East Bethel residents pack city hall on tax hike

East Bethel residents crowded into city hall for a special meeting Oct. 10 to ask questions of East Bethel City Council members and make their comments heard about the city’s proposed 2014 levy increase, which could be as high as 17.5 percent. The council chambers were so packed that several residents had to sit in the hallway.

Finance Director Mike Jeziorski led residents through a presentation explaining the city’s preliminary 2014 budget and levy. The portion of the tax levy that funds the city’s general operations is actually going down by .2 percent for 2014, he said.

However, the debt service portion of the levy is skyrocketing 239 percent because the city must start making payments on the 2010 bonds for the city’s water and sewer project, resulting in a potential overall levy increase of 17.5 percent.

The water and sewer project — which was approved by the city council in 2010 before any of the current council members took office — was supposed to be funded by connection and user fees paid by existing and future businesses in the water and sewer district that are required to connect to the system. However, those hookups have so far fallen short, so the city has no choice but to levy funds to cover the gap for the bond payments.

The city is investigating several options that could help reduce the financial impact on taxpayers. It may be possible to refinance the water and sewer bonds; there may be more connections to the system for 2014 than budgeted for; some general fund balances could be transferred to help subsidize the deficit; properties in the sewer district could be assigned special assessments; or the city could make other cuts to its 2014 budget.

Most of those potential options would only provide some relief for the 2014 budget year. Additional bond payments will be due the following year and the year after that. In 2018, the city will have to start paying principal on the bonds; until then, the city’s payments are covering interest only.

“The hard truth is that this [higher tax] rate will probably be with us for a long time,” said East Bethel City Administrator Jack Davis.

When a resident asked how much development would be necessary for the city to have enough utility hookups to break even, Davis said they would need about 5,000 new homes, eight to 10 strip malls and eight to 10 commercial businesses.

Many residents expressed anger and frustration.

“I guess I’m either going to have to foreclose or move north,” said Greg Bayard. “I don’t want to pay this debt.”

Others wanted to know how the situation came about.

One woman with questions told the council she had just moved to East Bethel in June. Resident Josh Edel, wanted to know if there was an option to just not repay the money that the Metropolitan Council invested in the water and sewer project.

Some offered more optimistic comments. Paul Johnson, East Bethel resident and owner of Aggressive Hydraulics, said that the current city council is part of the solution, not the problem. He said he’d like to look at the water and sewer project as an investment.

Resident Mark Bouljon told the council to stop looking back at whose fault the situation was and instead establish a vision for the future.

The council will have to approve a final 2014 budget and levy by the end of December. While the budget can increase or decrease, the levy must be the same or lower than the preliminary amount approved last month.