City budget wind blows less harshly this fall. Updated

UPDATE: Red Wing is another example. I had a conversation this morning with council administrator Kay Kuhlman. See below.

A year ago, city officials around Minnesota were wringing their hands as they headed into budget season.

The state not only had cut aid payments to local governments, it had changed the property tax rules in a way that made it difficult to predict what residents’ taxes were going to do. At the same time, political and economic pressures were unrelenting, pushing local leaders to look for budget cuts to road maintenance, libraries, parks and even police departments.

We chronicled these cross-currents in a three-month project we called Forced to Choose.

It feels quieter this fall.

A big reason, as MPR News reporter Curtis Gilbert points out in a report today, is that many Minnesota homeowners may see a reduction in property taxes next year as property values rise for commercial, industrial and agricultural land.

After several years of tightening budgets, cutting services, reducing employment, a lot of cities are still in that mode. Many are approving preliminary property tax levies at the same level as last year, a spot tally kept by the League of Minnesota Cities shows.

But you can find evidence of local officials trying to do some things they couldn’t before. As Conrad Wilson reported Tuesday, St. Cloud officials are seeking cost-of-living pay raises for city employees for the first time in four years.

Winona seems like the perfect example of what’s going on.

City administrator Judy Bodway said city department heads were told to be “as relentless as ever” in putting their 2013 budgets together. But, she said, “I don’t think it was as dire as it has been. The cuts have been made.” Winona has one less building inspector than it used to, for example, adding workload to the remaining staff. And even though new construction is down, their workload includes the growing number of rehabs.

So when the city council set a preliminary property tax levy last month — a figure that it reduced a year ago — it felt comfortable enough to raise the levy 1.2 percent. It hopes to do some capital spending on street projects and a new fire truck that it had put off in the past.

The small town of Jackson in southern Minnesota is another example. City officials have kept the levy flat for several years but at the cost of reducing its reserves. This year council members have approved a preliminary increase that will let them take on a street construction project and restore their fund balance, city administrator Jennifer Feely-Bromeland said.

It’s tough to draw too many conclusions, but Jackson and Winona make you think that if the budget wind is blowing less harshly this fall, the most noticeable impact might be on city streets.

“The angst has already been felt,” Bodway suggested.

UPDATE: I like to check in every fall with Kay Kuhlman, council administrator in Red Wing, because the city has wrestled a lot with squeezing operations, getting volunteer help, shrinking services. This morning, she, like Feely-Bromeland and Bodway, left a calmer impression than a year ago.

“I would say we have stabilized,” she said. Red Wing is unique because it has Xcel Energy and its Prairie Island nuclear plant as a huge contributor of property taxes. As the plant’s valuation rises, the city can tap it and still keep tax rates level on homeowners.

As a result, the city council has a little breathing room this year and is using it, not to undo past operational cuts, but to establish a plan that over 17 years will use the additional revenue from Xcel to pay off bonds the city wants to issue to ramp up infrastructure projects to improve sewer, water and roads.

Comments are closed.