By MaryHelen Swanson

In the city of North Branch, financial director David Stutelberg contends that a 14.3 percent increase in the 2006 levy does not equate to a 14.3 percent increase in local property taxes, on the cityís portion of the tax statement.

But at the Sept. 13 budget meeting, Mayor Gloria Karsky and councilwomen Amy Oehlers and Theresa Furman all wanted the levy increase lower than 14 percent, even though Stutelberg said 14 percent is one of the lowest increases in the city in the last few years.
By the end of the meeting, however, the council was able to pare the levy down further resulting in about a 12 percent increase. Stutelberg has already noted that for folks living in old North Branch, property valued at $200,000 would see a decrease in taxes with the 14 percent levy, if the valuation doesnít increase.

The increase in valuation makes a big difference in determining how the cityís, or countyís or school districts, for that matter, levy affects individual homeowners.

As Stutelberg explained at the onset of the meeting, the original requests for 2006 equalled $3, 371,748. In the past few months the council has been working on reducing that figure and the property tax levy at 14.3 percent would have been $3,010,719.

Only two of the requested positions for next year are to be funded in the current budget: a public works position (50/50 public works and wastewater) and the night supervisor for the police department.

Actually, Stutelberg noted, it is really a re-classification and not a new position. The budget for next year includes a $10,000 increase for motor fuels.

At the same time, the proposed revenue budget is showing a reduction in building permits of $46,000.

Thatís based on lots available, said Stutelberg, reminding the council that the city has not approved a plat for over a year. Thatís why there isnít the increase in building permits, he said.

The mayorís biggest concern was salary increases, which she believed were higher than most in the industry. City employees will get a 3 percent cost of living increase plus a merit increase that could average 4 percent.

Even 5 percent is more than most companyís are paying now, Karsky said.

But City Administrator Joe Lynch pointed out that not all of the cityís 33 employees would be getting merit pay Jan. 1. They receive that increase on their anniversary date, he said.

Further, he noted, the eight department heads are compensated solely on merit.

And Stutelberg pointed out that more than 50 percent of the employees are under union contract who are getting more than 7 percent at the first of the year by agreed upon contract.

Too high, just right
Councilwoman Furman said 14 percent was really, really high, and that she was not comfortable with it.

Councilman Larry Erickson, on the other hand, said 14 percent was not outrageous.

Councilwoman Oehlers went with too high also.

Discussion began on where cuts could be made.

The city will have to reduce general fund balance by $25,000 to offset the difference between revenues and expenditures next year. Stutelberg said the cityís goal is to maintain 45-50 percent of the cityís operations in the general fund to cover the next year.

Transferring the $25,000 will still keep the general fund balance at that level.

He noted that there would be reductions to the expenditures in cable of $12,500 and for the phone system, $16,158 which came out of the 2005 contingency as the phone system was needed now.

While the city is trying to build up funds in order to sell $2.5 million in bonds for park improvement in a couple of years, it was decided that the amount budgeted for 2006 could be reduced by $12,500.

Another $12,500 was taken from the facilities planning fund, a fund which may be used for a new city hall, a community center or other city building need.

At this point, with 1.3 percent in reductions, the levy increase was at about 12 percent. This levy was then approved unanimously by the four councilors on hand. Councilwoman Kathy Blomquist was on vacation.

It was also agreed that the council would continue to look at ways to lower the levy even more before the final adoption in December. It cannot be increased.

The public tax hearing was set for Dec. 5.

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