By MaryHelen Swanson

Budget is an ugly word, especially this time of year, in council chambers and board rooms all across the country.

It was no different in North Branch this week.

In a work session, the council learned that as it stands now, the proposed budget could create a levy increase of 23 percent with a tax increase on a $200,000 home of $87 or 11 percent, providing there is no increase in valuation.

Things that have changed since last year, as noted by city financial director Dave Stutelberg, include the fact that the city is losing $107,000 in local government aid (LGA) from the state of Minnesota.

That's a big chunk of change to replace.

Mayor Gloria Karsky said she will definitely not go along with a 23 percent levy increase.

The taxpayers would "go through the roof" she said, of the 11 percent tax increase.

Mayor Karsky came to the work session with a list of areas to cut to reduce the levy increase. She said she'd like to at least make up for the $107,000 loss in LGA.

But Stutelberg reminded her that the $107,000 was covered at a previous budget meeting by eliminating an administrative assistant position, as requested, and reducing the allocation to the library/community center fund by $75,000 (half of what was originally proposed).

Karsky continued with her concern over the 23 percent levy increase by pushing the councilors for their opinions on the 23 percent increase.

They responded they were not satisfied with it.

Stutelberg asked the councilors if they wanted to set a number for certification in September and work to reduce it before the final levy approval in December.

If an additional $375,000 is cut from the budget, he said, it would mean you'd almost come down to a $9 increase in the property tax.

Again the mayor queried the councilors: where do you want to end up and how do you want to get there?

City Administrator Bridgitte Konrad admonished the councilors by reminding them that this is the third year of having to find significant cuts. At some point, she said, the cutting diminishes the city's ability to provide taxpayers the services.

Mayor Karsky's reduction list looks as if it could produce a 5 percent tax increase, which, on that same $200,000 home, would mean an increase of $39, again, provided there is no valuation increase.

Councilor Theresa Furman asked if there could be cuts in staff due to the low revenue the city has been receiving in new home building permits.

She wondered if the cuts being proposed were in actual operations or in a wish list.

Stutelberg reminded the council that many line item cuts were made at the onset of the budget work when the council asked him to get to a 7 percent increase.

Councilor Katherine Blomquist was satisfied with the mayor's cut list, and with the 5 percent increase it would create.

Stutelberg reminded the councilors this is only a preliminary proposal, they have three months to make a final decision, he said.

Councilor Amy Oehlers stated that a zero percent tax increase as a goal is a bad idea. You can only go so many years like that she said, noting that in the long run the costs become higher to the taxpayers.

Twenty-three percent may be high, said Councilor Larry Erickson, but he also reminded them that it is preliminary. He reminded them that last year's preliminary levy came down.

Wrapping up Monday night's budget talk, the mayor said she could deal with a 12 percent increase but would prefer a 5 percent levy increase.

Furman talked of a 17-18 percent figure, but no more, s he said.

Erickson said 23 as a preliminary was OK.

Oehlers had no particular number in mind.

Blomquist wanted a number she was comfortable with while still including a bond payment for a new police station.

The next budget work session is Thursday night at 6:15 p.m. in the council chambers.

At the city council meeting following the work session, the councilors agreed to submit a proposal to the U.S. Postal Service for a downtown site of a new post office. The postal service is looking for a site big enough to contain a 6,000 sq. ft. building.

Stutelberg said the city has one site in the ESSBY Business Park and one on the same block as city hall.

Last year the city purchased the yellow house on the east side of the block. It is currently renting out that house.

Stutelberg believes there would be enough space if the house were removed.

The councilors agreed they wanted to keep the post office downtown.

Konrad noted that the only other legitimate proposal submitted was one for the site near JJ's Bowling.

The landowner (in this case the city) would sell the property to a developer who will build a post office building and lease it to the postal service.

A site must be chosen in NB by September.

The council was unanimous in agreeing to submit a proposal for the site near city hall.

Said Oehlers, "It's very important to me to keep the post office downtown."

In other business, the council:

• Modified the development plan for the Olson Trust and approved a business subsidy for Norlite, a steel fabrication company, in the form of pay-as-you-go Tax Increment Financing over an 8-year period. This will amount to $61,923. It will be used to help this company pay down the costs of land purchase and assessments which are $115,345. The bring with 6 jobs. Councilor Furman asked how many would be new jobs. There was no available answer.

• Approved a JOBZ land switch for Topline, an automotive parts distributor who wants to purchase a lot in the ESSBY park. The city is moving 3.29 acres from the current industrial park to the ESSBY park to accommodate this transaction. They will have 22 employees in a 22,000 sq. ft. building. With a question again on job numbers, Furman asked how long until they have the 22 jobs. Stutelberg believed they have 2 years to come up with that number, reminding everyone that businesses receiving JOBZ subsidy must report on the job creation on a regular basis.

• Received a letter from Chad Bistodeau withdrawing his offer of a softball park on his property due to legalities and lease entanglements that were brought forth during city attorney investigation of such an offer.

• Learned that the Comprehensive Plan committee is meeting regularly and is ready to look at a land use guide in August.

• Approved plans and specifications and authorized going for bids on the Goodview Ave./402nd Street utility and street improvement project.

• Approved a partnership agreement with Mn/DOT for a temporary signal for the Flink Ave. project.

• Approved plans and specifications and authorized going out for bids for the 10th Ave street improvement project from Hwy. 95 to Elm Street.

• Awarded the 2007 bituminous reclamation and overlay project to Knife River.

• Changed council pay policy to add work sessions on the first and third Thursday, but refused to add mileage reimbursement for councilors who go around the city looking at sites of discussion at the council or other committees. Councilor Furman requested this as she said she travels to a lot of sites as she considers issues before these groups.