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BE Council warned project funding will run out

By Staff | Jul 22, 2012

The city of Blue Earth could run out of money to service the debt on some of its current and future street and utility projects if changes are not made, a financial consultant told the council Monday night.

Doug Green of Springsted Financial says the various funds could run out of cash in the next five years if precautions are not taken.

“The Stormwater Fund is especially vulnerable,” Green says. “It will take a hefty 10 percent increase just to keep making the project payments. Actually, 25 percent might be necessary.”

Green says his scenario makes many assumptions when it comes to future revenue sources and outside influences, such as the state making cuts to Local Government Aid.

“Of course, assumptions don’t drive the city financial boat,” he says “Capital expenditures do. But a 3 percent annual increase in these funds will not be enough.”

Green says the city may have to consider delaying future projects or pushing them further out into the future.

City Administrator Kathy Bailey pointed out that while a 10 percent increase in the stormwater rate might be necessary, that translates to just 37 cents per month per household.

City engineer Wes Brown of Bolton and Menk also pointed out that several large storm and sanitary sewer projects listed have already been removed from the schedule, making a dramatic shift in the numbers.

“That will help,” Green says. “We can always run new numbers. But, we need the council’s input on what direction we will take.”

Councilman Rick Scholtes also pointed out that there are several bond issue payments that will drop off in the next few years.

“The key is the total debt,” he says. “I think we need to study that as well.”

Councilman John Gartzke said there is one funding source he wants to keep dedicated.

“I don’t want to see that dedicated street fund touched,” he says. “Once we stop funding it, or quit, it will be difficult to start again.”

He also said he felt the council should have raised the levy a little this current year, instead of lowering it by 6 percent.

“We should at least raise it by the rate of inflation,” he says. “Now we may need to raise it more.”

In other business at Monday’s meeting, the council:

Discussed possible detour routes during the Highway 169 reconstruction project set for next summer.

They agreed avoiding detouring traffic along Main Street would be the best.

Discussed the issue with sod along the boulevards of recent street projects needing to be replaced.

Councilman John Huisman says he feels a policy should be set that sodding only be done in the cool fall.

Heard from City Councilman Allen Aukes that he does not plan to file for re-election in this fall’s election, citing the reason of being kept too busy with his business.

Learned that the annual National Night Out will be held in Blue Earth on Tuesday, Aug. 7.