Town Talk: New Ulm City Budget
Budget season has been in full swing for City staff. In May of each year the departments begin work on the budget for the following year. Staff use the actual revenue and expenses from the previous year and the year to date numbers for the current year to predict their costs for the coming year. In addition to everyday expenses they also begin to plan for projects that need to be completed and equipment that needs to be replaced. While the departments are working on portions of their budget the finance office is working on budgets for overhead costs such as payroll costs, benefits, property insurance, workers compensation insurance and future capital improvement fund needs.
In July all budgets are submitted to the Finance office for review and assembly. Finance staff spends a large amount of time going through the details of the budgets submitted to look for calculation errors and any possible adjustments. After this initial review is complete the Finance Director can calculate the estimated property tax levy that will be needed to support the budget.
The City depends heavily on 3 major sources of revenue. These include Local Government Aid (LGA), the Public Utilities Lieu of Tax payments, and property taxes. The State releases the final LGA numbers in late July and the Utilities Lieu of Tax payment is approximately 5% of the utility’s revenue for the year. After LGA and lieu of taxes are added into the budget the remaining shortfall is covered by the property tax levy.
In years that the City stays under budget the remaining funds are set aside in fund balance accounts for future use. The City is required to maintain a fund balance that is large enough to cover 35-50% of our annual expenses. In years when the City has a large number of projects or an unexpected expense the City Council can opt to use a portion of the fund balance to reduce the amount of the property tax levy needed.
Throughout the budget process the City Council provides input during work sessions about items they would like to see, or not see, in the budget. At the second Council meeting in September the City Council sets the amount of the preliminary tax levy. The Preliminary levy needs to be submitted to the County by September 30th each year. After the preliminary amount is set the budget may continue to change but the amount of the levy cannot be increased. In December there is a public hearing held. This hearing takes place following the first regular City Council meeting of the month. The hearing is an opportunity for the citizens of New Ulm to voice their opinions and concerns about the budget. At the second meeting in December the final tax levy is set and must be submitted to the County before December 30th.
For the 2020 budget, in addition to everyday expenses, there are several items being considered. Some of these items include a zoning plan update, contribution to a bus route in town, downtown Christmas decorations, changing the fire department to a paid-on-call system, and funds for a new Battery building. In addition, there will also be discussion about funding the German Park Amphitheater and the replacement of the retaining walls along Center Street in Hermann Heights Park.