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Posted on: August 7, 2018

Preliminary 2019 budget set at $179.9 million

Minot City Manager Tom Barry presented the City Council with a $179,931,375 million preliminary budget for 2019 at the Council’s regular meeting on Aug. 6. The 2018 budget was $142.7 million.

The proposed 2019 budget calls for 129.26 mills. The mill increase from the 2018 mill levy of 106.65 is driven almost exclusively by two factors: slightly lower property valuations of about 3% (3.37 mills) and shifting sales tax collection back to the Northwest Area Water Supply project (19.43 mills). The estimated mill value is $205,920.

Collections for NAWS through the City’s sales tax was halted in 2011 after Minot residents voted overwhelmingly to temporarily discontinue the collection for the project and move the future collections to a Community Facilities Grant, Property Tax Relief, and Infrastructure Improvements until the project resumed following litigation. Work on NAWS can now continue and the previous $30 million collected is no longer sufficient to fund the local share of the project due to new requirements set forth by the court.

“We need to now shift our sales tax dollars back to NAWS,” said Barry. “That’s going to impact the amount we were using to reduce property taxes.”

In the past, the City has relied heavily on sales tax to relieve the property tax burden. With the need to use 40% of a penny for NAWS, the difference in revenue must be shifted back to property taxes.

“It’s not a matter of reducing budgets and eliminating services. It’s a matter of what was the revenue source that we used? We moved from property taxes to sales tax,” Barry said. “Now the line has been crossed. Sales taxes are no longer there. We have to move those activities back into property taxes.”

Barry outlined key efficiencies and cuts the City has made over the past three to four years. From prolonging the life of older equipment, slowing down projects, and finding grants, the City saved more than $78 million for taxpayers. In addition, the City’s operating budget has dropped more than $5 million in the past two years.

“We’re lean, very lean,” said Barry, citing U.S. Census Bureau statistics that show Minot well below average local government employment numbers. “We can’t cut ourselves out of this. We’re just looking down the barrel of two of the largest infrastructure projects in the City’s history and we’re doing them at the same time.”

The 2019 preliminary budget will affect individual property owners differently. In 2018, the median home value was $182,000; the projected median for 2019 is $178,000. The homeowner within the City of Minot with a home valued at $178,000 would see an increase of approximately $161.99, or $13.50 per month, if the proposed 2019 budget is approved.

“I would say this to the citizens out there who are just tuning in now about our budget: This has been going on for months. There’s no reason for anyone in our community to be ignorant about what’s going on with the budget,” Barry said. “We have multiple presentations, multiple videos, all the information you could want about how we got where we are and why we’re having to do what we’re doing is contained in those presentations and videos. So it’s incumbent on every citizen in our community to own this as much as the rest of everyone else because they have to get informed and they have to get engaged. We ask that they do that. We’re not trying to hide anything. We try to be as open and as transparent as we can possibly be about this, but it is incumbent on our residents to get educated as well.”

The NAWS project cleared a legal hurdle in August 2017 when a federal court ruled the project could move forward. The rule required that a new water treatment facility be constructed near Max; that facility is currently under design. Minot is projected to pay $49.7 million for the treatment facility and other aspects of the project over the next five years. As a result, the 40% of Minot’s second penny of sales tax will be committed to NAWS rather than community facilities projects. That money had been previously used to reduce property taxes, and the change means an increase of more than $4 million or 19.43 mills to the proposed 2019 budget. The spending on NAWS makes up roughly 80 percent of the proposed mill levy increase for the 2019 proposed budget.

Barry pointed out to the City Council on Aug. 6 that there are positive economic signs in the future, with projection modeling suggesting that 2019 will be the last major adjustment to property taxes, provided that alternative financing is found for flood control projects. Ag and oil prices are on the rise. Property values in Minot appear to have stabilized. A change in the state’s formula for HUB City funding could provide an additional $2.5 million annually for Minot. Online sales tax collections could produce significant revenue.

“We do see the economy starting to improve. That’s good news,” Barry said.

Other details from the proposed 2019 budget:

-Capital improvement projects continue to be delayed. To be most effective and to protect street surfaces, typical street maintenance should be scheduled every five years. Minot has extended the maintenance schedule for a number of projects throughout the City. Some street maintenance has been pushed to more than 15 years between jobs. The 2019 budget includes $4 million for street maintenance, well below what’s needed to keep street maintenance on schedule.

-The proposed 2019 budget includes no changes to the sanitation, cemetery, water, or transit bus rates. Monthly flat rates for sewer would rise from $6.52 to $7.04, while sewer usage rates would rise from $2.77 to $2.99 per 100 cubic feet. The average residential customer would see an increase of $3.16 per month in their sewer bill.

The members of the Committee of the Whole, which is also the entire City Council, will hold a budget questions and answers session on Aug. 28 at 4:15 p.m. in Room 201 of the Auditorium. City Council President Mark Jantzer will present his budget message on Sept. 4. The City Council will hold a special public hearing at 6:30 p.m. in Council chambers on Sept. 18 for the budget’s first reading. Another special Council meeting will be held Sept. 25 at 6:30 p.m. in Council chambers to approve the 2019 budget on second reading. All meetings are open to the public.

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