Council gets early look at 2009-10 budget
With nothing fancy and no real frills in mind, the Farmington City Council has set to work on a 2010 that will likely include the need to come up with an extra $595,000, just to maintain the status quo.
The budget cycle started Monday with a workshop to go over the basic objectives for the coming year. At the top of the list is finding a way to fund an expected $350,000 cut in state aid, and still address pre-approved items and state mandated expenditures.
Budget information provided to the council calls for a minimum proposed 2010 levy of approximately $9.5 million, an increase of about $200,000 over the 2009 planned levy and $550,000 more than the amount actually received due to the governor cutting Farmington's Market Value Homestead Credit this year.
It includes pre-approved new spending including $70,000 for a senior center loan and operational costs; $30,000 to pay the city's portion of a school resource officer for the second middle school that will open this fall; and $65,000 to hire a new officer to replace the one hired for the school job.
Another $30,000 is set as an estimate for retirement contributions, and $25,000 was identified in both 2010 and 2011 for new election equipment. Since Dakota County is upgrading its election equipment, cities throughout the county will have to buy new equipment, as well. The plan is to have Farmington's paid for before the 2012 election.
And, of course, there is the assumption Gov. Tim Pawlenty will again cut the state's MVHC aid, meaning $350,000 less coming in to the city's coffers.
However, city administrator Peter Herlofsky pointed out, the objectives for 2010 -- and the next two years, for that matter -- are to not increase the levy beyond what was pre-approved by the council and what is mandated by the state, and to maintain service levels. Ultimately, the latter calls for city officials to try to avoid cutting staff positions.
With those expenditures comes the need to look at possible revenue sources, albeit, probably very unpopular ones. Just months after council members said they did not want to pursue street light utility fees or franchise fees to balance the 2009 budget, the options are back for consideration in 2010.
Council member Christy Jo Fogarty said Monday she is not entirely opposed to enacting one or the other, or even both, since the measures would offer a stable income and fund city items in a fair manner.
"We need permanent fixes," she said. "This helps to ease the burden."
The street light utility would be just what it sounds like -- a fee to each homeowner, created to pay for the lights throughout the community. Herlofsky says $200,000 could be collected through the streetlight utility, which would cover the entire cost of keeping Farmington illuminated.
Franchise fees would be tacked on to gas or electric utility bills. The gas and electric companies essentially rent city-owned right of way. The city would increase that rent, the increase would be passed on to the residents, but the utility companies would pay the difference back to the city. That could mean another $300,000 for the city budget.
But rather than simply sticking that money into the general fund, city staff suggested creating a separate account for the annual seal coating projects.
For more than a decade, the city has assessed specific neighborhoods as those streets have been seal coated. They have had to do assessments because nonprofit, or tax exempt, properties like schools and churches do not pay for the projects if the city uses a general tax levy to collect money.
If the city were to go to a franchise fee, every property in the city would be charged. One advantage, though, would be that businesses could use the fee as a tax write-off. There also would no longer be an assessment for the seal coat project. But perhaps the biggest advantage would be that the fees pay for the entire seal coat project every year. And it would pull a $200,000 expenditure out of the general fund.
Under the numbers considered Monday, most residents would see a decrease in the city portion of their taxes -- mostly due to a decrease in market valuation. That, in turn, will affect the amount each homeowner will pay. Under a scenario presented Monday, a $168,000 market value home in 2009 has dropped to about $141,500 for 2010. As such, the taxes on that home drop from $742 this year, to $695 next year.
Council members discussed the initial suggestions this week, but ultimately agreed they could not make any decisions on the budget until they sat down and established a set of goals and objectives to achieve with the upcoming year's budget.