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City OKs 2013 tax levy, but seeks reductions

Some revenue streams dropping, while costs increasing

September 5, 2012
By Josh Moniz - Staff Writer , The Journal

NEW ULM The New Ulm City Council will be busy in the coming months, grappling with ways to reduce the 19 percent maximum property tax levy increase it approved Tuesday for the 2013 budget.

The motion sets 19 percent as the highest property taxes can be raised. The Council may approve any tax increase below that number, including 0 percent. Last year, the Council set a 15 percent maximum property tax levy increase, but it was able to whittle down the final increase to just under 1 percent.

The 19 percent maximum increase is due to the budgeted levy increasing by $1,085,496 despite overall expenditures being reduced by $967,213. This increase appears poised to be much more difficult to reduce than in prior years. The budget challenge consists of mounting costs trends in all areas, which makes it much harder to target specific areas to offset cost. Comparatively, the 2012 budget consisted of several easily identifiable bumps, including the elimination of the Market Value Credit. Additionally, the 2013 budget shows several revenues streams dropping at the same time that costs are going up. Finally, the upcoming budget comes after the Council's massive effort last year to bring the tax increase down to less than 1 percent. With nearly every department keeping a flat or reduced budget before 2013 cuts, it will be very difficult to bring the levy down to a small increase without a significant reduction in services.

The City has several 2013 increases outside its control: workers compensation insurance increased 6 percent; property insurance, 7 percent; liability insurance, 5 percent; auto liability insurance, 5 percent; health insurance, 9 percent. Water and electric rates each increased 5 percent.

The increases were part of ongoing trends. The City has refocused on only maintaining its road infrastructure. But, state requirements only allow a significantly smaller portion of the reconstruction work to specially assessed, leaving the City with the remaining cost. This situation consequently contributes to the City's debt, which is expected to increase its levy $100,833 for 2013.

On the revenue side, the City will see drops in income due to cuts and decisions it made for 2012. The interest revenue the City generates on its exceptionally high reserves decreased by $77,600, or 41 percent. The overall reserve balance was reduced to pay for big projects, like the Minnesota River levee. Other revenue decreases were less obvious. For example, the Council added two officers to the New Ulm Police Department, bringing the department back to full staff. One of the positions was filled by transitioning an officer from the regional drug task-force back into the department. While the transition did not add new personnel expense to the police budget, it also ended the additional state revenues targeted for officers on the drug task-force.

City departments offered some initial suggestions for cost reductions.

The Street Department suggested it could cut $42,000 by significantly reducing the surface reconstruction and street maintenance. The Required Maintenance of Effort from the state declares that the City could force the Library to cut up to $70,170. The Park and Recreation Department suggested saving $20,373 by closing one of the outdoor wading pools or $40,000 by not offering indoor ice from March to Aug. 1. Another suggestion was saving $75,000 by reducing the planned 3 percent wage adjustment for non-union employees to 0 percent or even laying off employees.

The Council also suggested some areas to examine in future budget meetings. Councilor Les Schultz suggested the City look for ways to increase its revenues, such as raising its fees. He offered raising the City's parking tickets as an example. Councilor Ken RockVam suggested trying to have City employees contribute more into their health care plan. New Ulm City Manager Brian Gramentz responded that City had just completed something similar to that last year, after five to six years of work.

Council Chair Charles Schmitz concluded the discussion with an impassioned speech about how important it was to keep maintaining some of the City's important services. He gave the wading pool and ice arena as examples of things that are important for New Ulm's children. He said the Council would work as hard it could to reduce the tax levy. But, he said 2013 may be the time that residents contribute more to maintain quality of services.

The Council will hold public hearings on Dec. 4 and Dec. 11 on the budget ahead of its final passage.

(Josh Moniz can be e-mailed at



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