It was a light turnout Monday for Brainerd City Council’s public hearing on its budget and levy but most of the residents and business owners in attendance spoke their peace about the city’s budget.
The city’s proposed 2014 budget shows a 4.2 percent increase in overall spending. The city's working funds shows a $180,681 increase from 2013 to 2014. The increase in expenditures is attributed to several things, including: an increase in budgeted capital items; a 10 percent increase in health insurance premiums and fees with health care reform; the fact that 2014 is an election year; and $23,000 increase in supplies, such as fuel costs, repairs and maintenance items.
The estimated revenues are estimated to be $758,00 less than 2013’s budget, which is mostly because a dip in Brainerd Public Utilities as a result in Wausau Paper closing, the loss of the fire department SAFER grant and no FEMA grant revenue. The decrease also is the city is seeing less building permits issued.
The proposed 2014 levy is $4,453,486. Of that, $1.9 million is for debt. With the proposed levy, the city tax rate would increase from 58.941 percent to 64.568 percent, or a 5.627 percent increase.
The city of Brainerd also will be seeing $25,000 less in 2014 as it will be exempt from sales tax.
Connie Hillman, Brainerd finance director, said if the budget and levy are approved as is, a homeowner who has an $125,000 taxable market valued property, would pay $70.34 increase on their city taxes in 2014, if their estimated market value stayed the same. A commercial property owner with a taxable market valued property of $420,000 would see a $430.46 increase.
Hillman said based on the value of a dollar, residential property owners will pay 46 cents to the city, 24 cents to Crow Wing County, 29 cents to the school district and 1 cent to other entities for taxes.
Hillman said for every $10,000 the levy is lowered, the tax rate would decrease by .145 percent and the homeowner with a $125,000 valued property would save about $1.82 a year in city taxes.
Council member Gary Scheeler said, when doing the math, it would cost about 19 cents a day for that property owner if the levy was approved as presented and if the city would drop its levy by $100,000 it would cost that same property owner 4 cents a day.
After the council and the audience heard the budget and levy presentation, residents were given the chance to speak.
Matthew Seymour of Brainerd wanted to know more details on the city’s debt and how the city planned to handle the increased debt.
“This is a huge part of the budget and I’m more worried about the debt (than the increase in 2014 taxes),” said Seymour.
Hillman said part of the reason why the debt is higher is because the city has not sold all of its industrial park properties. Once the properties start to sell the city will make money, she said.
City Administrator Theresa Goble said the city also hasn’t received all the money through its Beaver Dam Road and Riverside Drive improvement projects. Goble said once more people are hooked up to city services that the money will come in.
City staff also explained the equipment debt. Hillman said the city has not made capital purchases for years and the city is in need of equipment, including a new sweeper for the street department.
Council President Bonnie Cumberland said, “Previous councils have felt it was good to hold the line (on expenses).” However, city officials said at some point you have to play catch up and this year seemed like the time to move forward with some of the equipment needs.
Lisa Paxton, chief executive officer of the Brainerd Lakes Chamber, said she understands the decisions the council has to make with its debt. However, she asked them, “As you look at these difficult decisions, is it a good time to invest in these capital investments?”
Paxton said it has always been in the best interest for Brainerd and Baxter to have a similar tax rate. If Brainerd and Baxter stay at their projected rates, Brainerd will be at a 125.511 tax rate and Baxter at a 114.766 tax rate in 2014, said Paxton. In 2013, Brainerd was at 118.423 and Baxter was at 112.526.
Paxton said the bigger the difference in the tax rates of the two cities will make a big difference on where businesses will grow.
“People are looking at building on bare land and you are positioned with some great spots,” said Paxton. “Should you let another year go by to see where you are at?”
Al Gmeinder, owner of the Sawmill Inn and owner of two other Brainerd properties, agreed with Paxton and said the tax statements on all his properties increased from around 10-35 percent.
“We are talking serious money,” said Gmeinder. “I understand these are tough times, but I ask you to be considerate (when looking at the levy) ... I don’t know where additional money will come from, maybe some of these expenditures could be held off.”
Another resident said he was confused when he got his tax statements and that he thought they were high.
After hearing from the residents the council decided to not take action on the budget and levy Monday. They will meet Dec. 16 to vote on it. The levy must be certified to the county auditor by Dec. 30.
Before the meeting adjourned, Council Member Mary Koep spoke.
“I know I sound like a broken record,” Koep said, “but the city received more government aid in new money and that essentially will keep our budget flat. I am outnumbered, but I did some work on it ... I think we can easily, with no pain cut out $60,000 off the levy.”
Koep said the city could reduce the levy by $50,000 and then reduce what the city gives to organizations, such as the Initiative Foundation, the Housing Redevelopment Authority (HRA) and the Economic Development Authority (EDA).
“Whenever you take money away people they will scream,” said Koep. “But some money could be taken away from the EDA and the HRA. We could do it. It takes the will to do it and we should look at buying old vehicles, not new ones ... or get none and pay gas mileage.
“We would be wise to take one year and use all the money we have for streets and go into the maintenance mode ... I don’t think people have the money.”
Scheeler said the city has a lot of miles to maintain and every year two miles of streets need to be improved. Scheeler said if the city waits on purchasing necessary equipment, “We’re just kicking the can down the road.”
Council Member Chip Borkenhagen said the Initiative Foundation has provided the city grant money, as well as the HRA and EDA.
Council President Bonnie Cumberland said: “We will have to make a decision by the 16th. We are all taxpayers and we will all feel a tax increase. I’m not sure when the right time would be (to purchase equipment) but we have to trust our staff to guide us.
“Knowing there are two sides to each of these issues. We just need to balance what is right and what is appropriate. There are more than one way to look at it all.”