Grand Marais city councilors said Dec. 14 they would approve a 2012 levy that is $10,940 less than this year’s, and about $26,000 lower than the preliminary levy set in September. A vote on the proposed budget and levy is set for Dec. 28.
The revised budget was presented by City Administrator Mike Roth during the state-mandated Truth in Taxation hearing. As usual, there were no members of the public in attendance to ask questions or listen to the whys and wherefores of the proposal.
Chief among the reasons cited by Roth for the reduction were the new AFSCME contract with the city’s employees and a change in the employees’ insurance costs.
Mayor Larry “Bear” Carlson reported that a new two-year tentative contract had been agreed to with the union the prior week, covering the years 2012 and 2013. The proposed contract calls for a wage increase of 1½ percent in each year, which is less than the 2 percent increase that was penciled in the preliminary budget. Carlson, who is a member of the negotiating team, described the meetings as “pretty positive” among both parties. “I’m encouraged by the attitudes of everybody there,” said the mayor. “I think everybody realizes we’re all in this together.” Council voted unanimously to accept the terms of the proposed contract, and a vote of union members is expected soon.
Addressing the medical insurance cost, Roth explained that he has been budgeting 10 percent annual increases based on history, and actual changes in recent years have ranged from 25 percent to a slight reduction. Next year is one of the instances where there will be an unexpected decrease of 7.5 percent, Roth said, which will have a positive effect on the overall budget; the lower figures were unknown when council adopted the preliminary budget.
Other budget factors Roth discussed were:
. Loss of the Market Value Homestead Credit. The amount paid to the city by the state has been underfunded by $33,000 under the previous Homestead Credit Program; $15,000 was actually paid to the city, but taxpayers saw $48,000 in credits on their statements. The replacement program for the Homestead Credit reduces the taxable market value of those properties that had been receiving a credit. This reduction in taxable market value reduces the overall taxable market value in the city, effectively raising the property tax rate for everyone. . Uncertain state aid. Roth said the state budget has been in “crisis mode” for a number of years, with solutions often relying on local governments. Grand Marais’ allotment of aid from the state has fallen in the past 10 years from a high of $361,000 to its current $96,000. Because the state has balanced its budget through the use of borrowing and one-time money, Roth said the potential for even further cuts looms. . Bond payments. The improvement bond for Cedar Grove Business Park has an annual payment (from the city) of about $120,000, but so far the city has not had to levy property tax dollars to make the payment. Roth warned that the city’s ability to continue making the payment depends on the EDA’s ability to sell lots or to come up with another source of revenue.
On the other side of the coin, council voted to go ahead with its previous decision to pay off the city’s 2005 refunding bond early, an action that will save about $154,000 in interest over the next decade. More immediately, however, that means an annual payment of about $90,000 will go away after February.
Councilors said they were satisfied with the revamped budget. “The levy is reduced and we’re showing that we are being conservative and keeping costs down,” said Councilor Tim Kennedy. “Yes, I think we can even brag a little for bringing it down,” agreed Mayor Carlson. Roth added that with the further reductions, residents’ actual tax bills will be lower than those they received last month, which were based on figures in the city’s preliminary budget.
The 2012 budget calls for a levy of $815,058, a 1.3 percent decrease from the current year. General fund expenditures are projected to be $1.86 million, a 2 percent increase over 2011.
In other business:
Council held a work session on, and subsequently approved, a Fund Balance Policy on the recommendation of the city’s auditors. Finance Director Kim Dunsmoor explained that the three-part policy is designed to clarify funds categorized as “designated” or “undesignated,” and basically to make the budget more understandable to the general public.
Councilor and park board member Bill Lenz reported that the park board is still working with its consultant to modify plans for the community connection, and the board is reviewing the projected capital needs for the golf course. Lenz also announced that Amber Humphrey has resigned her position at the Rec Park to accept a job with the DNR, and councilors wished her well and expressed their thanks for her efforts over the years.
Councilor and EDA board member Bob Spry reported that the EDA held a “long but interesting” meeting the previous day, with a focus on golf course improvements at Superior National and how to draw more people to Cook County. Spry said he was doubtful a proposed business expansion and retention plan (which had been discussed by the EDA directors) could work, based on previous failed attempts over the years. “I’ve seen them come and go…they usually go shortly after they come,” Spry commented.
Councilor and library board member Jan Sivertson reported that the new and improved library has re-opened right on schedule and said the project is an example of what good planning and thinking can accomplish. Sivertson also expressed her opinion that the city council should have more input into the rates being charged at the Rec Park, with more of a “business approach” and an eye on bringing more income into the city. Currently, the park board decides campground rates and sends their recommendation to city council. Roth said it is a subject that merits more discussion and will be included on a future agenda.
Councilor and planning commission member Tim Kennedy told council that a concept drawing has been received from Dave Parsons for development of the Tomteboda property, so they should be aware that it’s coming. “It’s probably going to get some scrutiny,” he said. “But there are still a lot of unanswered questions.”
Council took formal action to remove Olwe Bottorff from the library board due to non-attendance at meetings. Bottorff was appointed by council to the position in January but has shown up at only two meetings. With the position being declared vacated in accordance with city policy, residents interested in serving are asked to contact City Hall or any city councilor. In addition to the seat on the library board, there are also vacancies on the park board (two), planning commission (five) and Public Utilities Commission (one).
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