Our view: Lots to like in early city of Duluth budgetDuluth’s tax base is expanding? The popular narrative for decades in Duluth — ever since U.S. Steel closed followed by nearly every other smokestack industry — is that our city is on a decline.
Either news nugget could be expected to generate screaming headlines. But Duluth Mayor Don Ness tossed them out so matter-of-factly this week while laying out his early budget and spending plans for 2014 that members of the News Tribune editorial board felt compelled to halt him mid-sentence.
Say what? Duluth’s tax base is expanding? The popular narrative for decades in Duluth — ever since U.S. Steel closed followed by nearly every other smokestack industry — is that our city is on a decline. Fewer and fewer of us pay more and more in taxes just to keep afloat. But now, tax base growth? The numbers tell a different story?
“It’s a good thing,” Ness acknowledged of the modest, almost flat, but nonetheless a-move-in-a-positive-direction $170,000 increase in property tax collections due to economic development and the reality that more businesses and residents are paying in now and shouldering more of the property tax burden.
But the mayor wasn’t done. Employee contract negotiations with city workers are wrapped up, too, he said. Really? Without public pickets or attempts to bargain via the media? Without woe-is-us, unfair-is-them outbursts? Yep. AFSCME-covered employees have a new deal that runs through 2015. Other employees’ contracts are good through 2014. Everyone gets a 2 percent raise, a bump that’s hard for anyone in the community to have a beef with after two or three years of no wage increases for city employees.
Perhaps the mayor can afford to be matter-of-fact because his budget has plenty for taxpayers and others in the city to like. Those two items were just the beginning. Here’s one that even made headlines: no increase in the overall property tax levy, a proposal for 2014 that can be cheered by everyone who owns property in Duluth.
“(It’s possible) because the state of Minnesota stepped up with an increase in (Local Government Aid of $1.6 million) with the express purpose of addressing property taxes,” Ness explained. “We’re honoring the intent of the state.”
In addition, the Legislature approved a sales-tax exemption this past session that’ll save Duluth $320,000.
The city’s sales tax collections are up a “slow but steady” 2 percent, resulting in an additional $250,000 in city coffers.
For the first time in more than a decade, the city’s general fund reserves are at 10 percent or more of the overall budget, a targeted percentage that’s considered “healthy.” The reserves were in the hole by $1.3 million in 2008 and are at $7.6 million now.
The city is spending less. Its highest total annual expenditure was $81.3 million in 2009. The general fund budget is now at $73.9 million.
The city is leaner. Staffing levels are down 5 percent since 2008 — 11 percent if you don’t factor in police and fire, where employee numbers have been maintained for safety reasons.
The city’s liability for OPEB, or Other Post-Employment Benefits, is down $186 million from its original debt of $378 million.
Retiree health care premiums have been reduced 18 percent with the adoption of a Medicare supplement plan, earning the city savings of $1.5 million every year.
Also, the city is saving $375,000 after an agreement turned assessment work over to St. Louis County.
“That’s another success story: the city working collaboratively with the county,” Ness said. “Instead of having two offices less than a few hundred feet apart from each other in an adjacent building we now combine those functions. …That’s critical to our ability to balance this budget.”
Those are just the highlights. And there’s still budget work to be done. City department directors have been instructed to trim $600,000.
“Believe me, the $600,000 is nothing compared to what we’ve dealt with over the last five or six years,” Ness said. “We were in the $5 (million) or $6 million (deficit) range, and then we got it down to $2 (million) or $3 million, and then last year it was a million and a half. Now we’re cutting down to this $600,000. Of course, because of the cuts the departments have made, even with $600,000, there’s some challenge there.”
On the upside, department heads have more time to determine their cuts — just like city councilors have more time to consider Ness’ budget proposal. Its release in early July is unprecedented. It’s at least several weeks earlier than usual.
“We’ve worked really hard to gain stability,” Ness said.
And if he sounded at all matter-of-fact, he needn’t be. Not with so much to like in the early look at the city of Duluth’s 2014 budget.