The city of Cambridge approved a 3.5 percent tax levy increase for 2013, which is less than the preliminary 5 percent tax increase set in September.
During the Cambridge City Council meeting, Monday, Dec. 3, Finance Director Caroline Moe explained most of the increase is necessary to fund a new patrol police officer position for the Cambridge Police Department and changes in debt service requirements.
The 2013 levy was approved at $4,844,174, which is 3.5 percent more than in 2012. The city’s general fund revenue assumes a tax collection rate of 96 percent.
The city’s 2013 operating expenditures were approved at $5,554,744. Moe explained the 2013 budget calls for a draw on the fund balance of $95,000 to help fund the purchase of a new plow truck for the public works department that is expected to cost $190,000.
“As always, the 2013 budget is just a measuring stick,” Moe said. “We do make changes to it throughout the year. Three-quarters of our budget is based on taxes. It’s sad to say that Local Government Aid decreases are a significant reason taxes have to be that biggest share of the pie.”
During the meeting, council took action to begin the process of purchasing a new plow truck. Public Works Director Steve Wegwerth noted the current plow truck is 20-years old and has reached its usefulness. He added the truck isn’t dependable and is very expensive to maintain.
The only staffing change in 2013 is the addition of a new patrol officer for the police department. Cambridge Police Chief Dave Pajnic received council authorization to begin the hiring process for a new patrol officer and the purchase of a new squad car for the officer. This position and new squad car is expected to cost approximately $100,000.
Moe explained the overall tax capacity (tax base) has decreased from $5.837 million to $5.771 million, a decline of 1.1 percent. The residential tax capacity has deceased from $3.044 million to $2.805 million, a decline of 7.9 percent. However, the commercial and industrial tax capacity has increased from $2.610 million to $2.744 million, an increase of 6.3 percent. Moe added license and permit revenues are expected to be higher in 2013 based on projects on the horizon including Mills Fleet Farm and Aldi.
Moe explained the budget plans for salary increases for union staff as dictated by contracts entered into with the police and public works unions. The non-union wage scale has been adjusted by a 1 percent cost of living increase. In addition, the former minimum step has been deleted and a new maximum step of 3 percent over the previous maximum step has been added, consistent with how union contracts were settled earlier in 2012.
As far as capital project fund highlights, the city has approximately $95,000 of park capital expenditures planned, $93,000 of police capital expenditures planned, $72,000 of City Hall capital expenditures planned, including replacement of the city bus owned by Heartland Express, and $100,000 for Pavement Management Capital expenditures on crack sealing and sealcoating.
General fund expenditures for 2013 includes:
Public Safety: $1,847,335
Public Works: $1,359,986
General Government: $1,313,302
Transfers Out: $701,243
Parks & Recreation: $332,878
2013 Utility Rates
Moe gave a presentation on the proposed changes to the utility rates for 2013; however, no official action was taken at the meeting.
Moe explained the recommended rate increases for 2013 translates into an approximate 4 percent increase on the average utility bill or $3.66 per month on a single family home using an average of 7,000 gallons of water per month.
Moe said in reviewing the city’s rates in 2012, with 10 other peer cities, the city was number six on the list (with one being the lowest and 11 being the highest).
Moe explained debt load continues to be heavy for all utility funds since the city is paying the debt for all the reconstruction projects that have occurred between 2001-2012 and debt related to major new infrastructure like the water treatment and new water tower.
Moe outlined reasons the utility rates got so high in the first place that included the construction of the wastewater treatment plant in 1994; rates were not increased in the late 1980s and 1990s to support the plant construction; the city did not generate enough money to support the debt; restructured debt with the state of Minnesota; the city needed to catch up with water supply issues; and active reconstruction projects.
Moe explained the city did refinance some of the debt in 2012 helping to reduce some of the cots. She also noted sewer operating costs driving cost increases that fund. A couple of the major driving costs include cost of power and chemicals.
“At no point in the past have we called for a 0 percent increase in utility rates,” Moe said. “It has been in the 10-year plan to make small increases along the way to maintain infrastructure.
“The investments we have been making, others are having to make as well. The reality is, is that providing water and sewer for a community of our size is expensive. Even though our rates aren’t where we would like to them to be, we need to continue to replace infrastructure and be disciplined in our small increases,” Moe added.
Moe noted water base units increased approximately 43 units to 4,016 as compared to 3,973 last year. Moe said this helped keep the city base rate from increasing an additional amount. Water gallons sold also increased 21 million gallons from 229 million gallons to 250 million gallons.
Moe explained action relating to the increases in utility rates will be a part of the fee schedule which is on the Dec. 18 council agenda meeting.
Moe noted the city entered into a loan agreement with the Minnesota Public Facilities Authority in 1992 to finance the expansion of its wastewater treatment plant.
The wastewater utility fund has cash available to retire the remaining principal of $1,009,466 on the next payment date of Feb. 7, allowing the city to save interests costs of $15,755 over the remaining life of the loan.
The loan was originally scheduled to be paid off on Feb. 20, 2014. Following discussion, the council approved a motion to pay off the loan early.
Council member leaves meeting
Just prior to the new business portion of the council meeting, Council Member Bob Shogren made a motion to speak with Council Member Dave Shornstein in private.
The motion was approved, and Cambridge Mayor Marlys Palmer and City Administrator Lynda Woulfe also attended the meeting.
Following the brief meeting, Schornstein’s personal items were collected by Mayor Palmer, and Schornstein didn’t return to the meeting.
“Council Members Bob Shogren and Dave Schornstein conferred on an issue, and through the discussion, Council Member Schornstein determined it was in his best interest to not continue with the meeting,” Woulfe said regarding the incident.