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Detroit Lakes looks at 5 percent levy hike

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Detroit Lakes, 56501

Detroit Lakes Minnesota 511 Washington Avenue 56501

Detroit Lakes city officials are looking to cut the percentage of levy increases for 2007. And they did just that Tuesday morning.

While it started out at a 34 percent levy increase, the budget committee worked numbers down to roughly 14 percent last week, and whittled the increase down further to 5.2 percent on Tuesday. It was working toward 5 percent, as the mayor had requested.

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A few of the items taken out or changed from the proposed budget include:

n Moving the reserved $150,000 Highway 10 relocation monies out of the permanent improvement fund.

n Only budgeting for one police officer to begin April 1 rather than two officers.

n One street department employee to begin employment July 1.

n Not allotting funds for refurbishing the restrooms at the beach and rec center. Instead, the $18,000 from the sale of land on Ox Cart Trail will be used along with money from the liquor store fund.

n Increasing the liquor store fund's transfer by $125,000 to the general fund. This brings the total transfer to $460,000, basically to keep taxes down.

n Transferring $70,000 from the liquor fund to the 2005 debt redemption fund.

n Instead of levying, pay the $72,000 for the Long Lake Phase II project with money from the sale of land to Menards.

After five meetings on the budget, the budget committee will make a recommendation to the finance committee -- which consists of the same aldermen as the budget committee -- and then a recommendation to the city council for approval. Both will be on the September agendas.

After going through the proposed budget throughout last week, the committee discussed several topics more in depth.

A couple months ago, the Boys and Girls Club came before the city council, requesting a boost in funds from the city from $1,500 a year to $12,000.

Mayor Larry Buboltz said that years ago, the city paid all the utilities for the club, but in the last five years, the city has gone to contributing $125 a month towards utility costs.

The city owns the club building and pays the property taxes on the land.

City Finance Officer Lou Guzek suggested the city phase in money over three to four years to the club, instead of such a big jump to $12,000.

Alderman Ron Zeman said the city should give the club the extra money because without that money and club, the city would possibly be paying for the kids in a more negative manner.

"We're getting a lot of bang for our dollar up there," he said.

Alderman Bruce Imholte said if the club is getting more money, he felt Mark Greenig and his recreation programs should be allotted more money, as well.

Alderman James Hannon suggested taking $5,000 from the $55,000 donated to the Holmes Theatre and splitting it between the Boys and Girls Club and the rec program.

Others suggested giving money out of the liquor fund.

"We can't depend on the liquor fund for general operations," Alderman Jim Anderson said. "That needs to be one-time items."

The group decided to give an extra $2,000 -- besides the $1,500 -- to the Boys and Girls Club. The issue can then be revisited each year and possibly increased in years to come.

Another item discussed more in depth was the cost of the city attorney.

Alderman Leonard Heltemes said the cost of legal services jumped too high from 2006 to 2007. In a letter from City Attorney Bill Briggs, he requested the budget for legal services be raised because of the increased workload.

The 2006 estimated cost for legal fees is $78,750. The 2007 budgeted cost is $98,812.

Briggs pointed out that those numbers are based on 1,400 hours for the year, but in the past year, the law firm has actually spent 1,631 hours on city legal work.

Heltemes said regardless of the amount of work, the percentage of increase was too high.

"Either they should propose a decent increase or we put it out for bids," he said.

City Administrator Rich Grabow said $85 an hour is a good price for a city attorney, and that the number of hours worked is what's driving the increase. He added that if the work was put out for bid, the city could get someone not as well versed in municipal law.

"Take any city employee that's been here for a number of years. They are still a valuable employee," Heltemes argued, pointing out that city employees only receive a 3 percent increase per year. The legal fees are budgeted for a 6 percent increase.

Anderson said with the city growing and asking more of Briggs and his legal team, he sees justification in the increase.

Heltemes suggested looking at other cities, what they pay their city attorneys and what percentage increase they receive in a year.

And finally, discussion over a levy for payment on Long Lake Phase II brought the weeklong discussions to an end Friday morning.

For the city share of the project, street improvements are $450,109, and sewer forcemain and lift station is $239,220. With those figures, the levy for the city share for 20 years at 4.5 percent is $72,000. The budget committee looked to decrease that number.

One source that will be used is money from the Menards property sale. It was agreed at the sale that a portion of the money would be used for wastewater costs and improvements. Therefore, the $239,220 for the sewer and lift station will likely come from the Menards money, which totals $777,585.

Options for the street improvements of $450,109 were from the Menards money or from the liquor store fund.

Several members of the board again argued the liquor store fund should be used for items other than annexation costs.

"I disagree in principal that we're paying down and boom, there is no consequence (for expansion)." Imholte said.

Since the airport runway will not be done in the next couple years for sure, Grabow suggested taking part of the liquor store fund transfer from the airport fund to pay for these street improvements.

Heltemes suggested that if the liquor store funds are going to be looked at, so should the public utilities fund, which also has an excess amount.

If the street and sewer costs were taken out of the levy amount for the Long Lake Phase II plan, it would bring the total figure down from $72,000 to $18,000.

In the end, the panel decided to recommend $450,000 be taken from the liquor fund to pay for the street improvements and widening, with the remaining $72,000 to be paid for by Menards land sale money.

With a 5 percent levy increase, taxes on a $75,000 house would increase approximately $13, and on a $100,000 house, taxes increase $17.

Guzek said with the increase only being at 5 percent, the city is exempt from holding a Truth in Taxation meeting, but he will still give information at the council meeting in December.

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