Rick Scholtes

The Blue Earth City Council found a way to slash its budget last Monday night, and were then able to lower the proposed 2009 tax levy.

The levy not only will not be increased, it is actually going to go down 11.5 percent from what it is this year.

Currently the property tax levy in Blue Earth is $1,275,700. The council had previously set a three percent increase for 2009, or a total of $1,313,959.

That was before they received a letter the next day from the Minnesota State Department of Revenue, informing the city that no levy increase could be made.

“The letter laid down a levy limit,” City Administrator Kathy Bailey says. The reason for the limit was an increase of the amount the state pays to the city, called Local Government Aid (LGA).

“It was also lowered due to a reduction in our debt service amount in the budget,” Bailey says. “The city had sent some incorrect information to the state earlier this year, as to what our debt service actually is,” Bailey says.

“Are you saying that as we continue to pay off debt, we won’t be able to raise the levy?” Councilmember Rick Scholtes asked. Bailey confirmed that is the way it looks.

“How are we to move forward as a city?” Scholtes questioned He listed a possible future bond issue for street replacement as one item needed.

“Going into debt for streets might be an option now,” he says. “We can raise the levy to pay for streets if it is new debt.”

Bailey presented a list of cuts to the budget which totalled $184,977, the amount needed to trim in order to keep the levy at the state limit.

The cuts included taking $116,106 from the street fund, leaving $168,640 in the fund.

Other cuts involved removing items from the budget which were actually paid for this year, such as a furnace in the Senior Citizens Center.

Bailey also reduced the expected cost for fuels by 15 percent, due to the recent reduction in gas and diesel costs.

“When we prepared the budget, we were looking at gas costs of nearly $4 per gallon,” she said. “Reducing it by 15 percent removes $12,500 from the budget, but still leaves us room in case the cost of gas goes up.”

The council unanimously approved the cuts, and setting the levy at the lower amount.