NORTH MANKATO — The first draft of North Mankato’s proposed 2013 budget includes an increase in the property tax levy of more than 16 percent.
The big jump — which reflects rising salary and benefit costs, a 27 percent leap in the portion of property taxes aimed at paying off past debt, and spending assumptions that include every single request by city department heads — is almost certain to be trimmed by the City Council, probably starting Tuesday.
The skyrocketing levy hike in the proposed budget partly reflects changes and vacancies in the city’s administration following the retirements of former Finance Director Steve Mork and City Administrator Wendell Sande. Sande and Mork typically pared some of the requested increased spending by department heads.
New Finance Director Clara Thorne and interim City Administrator Mike Fischer decided to leave those reductions to the council as the process continues to find Sande’s replacement.
Thorne said she’s been directed to prepare an alternate proposed budget for Tuesday’s budget work session that is based on 2012 spending, plus items the council has previously approved.
“I think the council wants to look at it from the bottom up,” Thorne said.
But that approach won’t eliminate the levy hike in its entirety. The council previously approved a 3 percent increase in pay for city workers (1 percent already implemented in July and 2 percent more coming in January) and an additional patrol officer, who wasn’t on the payroll for all of 2012 — meaning the full impact of his salary won’t be felt until next year’s budget.
On top of that, some increased spending comes from state and federal mandates that the council can’t ignore, she said. And medical insurance inflation is also largely beyond the council’s control.
The size of the health care cost hike won’t be as high, however, as the 15 percent jump in the first proposed budget, Thorne said. She received a letter Wednesday from the organization that provides city health insurance indicating it will be less than that, although details won’t be available until December.
More uncertain is the increase in the city’s debt service levy — property taxes collected to repay bonds sold to finance construction, economic development projects and other big-ticket items.
The first draft of the budget included a $387,000 increase in the debt service levy — a jump of more than 27 percent.
“It’s possible those levies would come down,” Thorne said.
She proposed that amount pending an explanation from Mork or Sande for why some of the city’s general obligation improvement bonds didn’t have accompanying levies to cover the cost of repaying the bonds. The bond books have specific amounts to be levied, but those levies weren’t collected in previous year in some cases.
Thorne said there may be non-tax revenue related to those bonds that she hasn’t identified.
“There’s a possibility there are other sources of income that could come in,” she said.
The $387,000 increase is substantial, nearly matching the $417,000 proposed increase in the levy for the general fund — which provides most of the services that people think of with municipal government, such as police and fire protection, the city offices, building inspection, the streets department, parks and more.
It’s safer, though, to include the large increase in the debt service levy in the first draft of the budget, Thorne said. If it turns out that other revenue sources are in place to pay off the bonds, the council’s preliminary levy hike — which must be set by Sept. 15 — can be reduced when a final levy is set in December.
Under state law, the preliminary levy can not, by contrast, be increased after it is set in September.
“We can always take it out,” Thorne said of the big increase in debt service. “You don’t want to get in a situation where you’ve established a preliminary levy that’s too low.”
As council members look at the general fund budget, they won’t find department heads seeking a lot of big-ticket items — just a long wish list of smaller requests.
The police department and civil defense? New radios for reserve officers ($13,000), computer upgrades in the offices and squads ($25,000), a new civil defense siren ($28,000).
Streets? More asphalt, seal coat oil and rocks ($24,000), more sign repair materials ($8,500), improved stop light components ($10,500), new street light poles and fixtures ($12,500).
The swimming pool? More money for mechanical maintenance ($15,000) and new diving boards and guard towers ($16,000).
The water and sewer departments? More money for travel and training for employees to get required certifications ($3,000) and a furnace and dehumidifier ($5,100).
The maintenance shop? A boost in spare parts and tires ($7,000) and a new computer ($1,500).
The library? A boost in the materials acquisition budget ($4,800).
There are some new employees being sought, although none are full-timers. The street department is asking for $10,000 to hire more temporary workers for construction-season street repairs, and the library wants $20,000 to hire a half-time staff member.
The council is, however, facing millions of dollars in requested vehicles, equipment and construction projects — higher-cost items that the city finances with borrowing via equipment certificates and bond sales.