable tangible personal property and services without paying the state 6.87 percent sales tax, with certain exceptions.
Cities are already exempt from paying local general sales or use taxes to other local government units. According to Oberg, the new sales tax exemption will reduce the city’s general fund by $60,000.
The Monticello City Council and staff met several times to discuss the city’s proposed 2014 budget and tax levy. As a result, in September, the city council approved the 2014 preliminary levy of $8.15 million which was certified to the Wright County Auditor for the tax notices that were mailed out in November.
The total 2014 proposed expenditures and other uses budget for all funds is $32.8 million, Oberg said. The total proposed revenue and other sources budget is $30.1 million
The difference between expenditures and other uses and revenues and other sources is either an addition to or subtraction from fund reserves.
City leaders also approved a 1 percent cost-of-living adjustment to full-time, part-time employees (excluding MCC staff and volunteer fire personnel) and seasonal employees for the pay period commencing Jan. 11, 2014. The council established the 2014 monthly family health and dental insurance benefits at $1,218.20 and $120.72 respectively and the 2014 monthly single health and dental insurance benefits at $515.50 and $41.59, respectively.
According to City Administrator Jeff O’Neill, Human Resources Manager Tracy Ergen and Oberg, the city was hit with a 29 percent increase in its medical insurance premiums and a 9 percent increase in dental premiums for 2014.
The large increase in medical premiums was partly due to our aging population as well as a number of “catastrophic” claims in 2013.
A personnel committee discussed the need to begin charging employees a premium for their coverage.
While it is typical for cities to pay 100 percent of the premium for single medical and dental coverage, most other cities require employees pay a portion of the premiums for family coverage.
Currently, Monticello pays 100 percent of the single medical and dental premium and 100 percent of the family medical and 85 percent of the family dental premium.
According to O’Neill, Ergen and Oberg, to address the issue of the city’s pay ranges as well as the significant increase in city medical premiums the personnel committee came up with a hybrid option for consideration that included full step increases for 2014 and the 1 percent cost of living.
The city will absorb one-third of the recent health insurance cost increase but its employees will have to shoulder two-thirds of the increased costs.
“A lot of people don’t have the benefit package that’s close to this,” said Mayor Clint Herbst during a special benefit and salary adjustment meeting held Monday night before the council’s regular meeting. “People are sucking wind right now [regarding health care benefits.] There’s no good way around this, and I know everybody [on city staff] is feeling a little blue about it. These are costs that we all are facing. Our employees have to start picking up some premiums.”

Contact Tim Hennagir at tim.hennagir@ecm-inc.com

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