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Erik Burgess, Published August 05 2013

Moorhead considers charging new $3 monthly fee for streetlights

MOORHEAD – City leaders may add a new monthly fee to utility bills to make up for a preliminary $500,000 shortfall in the Moorhead’s 2014 budget.

A streetlight utility fee tacked onto residents’ utility bills has become a popular option among cities staring down budget shortcomings, City Manager Michael Redlinger told the City Council on Monday evening.

City staff is working on other options to make up for the $500,000 disparity, which cannot be fixed using property tax increases due to a one-year levy cap imposed by the Minnesota Legislature.

The city pays about $650,000 a year to the Moorhead Public Service for maintenance and electricity to street lights, said Finance Director Wanda Wagner. A $3 streetlight utility fee per month could raise $500,000 next year, enough to cover the hole in the budget, Wagner said.

As of Monday, the city’s preliminary budget includes an 11 percent total levy increase. For a $140,000 home, that’s about a $40 increase to property taxes next year, Wagner said.

Councilwoman Brenda Elmer said she doesn’t believe residents could withstand such an increase.

“But I’m optimistic because as we went through the budget process last year, Wanda in particular came up with her bag of tricks and some really out of the box fixes that really helped us get that number down,” Elmer said.

Redlinger said a phased implementation of the Springsted Classification and Compensation Study completed earlier this year would also help. The study found that Moorhead city employees make about 6 to 10 percent less on average than employees with similar jobs in other regional cities.

It would cost about $465,000 in tax-supported funds to implement fully next year and bring city employees up to par, but the pay raises could be phased in over time to save on annual costs, Redlinger said.

Councilman Mike Hulett said he believed there are going to be “some serious discussions” in the near future about how those salary increases are phased in.

The 2014 budget comes down to mounting costs that are “somewhat out of our control,” and lost revenue sources, Wagner said.

There’s a health insurance premium increase next year that could be around $201,000 in tax-supported funds, and the Red River Regional Dispatch Center is adding staff, at a cost of about $50,000 to Moorhead.

The city will also lose about $558,000 in expected special assessment revenue from tax-forfeited lots in three developments – Stonemill Estates, Johnson Farms and Parkview.

Even with local government aid from the state, which increased $287,000 this year after having been flat for four years, and a proposed revenue transfer increase from Moorhead Public Service of $250,000, a $500,000 shortfall still looms, Wagner said.

State lawmakers this year decided that cities and counties no longer have to pay sales taxes on purchases in certain cases, but Wagner said that will only save the city dollar amounts in the five figures.

City staff also suggested reinstating a mosquito control fee of 75 cents and a forestry fee of 25 cents, which were cut from the budget last year. But the final answer could be in a “modest” streetlight utility fee, Redlinger said.

“The streetlight utility generates a lot of revenue quickly without a lot of pain,” he said.

The council will look to adopt a preliminary levy amount and 2014 budget at its Sept. 9 meeting. The final budget and levy will be set Dec. 9.

Readers can reach Forum reporter

Erik Burgess at (701) 241-5518