Ness’ budget plan keeps property taxes at bayAs promised earlier in the summer, Mayor Don Ness delivered a 2014 city budget proposal that for the first time in 14 years does not increase property taxes.
By: Mike Creger, Duluth News Tribune
As promised earlier in the summer, Mayor Don Ness delivered a 2014 city budget proposal that for the first time in 14 years does not increase property taxes.
It’s a budget that “maintains” city services and “absorbs” rising costs, Ness told the City Council on Monday night.
He said that while city employee wages and benefit costs keep rising, there were three things that created a little breathing room of $2.4 million in the $76 million budget.
The state increased Local Government Aid by $1.6 million. A sales-tax expansion added $400,000. An increase in gas utility receipts, because of an increase in use last spring, added $370,000.
State aid accounts for 38 percent of budget revenue, nearly $30 million. Sales tax generates 17 percent, or $13 million, and property tax covers 17 percent, or $12.8 million.
Duluth residents pay 26 percent of their property tax bills to the city. Four percent is dedicated to parks and recreation. St. Louis County takes 42 percent and the school district takes 28 percent.
There might be a decrease in property taxes if the council follows the budget exactly. A homesteaded property worth about $150,000 will pay $4 less than the current year.
The council could vote to keep the $157,000 to shore up some needs in city offices, Ness said, keeping property taxes the same as 2013.
No longer is the city scrambling to see where cuts need to be made, Ness said of the budget.
“It truly does represent stability,” he said.
A few hours later, the council created some budget party crashing when it failed to approve a resolution from city administration to pay off a $2.2 million street repair debt by using the Community Investment Trust Fund, created solely for fixing city streets on the city’s new “pay as you go” repair plan.
The transfer of funding required a 7-2 vote and failed, 6-3, when Jay Fosle, Jim Stauber and Garry Krause refused to allow the transfer. They said promises were made to protect the street fund from being tapped for other uses.
Other council members said options were limited. Using the street fund was the best of three evils, Linda Krug said.
Chief Administrative Officer Dave Montgomery said the administration will present a resolution next month asking that the money be taken out of the reserve balance of the general fund, something that could affect the city’s bond rating in the future as the transfer would put it below recommended levels for reserve cash on the books.
The option is to levy property owners for the money, something most council members seemed reluctant to do in the shadow of the mayor’s budget.
Ness and Montgomery said all future budgets include line items for street-repair-bond obligations. Montgomery said the city will continue to work on recouping money owed since 2009 from Fond du Luth Casino. Nearly $12 million is on the line in a judge’s decision due next month. Casino payments to the city came through contracts hammered out since it and the Fond du Lac Band of Ojibwe teamed up to open the casino in the mid-1980s.
Council members and administration are working on a plan that figures out how to make street improvements without the casino money, Montgomery said. Council members suggested to each other that they come up with a way to pay off the looming $2.2 million debt without marring the city’s credit rating or raising property taxes.