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Minot City Council President Mark Jantzer delivered a budget recommendation in early September that included significant changes in sales tax allocations to help fund flood protection projects, and consideration of a new 1 percent tax on food and beverage.
In his budget recommendation, Jantzer proposed shifting funds from the city’s sales tax that now are earmarked for the MAGIC Fund and the Community Facilities Fund to flood control. The change would provide an estimated $3.55 million for flood control projects. Under Jantzer’s recommendation, sales tax funds for Minot Area Development Corp. would be $365,000, and the $90,000 budgeted for Minot Air Force Base retention efforts would remain the same.
Jantzer asked the City Council to consider adopting a 1 percent food and beverage tax that would provide funding for the Community Facilities Fund to replace money that would be diverted from sales tax funds.
Jantzer recommended a reduction in the increase for City employee salaries from 3.5 percent to 2 percent, which would save approximately $568,218 or just under 3 mills from the 2018 budget.
The Council is expected to adopt a budget on first reading at a special meeting that includes a public hearing on Sept. 14 at 6:30 p.m. in Council chambers. Final adoption of the 2018 budget is expected at a special Council meeting on Sept. 21 at 6:30 p.m. in Council chambers.
The 2018 proposed $104.8 million budget includes approximately a 4 percent increase in spending, but the proposed budget actually reduced operations costs by about $4 million. The City of Minot has traditionally relied heavily on variable revenue sources, notably sales tax, permits, and fees, and all of those revenue streams have been significantly reduced in recent years.
With less income generated through sales tax and other variable sources, and economic trends showing steep reductions in oil and agricultural commodity prices and a drop in the value of the Canadian dollar, the City now finds itself in a position where it’s necessary to increase revenue.
The City’s budget for 2017 included a levy of 79.25 mills; the proposed levy for 2018 is 108.8 mills. The City’s mill levy was roughly 113 mills 10 years ago. The reduction was in part due to increased home values and an increase in city sales tax. In 2007, sales tax revenues were just over $13 million. By 2014, the income from taxable sales peaked at $27.2 million. Since that peak that revenue source has dropped to a “pre-boom” low of $18 million, a reduction of about 34%.
While sales tax revenues were used to offset many city improvements and other costs, Minot managed to stay below the state and national averages in property taxes. In 2016, the average home in Minot, which is valued at about $182,000, has a total tax bill of $2,100, with 27% allocated to the City of Minot. The state average is more than $2,500, with the average home value at $153,800 and the national average nearly $3,300. The average home price nationally is under $180,000.
In the preliminary budget for 2018, City Manager Tom Barry said the City has eliminated 19.5 full-time staff positions through reassignments and attrition. Approximately $2 million in capital improvement projects have been delayed. Some budget requests from departments have been eliminated, cutting another $5 million in requested spending.
But there are aspects of the City’s budget that must be funded, including the pension liability, which 2018 is $578,322. Costs for liability insurance and electricity are going up. The City’s emergency fund must be replenished with more than $1 million after being depleted during last year’s major snow removal efforts.
The City of Minot is one of four entities that levy property taxes in Minot. In an average homeowner’s property tax bill, 38.2 percent goes to the Minot Public School, 27.5 percent to the City of Minot, 22.8 percent to Ward County, and 11.1 percent to the Minot Park District.