NEW ULM — The New Ulm City Council discussed the 2022 budget during their Tuesday work session and contemplated significant cuts to avoid a 12.65% levy increase.

The council will not set their preliminary budget until September. The work session was intended to give the council a preview of the budget and discuss options.

The current budget request would increase the tax levy by $1,045,547 or 12.65%. Finance Director Nicole Jorgensen said a higher increase was anticipated for this year because the 2020 budget was bare bones. Many items that were not needed because of the COVID pandemic were cut from the budget, but this year those items have returned to the budget.

On city staffing, there were significant changes. City Manager Chris Dalton said the personnel committee had recommending eliminating the Economic Director/Assistant City Manager position held by Audra Shaneman. The elimination of this position would allow the hiring of information technology (IT) staff members.

Dalton said the two IT staff members currently employed by the city are spread too thin and a third IT person would alleviate some of the stress. Cybersecurity is a top concern as New Ulm was hit with a data breach. The breach was covered with the help of a consultant. Cybersecurity would be the top focus of the new IT person.

Along with the cost of living allocations and position changes, staff salaries are expected to increase the levy by 3.57%. This increase could change based on employee negotiations.

Many of the proposed budget increases are relatively small and impact the budget by less than 1%. As an example, the Heart of New Ulm (HONU) is requesting $25,000 to help fund the program for the next year. If approved, the $25,000 payment would increase the city levy by 0.3%.

HONU Facilitator Jennifer Maurer gave a presentation on HONU during the work session. The HONU looks at policy and environmental factors in a community that impacts health. HONU is currently funded by the New Ulm Medical Center Foundation, but that funding will come to an end after this year. Without funding from the city and other community partners, the program could end.

The city is also looking at $78,000 in park facility repairs at four park locations. These repairs would represent a 0.93% increase to the levy.

Council President Andrea Boettger raised concerns about the city funding non-profit groups and events. The city gives money to the fairgrounds, the Concord Singers, the Lind House and Wanda Gag House. She asked if the city could legally fund these things.

Councilor Les Schultz said the city had previously funded more non-profit items until they learned it was not legally allowed to spend taxpayer funds on non-profit items.

Mayor Terry Sveine non-profits can be funded if they fit certain criteria, including public health, safety, general welfare security and contentment. Sveine said “contentment” covered a variety of non-profits.

Councilor Larry Mack said many of these non-profits like the Gag House or the Kiesling House were assets that kept New Ulm on the map.

“It is our identity,” he said.

Under the sinking fund contributions, the city was looking at a $100,000 reduction to city facilities, but $100,000 was added to the Hermann statue. Dalton said the city needed to start setting money aside to repair Hermann.

Councilor David Christian said it was early to tell what cuts were needed. He wanted to know the impact of the city’s new tax base. Jorgensen said those figures would not be available until September. If the city’s tax base increases, the levy would decrease.

Boettger wanted to hear more from the requests from non-profit. She said the payments to non-profits were small amounts, but they added up. Boettger was willing to fund some of these organizations but wanted to make sure it was necessary funding.

“I don’t think it should ever be taken for granted,” she said, “there are so many other worthy causes.”

Christian asked about the city’s fund balance. It is currently at almost 60%. He said the city is in great financial shape compared to other cities the size of New Ulm. The city could use fund balance to buy down some of the levies without impacting the bond rating.

Dalton said for every 1% the council wanted to buy down using fund balance, it would cost $83,000. There could be other funding sources to cover budget items.

The council was not authorized to make any official budget decisions during the work session. The council will need to set the preliminary 2022 budget during the Tuesday, Sept. 21, council meeting. Another work session to discuss the budget was scheduled for Tuesday, Sept. 7.

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No parking areas were established near the new Kwik Trip site to prevent conflict with truck traffic leaving the gas station.

Liquor Mart owner Mike Esser requested to restrict parking along 16th North Street and 17th North Street from Broadway to the new entrances at the Kwik Trip site (1601 North Broadway).

With the new Kwik Trip, there is concern semi-truck turning movements into and out of the diesel pump island and deliveries to the new facility could cause conflict with vehicles parked in these locations.

The request was taken to the Safety Commission on Aug. 6. The commission voted unanimously to recommend the implementation of a plan restricting parking along 16th North Street and 17th North Street with curb markings and no parking signs. The recommendation included no truck signs on 17th North Street and no right/left turns for trucks at the Kwik Trip site exits. This would force truck traffic back onto Broadway.

City Engineer Joe Stadheim said in discussing the proposal with area businesses, Plaza Garibaldi was willing to go with any parking option because the restaurant recently expanded its parking lot. Windschitl Insurance was concerned about losing on-street parking for clients. It was decided to keep two street parking locations adjacent to Windschitl Insurance.

Councilor Les Schultz made the motion to approve the No Parking zones with a second from Councilor Eric Warmka. It was unanimously approved.

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The council authorized a request for proposals (RFP) to complete the 20th South Street utility and roadway reconstruction.

New Ulm is scheduled to receive a grant of $2,025,600 in the federal fiscal year 2024 to fund the reconstruction of 20th South Street from highway 15/68 to the Minnesota River Bridge. This section of road is a little under half a mile.

The project includes reconstructing the road and would include water and sanitary sewer main reconstruction, sewer and water end service reconstruction, storm sewer rehabilitation, stormwater treatment, grading, aggregate base, bituminous surfacing, boulevard restoration, trees, sidewalk construction, bituminous recreational trail construction and a LED street lighting system.

The time to work through the federal and state aid process is lengthy. If an RFP is authorized, proposals and associated engineering fees will be brought back to the city council for consideration.

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The council approved a request from Citizens Bank on behalf of Black Frost Distilling to subordinate a loan made by the city to allow the issuing of debentures on the property at 201 N. 1st Street.

Citizens Bank is funding the entire project until the construction phase is completed. Then the corporation will work with the Small Business Administration (SBA) in issuing debentures to pay down the banknote.

SBA needs to be assured that its debentures will be in a 2nd lien position on the property, including the assignment of rents, behind only the bank. For this reason, the city needs to agree to subordinate its mortgage and assignment of rents that have been put in place during the construction phase. This would move from the second position to the third position.

Warmka made the motion to approve the request with a second from Mack. It was unanimously approved.

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