Mike Roth, the city administrator, led a discussion about the proposed Grand Marais 2018 budget at the city council’s November 29 meeting.
The city council has been looking at a proposed levy of 8-9 percent for 2018, but Roth said there might be ways to lower it. The board must set the levy before January 1, 2018.
Revenue generated by the Recreation Park is “a significant variable” in the budget process, said Roth.
Currently, the 2018 proposed levy sits at 8.2 percent.
Over the last 10 years, revenues at the park have increased an average of $45,000 per year. The current budget estimates that the city will see $985,000 in money generated from the park in 2018. But Roth expects the park to make $1,075,000 next year, which would match 2017 numbers.
Roth walked the council through three scenarios. In the first, the council could leave the Rec Park budget unchanged. “This makes it difficult to lower the levy from the initial approval rate of 8.2 percent,” said Roth, adding, “The current draft budget would actually require a 9.5 percent increase due mainly to increased medical insurance.”
In the second scenario, the city could recoup $60,000 in additional revenue from the park which would bring the levy under 3 percent.
“This would make the revenue budget of $1,045,000, equal to our 2016 performance. If we outperform this number the excess can be assigned to other projects,” Roth said, adding, “We fully expect to outperform 2017 in 2018.”
Last, Roth said that if any revenues came in higher than what was needed for levy relief that those dollars would be assigned to the city’s capital project budget. If there was less money than expected, “We will assign a lower amount to the capital funds, a reverse of the 2016 revenue exercise.”
Councilor Tim Kennedy said he was a little concerned about using favorable budget projections because he was conservative. He added that with an aggressive budgeting approach, “If the money isn’t there, you’re in trouble. If your budget is low and you have an excess, you’re okay.”
Dave Tersteeg, the Grand Marais Recreation Park manager, was on hand at the meeting and he spoke. Noting increases to the camping/RV fees, and the fact the park continues to get busier every year and the busy season lengthens, Tersteeg told the council he expected the park to bring in as much as $1.4 million next year, which is far higher than current estimates.
“Primarily the city uses the park revenues for property tax reduction,” Roth reminded the council.
The council will discuss Roth’ recommendations at the December 13 council meeting. The council will also hold the Truthin Taxation hearing at 6:30 p.m. before the start of the regular session. The council has one more meeting on December 27 when it could set the 2018 levy.
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