At a budget workshop Monday, the Brainerd City Council discussed how to balance a 2014 budget with a near $700,000 deficit.
In September, the city of Brainerd voted to increase its levy by $500,000. That’s a 12.7 percent increase over the 2013 levy.
It equates to a 9.6 percent increase in tax rate. For a resident who has an $84,200 valued property, that would mean an additional estimated $48 for city taxes in 2014.
“We understand that’s a huge increase in the tax rate,” said City Administrator Theresa Goble.
The final levy and budget will be adopted in December, at which time the levy can be lowered but it cannot be raised above the recently voted amount.
The proposed 2014 levy is $4,453,486. Of that, $1.9 million is for debt.
Of the $500,000 increase, $400,000 is for debt service, with half going to maintain deficit levels and half for equipment certificates. The remaining $100,000 increase is for the general fund levy, which is to make progress toward the goal of reaching the minimum fund balance policy.
The current estimated revenues are $327,565 less than 2013, which is mostly because a dip in Brainerd Public Utilities (a result in Wausau Paper closing), the loss of the fire department SAFER grant and no FEMA grant revenue.
Requested expenditures are 4.3 percent more, or $371,312, than 2013. That increase is due to many reasons, city staff say, including: an increase in budgeted capital items, a 10 percent increase in health insurance premiums and fees with health care reform, and the election year.
Between the decreased revenue and increased expenditures, there is a deficit of $698,877 in the working funds.
The city is estimated to get an additional $382,579 in local government aid (LGA) for 2014. But that quickly dwindles down to $26,030 after several factors are counted in, like less Brainerd Area Hockey Foundation lease revenue with the sale of the Civic Center, a change in the mill rate and election costs.
After the PERA rate and health insurances increases are factored in, that additional LGA money is used up.
At Monday’s meeting City Finance Director Connie Hillman presented ideas to balance the budget. A few example ideas included: Lowering requested special projects amount, not hiring a new Street and Sewer Department employee, and lowering the Fire Department overtime request.
Also presented to the council was a suggestion to issue three different types of bonds next month:
■ For improvement bonds, it would be $800,000 in construction projects.
■ 2013 equipment certificates, if approved, would total $450,000 and include two staff cars at city hall, an inspections pickup, a parks and recreation pickup, a field groomer, satellite lifter, an upgrade to the police squad video system, a police vehicle and two squad cars.
■ Capital improvement plan bonds, if approved, would include a total of $980,000 and include city hall, police and fire department HVAC upgrades, city hall entrance update, emergency preparedness upgrades and a salt/sand storage building.
The council discussed the need for new vehicles among many departments. City councilwoman Mary Koep suggested a used car in good condition would be a cheaper route to go.
Goble agreed it would be good to look at.
City councilman Gary Scheeler said he was hesitant to get a used car because the lack of a warranty on them, as well as possible maintenance issues.
Koep also suggested police squad cars should be in regular budget like they have been in the past, instead of issuing equipment certificates.
Mayor James Wallin said with all of the budget issues presented, the council must balance what residents want with what the city can afford, when it comes to the level of services provided.
Goble said staff will continue to review and monitor the numbers and present any adjustments at the next budget workshop, which will be held at 6:30 p.m. on Monday, Nov. 25.