City council takes a good look at its budget for ‘09

October 6, 2008

Tax levy will increase about 5.9 percent

By Ryan Gueningsman
Managing Editor

DELANO, MN – At a special work session Tuesday night, the Delano City Council reviewed its budget projections for 2009, noting its tax levy will have about a 5.9 percent increase, and general fund expenditures will see about a 6.1 percent increase from 2008.

At a regular city council meeting Sept. 2, the council approved a preliminary tax levy for the general fund in the amount of $1,837,001, less local government aid (LGA) in the amount of $179,684, for a net tax levy of $1,657,317.

At the work session, city finance director Brian Bloch said the challenge preparing the 2009 budget is staying within the levy limit as mandated by the State of Minnesota. Bloch said the statewide levy limit is set at 3.9 percent above last year’s levy, plus allowances for increases for “household growth” within the city. This resulted in Delano’s levy limit of 5.9 percent.

The preliminary budget for 2009 shows the general fund expecting revenues of $2,624,436. This is a 6.1 percent increase over 2008’s budget of $2,473,875.

Looking at expenses for the city, council expenditures declined 11.9 percent compared to 2008. Bloch said the largest drop is in the area of other services and charges. The city has seen a large drop in the cost of publishing its minutes in 2008, compared to prior years, since it begin publishing in the Delano Herald Journal in 2008.

The budget for dues and subscriptions was also reduced significantly from $3,185 in 2008 to $910 in 2009. It was noted the 2009 budget also allows for a leadership/team building retreat in 2009.

Under administration, the department’s budget shows an increase of 4.7 percent over 2008’s budget. The budget for personal services has grown by $45,505, or 23.6 percent, as a result of the addition of the assistant to the city administrator position.

It was noted the department was able to slim down attorney fees, having budgeted $60,000 in 2009, compared to $75,000 in 2008. This was done by not having an attorney present at all city council meetings, but only when city staff feels it’s necessary.

In the finance department, its budget increased $8,703, or 4.8 percent over 2008’s budget. This is mainly due to additional auditing costs.

Public safety is seeing a 15.1 percent increase over its 2008 budget. This is largely a result of the contribution that is made to the fire department for operations and capital needs.

Also included within public safety is the budget for police protection. Bloch noted 2009 is the second, and last, year of the current contract with the Wright County Sheriff’s Department. The 2009 budget includes coverage for 16 hours of police protection per day, for seven days per week, 365 days a year.

Shifting to public works, its budget is seeing a drop of 27.2 percent as a result of shifting some capital expenditures in the capital improvement plan.

This shift resulted in a surplus already contributed to the capital fund in years prior to 2009, which means there is no need to contribute in 2009. Bloch noted this surplus will be used up in 2010, and contributions will be needed in 2011 and beyond.

Bloch said ice and snow removal expenses are always difficult to forecast. The city spent $11,737 in 2006, $17,432 in 2007, and $5,401 so far in 2008. These numbers include all snow and ice removal expenses with the exception of wages and related benefits.

The city’s community services budget is looking at a 44.4 percent increase from 2008, primarily because of park improvements at the Clover Spring/Highland Ridge parks. The budget also includes $28,000 for the purchase of a fuel-efficient four-wheel-drive vehicle for city use. This vehicle will replace the Chevy Suburban currently being used mainly by the city’s building official.

Turning to the “other community services” budget, the city was able to trim that by 9.5 percent, as well as a decrease of $2,915 in expenses for the Village Hall building.

Looking at its motor vehicle department fund, the 2009 budget expenses will increase about 5.8 percent, while revenues will be down slightly due to over-budgeting for Minnesota Department of Natural Resources income in 2008.

In its sewer fund, the budget for 2009 shows a loss of $681,545, compared to a loss of $102,870 in 2008. This is largely a result of no developer activity in the city, Bloch said.

“When developers are busy, they are building city infrastructure that is recognized as a contribution to the city,” Bloch said in his memo to the council.

The 2008 budget for developer contributions was expected to be $500,000, but now, Bloch said, that number will not be reached. To be conservative, the 2009 budget does not show any amount for developer contributions.

Bloch noted the poor economic conditions will still affect the amount of infrastructure charges the city receives in 2009, and therefore, city staff expects about $116,100 in these charges in 2009. This compares to actual revenue of $462,641 in 2006, and $225,129 in 2007. So far, in 2008, the city has received $59,700 in infrastructure charges.

The Delano Fire Department’s budget is expected to have an 11.2 percent increase over the 2008 budget, Bloch noted. He said the city contributes $183,200 from the city’s general fund public safety budget to support the operations of the fire department, and said the department also expects to receive revenue from the City of Independence, Franklin Township, and Rockford Township totalling $184,270.

Looking at the budget for the Delano Senior Center, expenses are expected to increase $33,685 from 2008 to 2009.

Shifting to the final department, the city’s municipal liquor store, the council heard budgeted sales for 2009 are expected to be $121,300 lower than budgeted sales in 2008.

Actual sales in 2008 are significantly under the 2008 budget, Bloch said, noting the economy most likely is a factor in this.

He said the 2009 budget is about a 3 percent increase of where actual 2008 sales are expected to finish at the end of this year.

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