City budget in holding pattern
By Tom Larson
City of Morris officials worked to ensure residents would not experience a tax increase in 2009. But that work could all be for naught.
State Legislators are meeting Wednesday to discuss a $426 million shortfall in the current budget, and an estimated $4.8 billion deficit for the upcoming biennium. It's widely expected that Local Government Aid, which represents the bulk of municipal budgets, will be targeted for reductions.
Any significant loss of LGA could cripple local governments, Morris City Manager Blaine Hill said Tuesday during the City Council's regular meeting.
"We're in serious trouble if (lawmakers) make dramatic changes in LGA," Hill said. "Hopefully, they won't dig into it too much."
Hill addressed the city's 2009 budget during its annual Truth in Taxation hearing, held as part of the council's regular meeting.
The city is expected to pass a budget that includes a 5.52 percent decrease in its levy for 2009.
It's not been typical in recent years for a local levy to be reduced or held at its current rate, and Morris' attempt to do so in 2009 might be an exercise in futility should deep LGA cuts be part of the the state's economic recovery plan.
"It's a good budget," Hill said. "It does what we want it to do, it reduces taxes. And in the end, it might not mean anything."
Currently, the city receives about $2.75 million of its General Fund revenue from intergovernmental aid, such as LGA. The next largest revenue source for the city is taxes, which are about $383,000.
The city receives its intergovernmental aid in two payments during the year, and its expected to receive about $1 million this month. Hill said he doesn't expect that payment will be cut, but that reductions in LGA could affect city revenues when the first 2009 payment is due next spring.
The city also was expecting to receive in 2009 an additional $366,000 in LGA. But while that increase was approved, it wasn't due to be appropriated until the upcoming year, and Hill said that because of the state's fiscal predicament, the city probably won't see that increase. City officials anticipated that and didn't earmark the money for spending, Hill said.
2009 budget review
The city's 2009 proposed budget is $8,418,760, a 8.8 percent increase over the 2008 budget of $7,737,848.
The proposed General Fund budget for 2009 is $3,445,013, a 3.05 percent increase over 2008's budget of $3,343,164. Hill said he tries to keep the General Fund increase at about the rate of inflation.
While the city is expecting to decrease its 2009 levy, residents may still see a tax increase. That's because the city's tax capacity -- the ability of Market Value to generate taxes -- is expected to increase 7.82 percent from 2008 to 2009. The city's tax capacity in 2009 is $2,152,650 compared to $1,996,443 in 2008.
The Stevens County Assessor has estimated a 7.856 percent increase in city property Market Value. The 2008 Market Value of property in the city was $202,301,300, and the estimated 2009 Market Value is $218,194,900.
Debt service is a growing budget item for the city, which has undertaken major infrastructure projects in each of the last four years. The Debt Service Fund will increase about 48.4 percent in 2009, from $478,350 in 2008 to $710,090. Tax levies are the primary funding source.
The city in 2009 will eliminate contributions to non-profit organizations, and also will eliminate an annual $7,000 contribution to the Morris Chamber of Commerce.
However, the city is expected to approve implementing a 3 percent Lodging Tax in 2009. By law, a lodging tax can only be used to promote the city, and money collected through the tax is expected to be contributed to the chamber for promotional purposes.
Hill stated that the city has received a letter of support for the move from the chamber.
The city also is expected to approve a 3 percent increase in utility rates in 2009.
Transit fares could be increasing in 2009. The council will hear a presentation from city Finance Director Gene Krosschell about a possible fare increase to offset the rising cost of operating the system. Hill stated that the fare increase could be lower than anticipated because of falling gas prices, but that some increase will be needed.
Hill stated that the tough economic times could present some opportunities, as well.
For example, a major infusion of dollars into infrastructure projects is being talked about at the federal level as one way of stimulating the economy.
Hill said it's possible projects that are coming up for bid -- such as the city's infrastructure improvements planned for the Highland Homes Addition in 2009 -- may be considered eligible for federal money, if such a program is enacted. The county's courthouse renovation also is a project that could be considered as an infrastructural enhancement, he said.
Other city business
The council approved designating TKDA of St. Paul as its engineering firm for work at the Morris Municipal Airport.
Because the city received federal money for airport projects, the Federal Aviation Administration requires the city to solicit qualifications from engineering firms.
The city received six proposals and chose TKDA because of its partnership with Widseth Smith and Nolting and Associates, of Alexandria, the city's current consulting engineering firm.
The city Planning Commission has scheduled a Dec. 16 hearing to consider a Conditional Use permit for Stevens County's building project. The project includes construction of a jail and law enforcement center, and renovations of the existing courthouse.
In the future, the county also is expected to ask the city to vacate a block of Colorado Avenue as part of the building plan. The area across the street would be used for parking and a walking plaza would be constructed from the lot to the courthouse entrance.
The council will meet on Jan. 6 for a reorganizational meeting mandated by the City Charter. Meetings will continue to be scheduled on the second and fourth Tuesdays of each month.
In November, Bill Storck and Matt Carrington won reelection to the council.
The city's transit system is poised to break a ridership record it set last year.
November ridership was 5,304 compared to 5,154 in 2007. Total ridership in 2008 stood at 58,320 through November, which is about 1,100 ahead of the record set last year, Krosschell said.