After reducing its tax levy by $1,187,270 from 2009 to 2013, the majority of the Blaine City Council Dec. 19 voted to increase the levy by $727,610, but the city’s increased tax base will actually lower the tax rate and help keep taxes down.
The biggest reason for the 3.9 percent increase in the tax levy is more operating expenses across the board in the general fund budget. About 67 percent of the revenue for the general fund to cover the almost $25 million in expenditures comes from property taxes. Charges for services accounts are the second highest revenue source at 16 percent, according to Finance Director Joe Huss.
A $150,000 Economic Development Authority levy was unanimously approved.
An average home valued at $146,100 in 2013 will rise in value to $152,100 in 2014. City taxes on that home will be $470.91 in 2014, up $22.66 from $448.25 in 2013.
Approval of the other levies and general fund budget was on a 5-2 vote, however. One point of disagreement was the continued use of the city’s unrestricted reserves. The city is budgeting the use of $766,265 of its unrestricted reserves in 2014 to cover its $24,996,065 general fund budget.
Councilmember Mike Bourke said the city is focusing on infrastructure projects like sewer lining and road improvements while holding the line on taxes.
“We have pulled together as a council and as staff. Everyone has done a good job the last three to four years and I’m real proud of that,” he said.
Bourke said the unrestricted reserves are the citizens money so he and other councilmembers felt it was proper to use this revenue source.
“The reason we have reserves is for a rainy day,” Councilmember Dave Clark said. “Let’s face it. We’ve been through the worst recession, some would come it a depression, since the 1930s.”
Mayor Tom Ryan and Councilmember Kathy Kolb voted no on the operating, debt service and pavement management program levies and the general fund budget.
Kolb said staff has done a good job, but she said it is not easy for staff to survive based on the cuts that have been made.
“They’re dedicated and they care, but it’s to the point where we’re actually pulling bricks out of the structure,” she said.
The unreserved fund balance is what is left over after these needs are accounted for, Herbst said.
According to Huss, the $766,265 drawdown of the unrestricted reserves leaves this account with a $233,000 balance. The total reserves are about $9.7 million, but 30 percent of general fund expenditures are set aside for cash flow at the beginning of the year and $1,215,000 is for contingencies.
Herbst said information is also coming back from Anoka County that valuations should be going up next year, which will help make budgeting for 2015 much easier.
“The city of Blaine is in great shape,” he said.
Councilmember Dick Swanson said he is not entirely happy with the budget, but had the council failed to approve it, the city would have automatically reverted to the 2013 budget and levy.
Ryan believes the city has cut staff too much. He has previously stated that he believes the city needs a parks director and economic development manager again because the current staff does not have the time to handle these duties.
A significant parks project that could be coming up this year is the Lexington Athletic Complex.
Overall, Blaine has the equivalent of 173.1 full-time employees budgeted for 2014. It had three more in 2011 and 16 more in 2008, for example, according to Huss.
“It isn’t the way a business should run when you keep adding on more expenses and then you don’t cover the cost,” Ryan said.
According to Huss, the Blaine EDA was established in 1988. Primary activities have been administering the city’s tax increment financing districts, coordinating the city’s participation in the 3M golf tournament and operating the city’s business retention and expansion, and business appreciation programs. The Blaine home improvement loan program is also administered by the Blaine EDA.
Property tax levies initially paid for activities, but as the EDA acquired and re-sold property, this became a revenue source. Since 2004, EDA operations have been funded solely from property sales and there has been no EDA levy.
“This is a shot in the arm for the EDA, but not necessarily a permanent levy that will go on and on,” Councilmember Wes Hovland said before the EDA unanimously approved a $150,000 levy for 2014.
Ryan voted for the $150,000 EDA levy, but wanted it to be $300,000 to cover the cost of a new economic development manager’s salary and benefits. The council has yet to request staff hire somebody to fill the position that Curt Larson vacated over a year ago when he left for another job.
Swanson said the EDA has brought a number of businesses to the community over the past 10 years, but there needs to be more businesses brought into Ward 1 and redevelopment there.
Ryan said most in the city of Blaine probably do not know what the EDA does. He said it is a body used to develop and redevelop areas of the community that need to be cleaned up or are blighted. The economic development manager’s job would be to retain and attract businesses, which he said Community Development Bryan Schafer and City Manager Clark Arneson do not have time to do because of their other duties.
Bourke and Herbst said back in September when the preliminary levy was set that they preferred a $100,000 amount.
Kolb said the sale of land is how the city has funded EDA activities in the past, but the market is not there for selling land. “The purpose of government isn’t to be land developers,” she said.
Clark said, “The levy makes sense because philosophically and fundamentally I’m opposed to the city being in the land development business. It’s competition with the private sector.”
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