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City taxes remain unchanged; water rate to increase
City taxes for Montgomery residents are proposed to remain unchanged in 2013, however the city council is proposing a slight increase in the base water rate next year.
The proposals were presented at a public hearing and council meeting on Tuesday, Dec. 4. City Administrator Steve Helget presented the proposed 2013 budget to the council and the public, stating that it reflected a zero percent property tax increase from 2012.
Helget showed expenditures and revenues in each city department and the debt the city carries. He pointed out that over the past several months, after many budget meetings with department managers, the proposed budget indicates a 3.6 percent decrease in the general fund.
“We are working to scale back as much as possible,” he said.
He said this was the first time he was able to propose this kind of budget in his seven-year tenure with the city. In 2005, the city’s general fund had a deficit of $600,000. At the end of 2011, the city was short only $11,000 in its general fund. With fiscal planning and the city’s Five Year Financial Plan, Montgomery will finish the year with money in the bank.
“Our Five Year Plan is working,” Helget said. “It is a necessary tool in the budgeting process.”
Helget said the city’s goal is to increase its general fund reserves to the state recommendation of 30 to 50 percent of the budget. For Montgomery, that figure would be $787,882 to $1.3 million in the bank.
The city’s goal also works to becoming independent of the Local Government Aid (LGA) from the State of Minnesota, which makes up 14 percent of the city’s budget or $367,678.50.
In addition, Helget said the city is also budgeting for a community sign (Welcome to Montgomery), the county-wide 800 MHz implementation and the homestead market value exlusion.
Helget went over each department and showed the proposed increases and decreases in each budget. Increases came in administration for adding to the general fund, planning and zoning and city hall for building updates, as well as park improvements, street lights and weed control.
Decreases came in the police, fire, and public works departments due to purchasing and paying off equipment this year. Other decreases came in economic development and getting the former clinic and bank buildings off the city’s financial responsibilities when they were sold.
Water base increase
Helget said the budget also shows a $3 increase in the residential base water rate. Public Works Manager Dan DeRudder presented the 2013 utility budget. Prior to proposing an increase in the water base rate, DeRudder explained how the stall in residential growth and the debt obligation are not able to keep the water fund self-sustaining.
In 2003 the city issued 78 building permits and collected $546,000 in water and sewer hookup charges. In 2008, building permits dropped to one and the fees plummeted to $3,500.
He added since 2000, 326 lots have been developed with only 104 houses built on them.
In addition, the city’s debt load for its water tower, water plant, wells, wastewater treatment plant, and collection and distribution totals $17.7 million.
The saving grace for the sewer department has been the septic dumping station, that since 2008 is estimated to bring in $535,000 to the water/sewer fund. DeRudder added the new schools and businesses, as well as the $3 water base rate increase will help the funds become more sustaining. But it won’t bring them completely inline. It is projected the water fund will end the year with a $248,000 deficit, and the sewer fund will finish with $46,000 to the good, leaving a deficit of $201,000.
The city’s deadline for adopting its budget and tax levy is December 28. The council will vote on the proposal at its next meeting on Thursday, Dec. 20.