Erik Burgess, Published November 12 2013
Streetlight fee or cuts to service? Moorhead finance director says options slim for balancing 2014 budgetMOORHEAD – The city’s finance director says if the City Council doesn’t fix Moorhead’s budget woes, there will be cuts to city services next year.
Because of necessary increases to city employee wages and benefits and declining revenue, the city needs to find $342,000 to balance its 2014 operating budget.
A possible cure-all to the budget gap is charging a monthly streetlight utility fee, but council members have not yet committed to that fix. Councilman Steve Gehrtz said Tuesday he doesn’t think the fee is a good idea right now.
“I don’t think that we have enough time to thoroughly vet that out,” Gehrtz said. “And it would be a bit presumptuous that the new council in 2014 would even support that.”
But Finance Director Wanda Wagner said after the meeting that options are slim and time is short. The city is set to pass its final budget on Dec. 9 and has to pass a balanced budget, she said.
A $1.30 monthly streetlight utility fee for residents and a $1.70 monthly fee for small commercial utility customers would raise $455,000, Wagner said.
“We have, since 2008, scrutinized line item by line item every department’s budget,” Wagner said. “There is no way we can find $340,000 in just general operations as a reduction without reducing some services.”
The council voted Sept. 9 to set next year’s preliminary levy increase at $32 per median-valued home, which is $139,900. That levy will be spent on the city’s debt, and does not cure the $342,000 operating budget shortfall.
The $8.7 million preliminary levy for 2014, an 11.3 percent increase from 2013, cannot be raised before a final budget is passed but can be lowered, according to Minnesota law.
The city this month will likely close the deal on a major housing development at Stonemill Estates, which will mean another $150,000 for the city, City Manager Michael Redlinger said.
With those new funds, the council could lower the preliminary levy increase to $24 on the median-valued home, but it would still have a $342,000 deficit.
Councilwoman Heidi Durand said she, as a taxpayer, would rather see more taxes than fees.
“Because I can reclaim (taxes) at the end of the year versus $32 in fees that I can’t recapture,” Durand said.
The city also needs to pay for its recent reorganization of City Hall, which Mayor Mark Voxland vetoed because he said it would cost the city too much money. The veto was overturned by a 7-0 council vote, with members saying the reorganization will improve customer service.
The reorganization could cost anywhere between $8,500 and $160,000, which would only add to the shortfall. Redlinger said he’d have a more exact cost estimate by Monday.
The council is already asking for a $250,000 increase in funds it receives from Moorhead Public Service. By law, the city can only ask for up to 20 percent from the MPS general fund. The city now takes 17.3 percent, about $8 million.
“If we want reliable utilities, we have to be a better partner with them,” Durand said. “We can’t keep raising that transfer.”
Earlier this fall, city staff predicted Moorhead would face a roughly $500,000 shortfall. That number was reduced to $342,000 thanks to a number of small savings city staff found.
There will be a public hearing on the levy and budget at 6 p.m. Dec. 2 in City Hall.
Readers can reach Forum reporter
Erik Burgess at (701) 241-5518