The Blaine City Council on a 4-2 vote approved the 2013 budget and levy Dec. 20.
Voting in favor were Councilmembers Mike Bourke, Dave Clark, Russ Herbst and Dick Swanson. Mayor Tom Ryan and Councilmember Kathy Kolb voted no. Councilmember Wes Hovland was absent for a health-related reason, Ryan said during the meeting.
The total 2013 levy of $18,724,390 is the same as it was in 2012. The 2013 levy includes $16,295,000 for general fund operations, $2.2 million for debt service and $229,390 for the pavement management program. The only change between 2012 and 2013 was the debt service levy is increasing by $9,444, but the pavement management fund levy is decreasing by the same amount.
Finance Director Joe Huss said the city has reduced its levy by $1,187,270 since 2009 and is one of the few cities in Anoka County that has not had a levy increase over the past four years.
The levy is the same that the council approved in September when it approved its preliminary levy so Anoka County could notify Blaine taxpayers what they could potentially pay in 2013.
However, the city at that time had a $489,477 funding gap between revenue and expenditures in the proposed 2013 budget, so it had to find additional revenue and cut expenditures.
Blaine made adjustments to its revenue projections for such things as sports teams’ participation fees, donations, building permits and plan review fees, but it mostly made cuts to balance the budget.
The park and recreation director and building inspector agreed to voluntary separation. The economic development specialist position and a patrol officer opening will remain vacant. A parks maintenance worker will retire in the middle of the year. The city is ending its membership in the North Metro Mayors Association. These are just some of the examples.
By making all the revenue and expenditure adjustments, the city is doing more than closing that $489,477 funding gap that existed in September. It also reduced a planned general fund reserve draw by $60,000. The council’s preliminary budget approved in September included a $500,000 reserve draw. The budget approved Dec. 20 included a $440,000 reserve draw.
Clark would like the city to cut another $100,000 from the budget in 2013 so it can lessen the impact to the general fund reserves. At the outset of the 2013 budget discussion, Clark proposed identifying $50,000 in additional cuts by the end of the first quarter and another $50,000 in cuts by the end of the second quarter.
Clark is concerned about drawing $440,000 from reserves because it is about half of the city’s reserves.
“We can get through that for 2013,” Clark said. “I am concerned about 2014 and 2015.”
Although it was focusing on next year’s budget, Blaine does do a five-year projection to try to gauge the financial health of the city over the long term. The 2014 through 2017 budget projections that Huss presented to the council projects a $500,000 reserve draw in 2014.
Ryan said the city cannot survive on retirements and reserves. Iin September, he had proposed increasing the levy by $500,000 in order to eliminate the entire $500,000 reserve draw.
Kolb supported him, but the other five councilmembers including Hovland, did not.
“We’re not Washington,” Ryan said. “We don’t print money like they do. The only revenue that we have are taxes…”
According to Huss, 68 percent of the $24,225,960 projected 2013 general fund revenue will come from property taxes. The next highest revenue sources are expected to be charges for services (17 percent) and licenses and permits (7 percent).
Ryan said he only received one letter from a resident commenting about the budget. Nobody spoke during the public hearings Dec. 13 and Dec. 20 and the council chambers were mostly empty at both meetings.
Swanson said he would reluctantly support the amendment because he believed its passing was necessary to get the 2013 budget approved.
If the council had ended the year in a stalemate, the budget would be reverted back to 2012 numbers, which would have meant a lot of cuts restored and a $650,000 reserve draw because that is exactly what happened this year.
Herbst said he thinks the city could do some more budget trimming. He considers himself a “glass half full” person, so he said the cuts may not be needed if the economy turns around and revenue is better than expected.
Although Clark’s amendment to find another $100,000 in cuts ultimately passed, it does not mean it will happen. Because the council did not specifically identify the cuts right now, any revisions in 2013 would be considered a budget amendment, which requires a super majority five out of seven council vote, according to City Manager Clark Arneson.
Due to the uncertainty that $100,000 in budget cuts could actually happen next year, Bourke said that he wanted to see the council immediately reduce the reserve draw by $100,000.
Clark said doing this would be like “cutting a budget with a meat cleaver.” He wanted to take the time “to be more surgical about it and do it in a thoughtful, planned way,” he said.
Kolb disagreed with Clark’s amendment and the 2013 budget as a whole. She referenced her comments in September that she wanted the council to approve a higher preliminary levy at that time. A council cannot legally approve a final levy amount in December that is higher than the preliminary levy it approved in September. Therefore, Kolb had wanted a higher preliminary levy that could perhaps be reduced so the council was not limiting itself in budget discussions.
“This council was adamant that we cut it then and then we would deal with it later on,” Kolb said. “I didn’t agree with it then and I don’t agree with it now.”
“I believe that the people that are out there are not in disagreement with how they are being serviced in Blaine. I believe it’s opinion more in this council than it is maybe in the general population.”
City Clerk Jane Cross took a roll call vote on Clark’s amendment proposal and the 2013 budget. During voting on Clark’s amendment, Bourke passed when his name came up first. After the other five elected officials voted and Bourke became the swing vote, he paused before voting yes, which avoided a 3-3 tie on the amendment.
Eric Hagen is at [email protected]