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Budget challenges will mean cuts for city

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Cuts to the city of Farmington's budget are on the way, and those cuts likely mean someone will lose his or her job.

During a Monday budget workshop, Farmington City Council members directed city administrator Peter Herlofsky and finance director Teresa Walters to find up to $500,000 in reductions for the 2011 city budget. Those cuts will almost certainly mean at least one city employee and possibly more will lose his or her job.

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City staff has proposed a 2011 levy of approximately $9.195 million. Of that, $6.386 million is levied for the general fund; an additional $2.8 million is assigned to the debt service fund, which makes payments on the city's outstanding bonds.

The debt service fund levy is non-negotiable, meaning council has no option but to levy that amount to cover the debt the city owes. And there's one big payment in that debt service fund -- a payment of $713,545, that's causing council to look at staffing cuts.

The payment is for the Vermillion River Crossings infrastructure and Hill Dee reconstruction construction projects. Issued in 2006, the bond was supposed to be paid off, in large part, by assessments generated by the then-proposed Vermillion River Crossings commercial project. The project has failed to materialize and the assessment payments never came, but the bond payments came due. The city has made payments, but didn't levy enough to cover the payments for the past two years. As such, from 2010 to 2011, the payments skyrocketed by $636,345.

In July, council members were presented with three options to cover that increase. The first ultimately meant making cuts elsewhere to free up money to cover the bond payment. The other two options meant borrowing from one fund to the next, a move council member Christy Jo Fogarty described as "robbing Peter to pay Paul."

Once there was a consensus to go ahead with severe cuts to the budget, there was only the matter of where those cuts would come from.

Finding cuts

Though the debt service levy cannot be decreased, the general fund levy can. And that's where council directed city staff to trim from. The recommended staff eliminations will have to be identified by Herlofsky and Walter, but council members had a number of suggestions.

Julie May suggested cutting the police department's new K9 unit and school resource officer positions, closing a liquor store and reorganizing the management staff to eliminate a position at that level. Steve Wilson advocated eliminating the economic development specialist position, and returning the council's stipend for meetings to what it was prior to 2009.

None of the council members is thrilled about the decisions that have to be made, but the only other option to make up that difference would be to raise the 2011 tax levy and ask residents to pay more. And they're less thrilled about that option.

"We just can't tax our way out of things anymore," mayor Todd Larson said. "We need to make cuts."

The city council must have a preliminary levy approved and submitted to Dakota County by Sept. 15. Once approved, the preliminary levy can be decreased, but not increased, before the final levy is set in December.

With the preliminary levy deadline looming, Fogarty suggested Herlofsky and Walters come up with two sets of recommended cuts -- one totaling $400,000 to $410,000; the other totaling $500,000 to $510,000. Fogarty wishes to keep the city's options open, particularly to see if they can work a deputy registrar's office into next year's budget.

The cuts will go a long way to addressing the levy needs, but will not cover the entire deficit created by the Vermillion River Crossings payment. However, Walters had a little good news to share Monday -- the city of Farmington is receiving approximately $233,000 more than anticipated in fiscal disparities from the state of Minnesota. That funding will likely offset some of that deficit, as well.

Council directed Herlofsky and Walter to come up with their recommendations by the Sept. 7 city council meeting, at which time they will likely set the preliminary levy. Then, they will have two months to determine just where all of the cuts will come.

"I'm not comfortable with any of this, but I don't see any other way out of this mess," council member Terry Donnelly said.

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Michelle Leonard
Michelle Leonard started covering the Farmington community in June, 1994. Michelle earned her Bachelor of Science degree in Mass Communications: News-Editorial from Mankato State University in 1991. She is an active member of the Farmington American Legion Auxiliary Unit 189, and acts as the volunteer coordinator for the Minnesota Newspaper Museum which is open annually during the Minnesota State Fair. She has earned Minnesota Newspaper Association awards in Investigative Reporting, Local News Coverage, Feature Photography and Column Writing. 
(651) 460-6606
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