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City studies budget options

By Staff | Sep 21, 2009

No matter what option the Blue Earth City Council decides to do, $270,000 must be trimmed from the 2010 budget.

In a budget workshop held Monday, handouts from City Administrator Kathy Bailey identified suggested cuts of $246,371.

That means the budget still needs to be reduced by about $24,000.

As a result, city employees may be asked to take less than their customary 3 percent annual pay raise.

Bailey told the council reducing pay increases to 1.5 percent would save $24,625.

“As long as there isn’t an increase in health insurance, that’s an option,” she says.

The council has approved a preliminary 2010 tax levy of $1.308 million, a 16 percent increase.

However, Bailey says because the city’s debt level has dropped, only $1.038 million can be levied — a decrease from the previous year.

Bailey gave the council another budget option allowing them to bond for equipment purchases.

Although the levy limit would increase because of bonding, that does not mean taxpayers will have to pay more.

Bailey says selling bonds would help buy equipment that is needed.

“If we keep putting off replacing equipment pretty soon we are not going to be in operation,” she says.

Councilman Rick Scholtes asked whether money from a special levy earmarked for street repairs could be used to provide services.

Scholtes says repairs would continue because the city could bond for them.

Councilman Dan Brod wasn’t too keen on the idea.

Brod says the levy has been increased substantially just for fixing up streets and he doesn’t want to see the money used for other things.

Under the city’s five-year street maintenance plan, $160,000 is being set aside annually and earning 3 percent interest.

Some of the reconstruction projects that have been identified will not have to be paid by the city.

Projections show the street fund will have a balance of $700,000 in 2014.

“I’m going to question why more streets are being done,” says Scholtes.

Bailey reassured Schol-tes there are plenty of streets in need of repair.

The city administrator says changes in levy limits and funding formulas could be in store when a new governor is elected.

“If they are going to make big changes in formulas they are going to have to allow cities to make adjustments to provide services for their citizens,” says Councilman John Huisman.

Despite the budget woes at the local and state levels, the city may be able to utilize the federal government’s Build America Bonds to help pay for capital projects.

The funds are part of the stimulus package and could be used for work on a ballpark, basketball courts, park improvements and a shelterhouse city officials would like to see done.

Under the program, projects may be grouped and must total at least $1 million.

The federal government will pay up to 3.5 percent of the bond’s interest.