Heidi Shaffer, Published September 06 2010
Fargo cautious on 2011 budgetLower-than-average revenues are forcing Fargo city leaders to take a cautious approach to budgeting for 2011, Mayor Dennis Walaker’s preliminary budget shows.
The total city budget tops $206 million, but while general fund revenues are expected to increase 1.4 percent over 2010, they have slowed from levels of the past few fiscal years.
“That’s the lowest in my recollection,” said Kent Costin, city finance director.
Before 2008, Fargo averaged a general fund budget growth of 5 to 6 percent or more, Costin said.
“While Fargo’s economic performance has been impacted by national trends, the severity of the regional decline is much less than other economies across the nation,” Walaker writes in a letter attached to the budget proposal.
In July, Walaker directed each department to cut 1 percent from 2011 budgets to counteract revenues slowed by the national economic decline.
“We went into it with a goal of cutting right at the front of the process,” Costin said.
The mill levy will stay at 58.25 mills for the fourth consecutive year.
Individual property values remained relatively flat, but new construction in 2010 provided a 2.8 percent increase in overall property values, “which is amazing in this economy,” Costin said, noting that some U.S. communities saw values decrease by up to 40 percent.
Fargo also took a cautious planning approach to prepare for unknown cost increases for employee pension plans and health care.
City employee pension plans took a hit in the recent depressed stock market, losing up to 25 percent of their value at one point. Pensions are up 15 to 17 percent, but the recovery process is expected to be slow.
“The amount of loss across the nation is so large that it’s going to take time,” Costin said.
The city will watch what the North Dakota Legislature does with state-funded pension plans and will likely follow suit.
“Certainly we need to watch and continue to fund, add money where we can to stabilize it,” Costin said.
The city will also monitor its health care plan over the next year, with officials expecting costs to continue to rise.
The city spends $6.2 million for its health care fund, which represents 5 percent of the total general fund budget. That percentage is expected to grow.
The budget sets aside $600,000 for employee salary adjustments, pending the completion of a new pay plan the city hopes to have finished by the end of the year, Costin said.
The funds are allocated for employee step increases, potential cost-of-living adjustments and benefit programs. A 1 percent employee cost-of-living increase in 2010 cost the city about $500,000.
Seven full-time employees will be added to the payroll in 2011. The Street Department will get the majority of those positions, with three new equipment operators to cover the growth of the city.
No major building projects are budgeted, but a new City Hall, police precinct and public works facility are on the list of future needs.
The City Commission will vote on the preliminary budget in Tuesday’s meeting, and there will be public hearings on Sept. 20.
Readers can reach Forum reporter Heidi Shaffer at (701) 241-5511