City outlines 2016 budget, $50M debt load

City Administrator Clay Wilfahrt was asked to respond to a series of questions about the city’s budget as city staff prepare the final budget for 2016.

The city carries a debt load of approximately $20.8 million in general fund obligation debt and another $29 million in enterprise funds.

Enterprise fund debt includes  the city’s fresh water treatment facility and waste water treatment plant, both required by state mandate and funded by sewer and water payments.

General fund obligation debt includes the city portion of street projects, building purchases and the like. The city pays for about half the cost of street projects, with a portion of the charges being billed to homeowners and carried on their property tax payments over time. 

“All of our debt is covered under taxes residents are already paying,” said Wilfahrt. “We may bond for road improvements in 2017. Other bond payments will be coming off the books by then.”

While the city may never be entirely debt free, the council is taking steps to build up their capital reserves for small projects.

“Then we don’t have to borrow to fund them,” Wilfahrt said.

The city did refinance one bond issue in the past year, saving tax payers around $1 million in interest payments, City Finance Director Deb Wegeleben said. 

“We are always looking for opportunities to refinance if we can save money that way,” she said.

The former police department building owned by the city has been sold to CentraCare to house their ambulance service. When all expenses are paid, including repairing some leaking pipes, the city expects to net around $100,000 from the sale. Most of this money is already earmarked to move the Big Lake Police Dept. to the substation on Minnesota Avenue, where they will share the building with the Big Lake Public Library. 

This is an expense which had been included in the 2016 budget but will now be covered by the returns from the sale.

The city will hire a community development director, a position currently covered by a consultant, to agressively market Big Lake on a fulltime basis and  work in conjunction with county economic development efforts for the region.

“It will cost a little more but we will get so much more out of if it,” said Wilfahrt. “The city will have somebody working on their behalf 24-7 and we will be promoting each other’s development strategies within the county. It will give us a louder voice and we can get more accomplished. It looks promising.”

Already approved is a city planner position, to bring the cost in-house and allow residents access to a city planner every day.

A decrease in the total tax levy from the preliminary levy of $3,957,446.89 to $3,913,592.89 has been made and presented to council.

The tax levy with the proposed changes will increase 3.29% over 2015 compared to the preliminary levy, which was a 4.45% increase over 2015. The general levy will be set at $2,401,436. The debt services levy will be $1,462,156.89 and the EDA levy is at $50,000. 

The new tax rate for the city would increase to 58.50% compared to 57.82% in 2015 or a .68% increase.

The most notable changes include budgeting for capital items and their dedicated funding sources. Local Government Aid (LGA) and State Aid Revenue will no longer be budgeted in the general fund.  

Capital improvement items will also no longer be budgeted in the general fund. Instead, these expenditures will be budgeted in the capital infrastructure and vehicle and building replacement funds to better line up with associated revenues, Wegeleben said. 

“Being that capital items can be quite costly, budgeting this way will help prevent large increases or decreases within the general fund by moving the acquisition costs to a separate fund,” she said. 

“The resulting expenditures within the general fund will show a truer picture of actual operational expenses and costs associated with general government activities.”