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Erik Burgess, Published December 09 2013

Moorhead council passes 2014 budget with 8 percent tax levy increase after grueling debate

MOORHEAD – It took about three hours, but the City Council here worked through a budgetary headache at its final meeting Monday night to pass a final 2014 budget.

By the end of a sometimes heated debate, the council ended up saving the median-value homeowner here about $13 on next year’s tax bill, but some members argued that the methods they used to lower the levy only kicked the city’s budget problems down the road.

Outgoing Mayor Mark Voxland, whose last meeting as mayor was Monday, called the lengthy debate “a little ludicrous.”

“I don’t have aspirin in my drawer, so I can’t help anyone out this evening,” Voxland said toward the end of the evening.

Council members ultimately passed a final levy of $8,437,376 with a 7-1 vote. That’s an 8 percent bump from this year. The owner of a median-value home of $139,900 will pay the city $26 more in property taxes next year.

The city in September passed an 11.3 percent preliminary levy increase, which would have bumped taxes on the median-value home by $39.

In finalizing the budget, the council was split about how to use the city’s so-called “overmatch funds,” a pot of money with about $5 million from flood mitigation bond proceeds.

The council eventually agreed to use $500,000 from that pot to help Moorhead Public Service pay for the roughly $1.08 million demolition of the old power plant on the Red River.

In return, the council asked for a $500,000 increase to the general fund transfer it receives from MPS revenue, which helped buy down the city’s levy. That brings the transfer to over $8 million.

Some council members and city staff, though, urged caution using those overmatch dollars, calling them “one-time” funds that need to be spent on flood mitigation and can’t continually be sought out to balance future budgets.

Outgoing Councilman Mark Altenburg said the 11.3 percent preliminary increase would have gone entirely toward the city’s debt payment schedule, which balloons next year thanks to dozens of tax-forfeited lots in Stonemill Estates, Johnson Farms and Parkview.

“Now we’re using flood money to cover failed businesses,” Altenburg said. “I would rather justify an increase in the levy than dip into the flood money that we fought hard for.”

“This seems like a one-time gimmick,” Altenburg added.

Numerous times, Altenburg buried his reddened face in his hands during back and forth with Councilwoman Brenda Elmer. Elmer led the charge for lowering taxes, and at one point proposed using $750,000 in overmatch funds to buy down the levy to a 4.9 percent increase.

“I’m concerned that we’re losing our competitiveness in the metro area, talking about double digit increases,” Elmer said.

Elmer’s proposal failed by a 5-4 vote, with Voxland casting his tie-breaking vote against. Budgets need six votes to pass.

City Manager Michael Redlinger said overmatch money could be used to demolish the power plant, but he cautioned the council, saying that the more the city uses from that fund, the more it will have to ask from the Legislature to finish the $12.2 million left in flood projects.

City Finance Director Wanda Wagner said using one-time funds to cover operational costs “just compounds the issue down the road” and could negatively affect the city’s credit rating.

The final budget also included a 5 percent cut to discretionary funds and a $9,000 cut to the roughly $18,000 council member and mayor travel budget.

Councilman Luther Stueland was the sole “no” vote against the final budget. He had proposed raising the levy by 3.75 percent, an idea which only got two “yes” votes.

Readers can reach Forum reporter

Erik Burgess at (701) 241-5518