NEW ULM The New Ulm City Council held an informal budget meeting Tuesday to consider ways to limit the tax levy increase in the 2013 budget.
Currently, the City has a projected $1.085 million budget deficit for 2013. The maximum limit the tax levy can increase was set at 19 percent. For 2012, the City faced a 15 percent maximum increase, but reductions brought it to just under 1 percent.
For the purposes of considering the impact of cuts, the Council worked with $55,000 equating to cutting 1 percent of the tax levy increase. It also worked with the positive news that increase in taxable valuations - due to recent changes to state tax codes - brings in approximately $55,000 more in taxes under the current levy. In other words, the Council can shave an additional 1 percent off the total levy increase for 2013 before cuts are even made because more taxes coming in.
A presentation by City Manager Brian Gramentz outlined $956,500 in possible reductions, which would bring the 2013 levy increase down to 2.4 percent. The cuts covered a wide range of services, with some potentially controversial suggestions for the larger tax levy decrease.
The largest suggestion was to increase the amount the City bonds on street reconstruction projects by $375,000, which would represent a 7 percent decrease of the tax levy increase. Currently, the City covers $480,000 of its street reconstruction with Street Department general funds instead of bonding each year. The purpose of covering the cost is for the business practice of not bonding for projects that won't last the 10-year life of the bond. Another reason was that the City only assesses 20 percent of road reconstruction versus assessing up to 100 percent of new roads. The smaller assessment translates into more City debt. Currently, the City charges $2,800 per lot for special assessments. That charge would go up if this suggestion is used, though the exact amount of increase has not been calculated.
A more controversial suggestion from the Park and Recreation Department would be to not provide ice at the Civic Center from March to August. The proposal would save $40,000 in the budget, or 2 percent off the tax levy increase. Council Chair Charles Schmitz said he was firmly against budget cuts this year that would take away programs for New Ulm's youth.
Another controversial suggestion was eliminating $110,000, or 2 percent of the tax levy increase, from the Administration Department by ending one full-time Maintenance Technician position and cutting from subsidies to many local programs. Examples would include reducing $3,444 to the Concord Singers, $5,510 to local festivals and $2,880 to the New Ulm Battery. Additionally, the cuts would end the $32,941 in subsidies to the local Retail Economic Development, though the New Ulm Retail Development Corporation would not be reduced.
Gramentz said his thought process in proposing the Administration cuts was to focus on funding essential City functions above all else. He said that items like the subsidies were additional expense the City chose to pursue, but are not essential. He added that programs like the Concord Singers could make up the lost subsidies by hosting additional shows, while parks could not generate the extra funds.
Mayor Bob Beussman said he opposed many of the subsidy cuts, particularly the ones to the Concord Singers. He said that these programs act as tourist attractions and provide valuable enrichment.
Other miscellaneous reductions included targets of $30,000 to $60,000 in cuts for several departments like Park and Recreation and Police, with the departments determining what the reductions would be.
No decisions were made on Tuesday. More budget work sessions will take place ahead of the final budget public hearings in early December.
The Council's requested that additional information be gathered on potential income from raising fees. Gramentz also noted that the Council should start thinking about what percentage of tax increase it would find acceptable for 2013. He explained that a 5 percent increase could avoid major cuts like ending subsidies, while a 3 percent increase could take major work.
(Josh Moniz can be e-mailed at email@example.com)