BAXTER — Baxter has joined the league of cities forced to cut its workforce in the face of declining revenues and increased expenses.
The Baxter City Council, in a special meeting Wednesday, unanimously approved eliminating the city’s building inspector position and one engineering technician position effective June 17. Several staff members also attended the meeting.
The recommendation for cutting the positions came from a committee of council members Rob Moser and Todd Holman established by the city council in January.
Because of reductions in market value homestead credit, tax capacity, property value, permit value and in other areas, coupled with increased operating costs, the city would see a $223,000 deficit in 2012 and a $377,400 deficit in 2013 if it maintained the status quo, the committee found. Property taxes account for 87 percent of the city’s 2011 budgeted expenses.
The committee’s analysis noted that even in the case of positive variances it was clear the current revenue and expenditure trends are unsustainable and there are no indications the financial conditions of local units of government will significantly improve within the next three or four years.
Holman said the committee began working with staff after a study commissioned by the League of Minnesota Cities found that Minnesota cities of all sizes would be broke by 2015 if current revenue and spending trends continued.
Holman described the study, conducted by the Hubert H. Humphrey Institute, a “pretty grim piece of information.”
“Optimism that this economy would turn around doesn’t seem as warranted,” Holman said. “We have to face the math.”
Moser, who made the motion to eliminate the positions, said the committee struggled with the difficult decision but thought it was the best decision for the city’s future.
Mayor Darrel Olson said he appreciated the committee’s work, saying he knew the recommendation wasn’t easy to make or made lightly.
“Other entities made cuts long before us,” Olson said. “We’re coming in on the tail end and maybe we waited too long.
“When you have a small group like we have it becomes very difficult to do, it’s like cutting off your own arm. We have great employees.”
In its report the committee recognized the personnel reductions would not fully address the projected future deficits and would continue to monitor financial data as it becomes available. The committee will continue to look at projection adjustments, consider restructuring operations for efficiency and reduce costs and consider other permanent expenditure reductions as warranted.
The council also unanimously approved updating its early retirement incentive program, which offers eligible employees a lump sum contribution to their health care savings plan — based on how long they’ve worked for the city — if they enroll and retire. The council’s action Wednesday terminates the program on July 31, unless the council votes to extends it, and allows unused vacation to be paid out to the health plan.
City Administrator Gordon Heitke announced Wednesday that City Clerk Beva Olson, who has been with the city for 28 years, has accepted the early retirement plan and will be retiring June 30.
“Thank you for all your years here and we wish you the best of luck in retirement,” council member Jim Klein said.
“I’ve enjoyed most of it,” Beva Olson replied with a chuckle.
MATT ERICKSON may be reached at firstname.lastname@example.org or 855-5857.