East Bethel could see 17.5 percent tax hike

The East Bethel City Council Sept. 4 reluctantly voted to set the city’s preliminary 2014 property tax levy at $5,230,742, which reflects a 17.5 percent increase over this year.

This increase is due solely to the fact that the city’s first bond payments on the municipal utilities project come due in 2014. Without that obligation, the city’s levy would have been $4,440,742, a 0.3 percent decrease from the current year.

Councilmember Heidi Moegerle, who is serving as acting mayor during Mayor Richard Lawrence’s absence due to heart surgery, said city staff is compiling a one-page history that will explain the events that led to the city’s debt for the utilities project. This history will be available to view on the city’s website.

The utilities project and its accompanying debt was approved in 2010 by the city’s previous council.

The levy amount adopted last week is only preliminary, as cities are required to file a preliminary levy and budget with the county by Sept. 15. The city will adopt its final levy and budget Dec. 4, and that levy may be lower, but not higher, than the preliminary levy.

City Administrator Jack Davis said there are still opportunities to potentially reduce the levy amount before it is finalized in December. It may be possible to refinance the 2010 bonds; the city may be able to confirm connections to the water and sewer system, which will generate revenue in connection fees; it may be possible to transfer general fund money to help subsidize the deficit; and the city could make further reductions to its budget.

A council meeting dedicated exclusively to working on the city’s budget will be scheduled soon, according to Davis.

Councilmember Bob DeRoche said he is concerned about cutting the city’s budget much more.

“We are not going to gut the city to pay for this,” he said. “We’re at a point now where if we start cutting any more, services are going to go down and people are going to suffer.”

Moegerle said she thinks more can be done to cut the budget.

“I don’t think the preliminary levy has to be at 17.5 percent,” she said.

Moegerle suggested, for example, that the city consider reducing a planned across-the-board 2 percent staff salary raise to 1.5 percent.

Not helpful to the city’s finances in relation to the municipal water and sewer project is that one of the businesses with a high number of equivalent residential units has applied to Metropolitan Council to have that number reduced. Davis said East Bethel Theatres is eliminating 700 of its seats in order to bring its units down from 28 to 17, thus cutting its connection fees collected by the city by $61,500.