The action took place at the council’s regular meeting, following a workshop where City Administrator Ryan Mathisrud and Treasurer Jeremy Jude presented the preliminary budget.
Initial figures to start the budgeting process were set high, Mathisrud explained, because the proposed levy can be decreased but not increased.
Mathisrud noted that city staff is behind in preparing the budget this year, partly due to recent personnel changes and partly due to COVID-19.
For example, he said, the city’s annual audit is still in progress and the auditors are working from home. It was also noted that Mathisrud came on board during last fall’s budgeting process, and Jude joined the staff in May.
They said discussions with department heads about their budget requests for 2021, and with the city’s finance committee, have yet to take place.
The staff proposal set the general fund budget at $3,597,057; the general fund levy, at $2,239,283. With bonding levies totaling $735,189, which Mathisrud said cannot be changed, the total proposed tax levy is $2,974,472 – a 5.9 percent increase compared to 2020.
Mathisrud noted that personnel wages and benefits comprise more than 70 percent of budgeted expenditures.
Jude said that on the revenue side, the budget mostly carries over 2020 revenues, with the main exception a $36,860 increase in local government aid. He said they are also planning conservatively because of the potential for a tax revenue shortfall.
On the expense side, Jude said, most budget items were kept the same except for labor increases, which are contractually obligated, and insurance costs.
“In 2020’s budget, you budgeted for about a 3 percent increase on the insurances,” he said. “It looks like, this year, those insurances went up between 23 and 35 percent, depending on what they were.”
Jude said these costs increased mainly in the areas of workers’ compensation, due to some claims; property insurance, due to additional properties being covered; and vehicle insurance, due to fleet vehicles being added to the policy.
“So, on the insurance side, we took the actual costs for 2020 and added 3 percent to that cost,” he said.
Council members Erika Randall and Tom Conway voiced concern about city properties and vehicles being uninsured before the covered list was updated.
“That just scares me,” said Conway.
“We’ve got to make sure that that doesn’t happen again,” Randall said.
Mathisrud said last year was the first time in several years that the city has reviewed its schedule of covered items.
Jude urged council members not to be overly concerned by the percentages of the increases, since in many cases they relate to individual departments with a small share of the budget.
“My fear was the fact that we had properties that we didn’t have insured,” said Conway. “It wasn’t that the price of the insurance (went up so much).”
Conway voiced appreciation for Mathisrud and Jude’s efforts to clean up the city’s accounting issues.
Randall moved to adopt the 2021 preliminary budget and property tax levy, and both motions passed without dissent.
The council also scheduled a Truth in Taxation hearing for 6 p.m. Tuesday, Dec. 8 at city hall.
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