By Ivan Raconteur
WINSTED, MN Responding to concerns from taxpayers, Winsted City Council directed City Administrator Brad Martens to come up with a plan to reduce the 2012 levy to reflect no increase.
The preliminary levy of $1,173,510, approved by the council Sept. 6, represented a 5 percent increase.
During Tuesday’s meeting, following the city’s Truth in Taxation hearing, the council directed Martens to find cuts to reduce the levy by $55,881, to equal the 2011 levy amount of $1,117,629.
When Mayor Steve Stotko asked for questions or comments from the audience, Marvin Vetsch, owner of V’s Grill, asked about the tax rate and tax capacity.
“We have seen a huge increase in our property taxes,” Vetsch said.
“It’s continually falling back on main street businesses here,” he added. “You just get tired of fighting the battle of trying to maintain a business in this town.”
Vetsch said the market doesn’t bear the taxes that are levied in Winsted, at least not in the downtown area.
“It’s a simple question,” Vetsch said. “Yes or no. Are you going to help? Can we lower it?”
“The short answer would be yes,” Council Member Tom Ollig replied.
He noted that there has been a paradigm shift in terms of where the city gets its dollars, and this year, industrial/commercial property owners are paying substantially more than they have in the past.
Ollig said he would propose that the council lower the levy to zero levy increase, rather than a 5 percent increase.
“I’ll also be proposing that the council contemplate forming a task force made up of council members, department heads, and possibly some civic leaders to basically go through the entire budget, and for 2013, my hope is you would see drastic reductions in the city’s levy,” Ollig said
Vetsch said that sounds good, but noted he keeps hearing rhetoric, but nothing seems to change.
“I think everyone on the council is more than aware of what happened and how it’s affected main street business in Winsted,” Ollig said.
“It’s not anything we were prepared for. The legislature did what they did, and the county did what they did and if I had my druthers, and the county was going to change these market values, it should have been phased in over a period of years, rather than just all in one year. But, that didn’t happen, and so we’re kind of stuck with the cards we were dealt, and the now the only recourse we have as a city is to cut our expenses, which means we will be looking at cutting services, but that is the reality of the world we live in today.”
Ollig also noted that the council can only address the city’s portion of the tax.
Stotko said the toughest thing is going to be educating the public as far as what type of cuts, and the impact of the cuts if there are cuts, to services.
“We don’t even know that ourselves yet. So, things may not be what they are today. We’ve had very little discussion on it other than we know we need to do something,” Stotko said. “Everybody here is dedicated to taking a serious look at it.”
“I agree with Tom, to do anything and everything we possibly can to help downtown businesses. I’m in favor of that, too,” Council Member Bonnie Quast said.
The council will certify the city’s final budget and levy for 2012 during its Tuesday, Dec. 20 meeting.
Among the budget items that increased in the preliminary budget were 3 percent salary increases for all employees, costs related to the 2012 election, a $13,000 server upgrade, $10,000 for the city’s 125th anniversary celebration, an $11,000 sealcoating expenditure increase, and a $110,000 increase in capital improvement funding.
During a presentation at the start of Tuesday’s Truth in Taxation hearing, Martens noted that external factors such as the state’s elimination of the market value homestead credit and implementation of the homestead market value exclusion will have an impact on the 2012 budget.
This change will eliminate $78,836 in state aid to Winsted, will reduce the taxable value of homestead properties, result in a higher tax rate, and will shift taxes from homestead properties to non-homestead properties (commercial, residential, and multi-family residential), according to Martens.
Other external factors include a $119,000 decrease in local government aid (compared to the 2011 budget) and the county’s change to the Marshall Valuation System for determining property values.
Winsted’s total taxable market value decreased by $32,464,300, from $135,891,300 to $103,427,000.
Winsted’s total tax capacity decreased $311,440, from $1,504,899 to $1,193,449.
The city’s tax rate increased by 22.26 percent, from 72.346 percent to 94.605 percent.
Martens said it takes $11,176 in reduced expenditures or increased revenues to reduce the levy by 1 percent.
In order to maintain the city’s 2011 tax rate of 72.346 percent, the city would have to decrease its levy by $285,911, which would be an 18 percent decrease in the general fund, according to Martens.
Administrator pay increase approved
The consent agenda included minutes from a special closed meeting Nov. 15, the purpose of which was to conduct a six-month performance review for Martens, who was hired in May.
The council approved a 5 percent salary increase for Martens, resulting in a change of $3,400, bringing Martens’ annual salary from $68,000 to $71,400. The increase became effective Nov. 15.
Public hearings scheduled
The council scheduled public hearings Tuesday, Dec. 20 at 6 p.m. to consider adopting amendments to electric distribution and gas energy franchise ordinances.
The city is interested in establishing franchise fees on utility providers (Xcel Energy, McLeod Cooperative Power, and CenterPoint Energy) to fund capital improvement projects such as the pavement improvement plan.
The fee is $2 per account that each provider has in Winsted. The utilities have the option to pass that fee on to customers.
The proposed fees could result in $37,260 in new revenue for the city.
Acceptance of landfill leachate approved
Martens explained that the city has been approached by Waste Management to enter into a contract to accept leachate from the Spruce Ridge Landfill.
Leachate refers to the liquid material that drains through the landfill which contains elevated concentrations of undesirable components derived from the material through which it has passed.
The agreement would allow Waste Management to deposit the leachate materials at the Winsted wastewater treatment facility at a cost of $0.015 per gallon.
The agreement allows for the city of Winsted to have “the unconditional right, at any time, to refuse acceptance of any load or stop an unloading operation in progress at any time.”
Additionally, the agreement requires Waste Management to test the leachate four times per year and to provide the city with a copy of the results.
The request has been reviewed by PeopleService, which operates the wastewater treatment facility, and is recommended for approval, as it has been found that the addition of the leachate material would not negatively affect the plant operations.
To date in 2011, Waste Management has averaged 8,000 gallons of leachate at the Spruce Ridge Landfill. The generation of leachate depends on the amount of rainfall and snow melt. Leachate is hauled out of the landfill seven days per week.
The estimated potential revenue from accepting the leachate is $43,800, which would be directed into the sewer fund and help to offset the annual sewer rate increases needed to pay for phosphorous reduction.
After discussion, the council approved the agreement.
Odds and ends
In other business, the council:
• approved the 2012 assessment agreement with the McLeod County Assessor at a cost of $12,044.
• authorized rescheduling the Tuesday, Feb. 7, 2012 city council work session and council meeting to 5 and 6 p.m. respectively, Monday, Feb. 6, 2012, due to precinct caucuses.
• accepted a $2,500 gambling funds contribution from the Church of the Holy Trinity to be dedicated to the city’s park fund.
• accepted the resignation of part-time police officer Gary Schott.
• authorized a lease agreement with Herald Journal for installing and operating an ice rink on company property.
• approved fire department officers for 2012, including Chad Engel, fire chief; Brian Langenfeld, 1st assistant fire chief; Jon Davidson, 2nd assistant fire chief; Tim Kosek, 1st captain; Brent Mickolichek, 2nd captain, and Shaun Bush, ladder captain. These appointments are unchanged from 2011.