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City sets 2% preliminary levy increase
The City of Montgomery worked at dividing its preliminary financial tax levy pie at a special meeting on Thursday, Sept. 12.
The council met with interim city administrator Jerry Bohnsack who presented a tax levy that indicated a zero percent increase for property owners. However, after discussion, the council changed the amount and unanimously approved a preliminary two percent increase to its 2014 budget.
Bohnsack said he had sent out the city’s department budgets to city managers to review. He added that overall, each department’s budget remained the same compared to last year. He said the city budget also incorporates state-mandated levy limits that force cities to keep property taxes stable since cities are receiving more state aid. Montgomery is set to receive $729,745 in aid from Minnesota in 2014.
In his notes to the council, Bohnsack said the original budget that showed a zero percent increase had also built in two percent raises to city employees. He added that the city’s biggest concern is the quality of the existing facilities that house their departments (fire, police, ambulance).
Bohnsack also stated that the first budget also provided an additional $133,000 to the city’s cash balance by the end of 2014. He said this was in line with the city’s past practice of trying to build up a six-month cash reserve.
“Putting money away will pay dividends to the city through diligent savings, raised bond ratings and lower interest,” he said.
Bohnsack emphasized that the budget the council was working on may require adjustments down the road.
“These are guides, not Bibles, and sometimes you have to change them in midstream,” he said.
Councilor Jim Mladek asked Bohnsack and the council if they should set the preliminary levy limit slightly higher. He said that way they would have some room to work with the budget if needs arise before it has to be finalized.
“Since it is preliminary, we should increase it, just to protect ourself between now and December when we have to finalize it,” he said. “It would give us a little cushion.”
Bohnsack said the council was able to increase it by $34,000, which would represent a two percent increase. He warned though that because of the levy limits, the additional money could only be used to pay off some city debt, which he said was a good thing if the city wanted to look at future projects.
Also at the meeting, Fire Chief Lloyd Wiechmann worked to increase the city’s contribution to the fire relief association which was budgeted to be lower than in previous years.
He said the city used to contribute $20,000 to the association, but that it had been cut in past years. In 2013, the city was required to contribute $10,200. In 2014, that number drops to $9,800.
Wiechmann said he would also like to be able to set aside $25,000 of his budget for a new Public Safety Building.
“We can’t do anything until we get a new fire hall,” he said. “We’re stuck.”
The council adopted the revised resolution, which sets the city’s general budget at $1,160,874, combined with debt service of $518,292 and tax abatement of $84,000 for a total property tax levy of 1,763,166, or $34,000 over last year (see accompanying tax history).
The preliminary tax levy had to be certified by the county auditor by September 16. This amount can be lowered, but not raised.