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No 2014 levy increase for Rushford


By Kirsten Zoellner

Fri, Dec 27th, 2013
Posted in Rushford Government

One of several hot topics of the evening, the council again addressed the 2014 budget and levy at length at the Monday, December 23 meeting. The budget sub-committee and city staff had worked together and recommended a 2.02 percent increase earlier this year. At the December 9 meeting, Councilor Vern Bunke instead put forth a motion, which passed in a 3-2 vote, to direct city staff to prepare a budget at a 5 percent reduction from last year’s levy.

“There are a lot of issues that we’re unsure about,” noted City Administrator Steve Sarvi. “Our recommendation is to stick with proposed 2.02 percent levy increase.”

Mayor Hallum, a vehement opponent of the 5 percent reduction added, “I support staff’s recommendation. I will not vote to approve below 0 percent. I will not budget via hatchet.”

Discussion continued as Bunke poured through a series of funds, seeking current balances and opportunities for revenue or savings. “The point is, and the reason I said what I said, is that staff could achieve a 5 percent reduction, is because our fund balances are healthy. We’ve gotten a lot accomplished without so much excess. I’m not saying we need to budget by the ax every year, but if there’s any possible way to try and save the taxpayers’ money, that’s our duty. We are trying, as a team, to do the best possible job that we can and I feel the $37,000 reduction is doable. I think they’ve shown it.”

City Clerk Kathy Zacher suggested that it wasn’t that simple, as balances are shifted around to hit the budget target. According to Zacher, a 5 percent reduction, when all is factored in, will likely be a near $52,000. “At some point, you have to say, ‘It costs too much.’ At some point, you have to bite the bullet.”

The city has several massive projects underway and several in the near future, including the state Highway 43 project. The city has spent the last six years since the flood rebounding and rebuilding its fund balances. “The way I see it, what are we putting at risk in the future?” asked Councilor Mark Honsey. “We don’t always stay off the front page like I’d like, but I think we’re doing a good job. I can support a 0 percent increase.”

“There’s some squish,” responded Bunke. “It depends on management over the next year. While it might seem drastic, I see enough areas where we can work with this. I appreciate your work on this. We have done good things and we’re going to continue to do good things. We can do good things with a 5 percent reduction.”

“My concern if we lower the levy, and I’m a taxpayer, I’d love to see it lower, is our over-reliance on LGA. If it’s cut, and it has been in the past, my concern is what services would have to be cut. And it would be dramatically because of the nature of the thing. People are going to see spikes and we like to keep it as level as possible, trending in the right direction so you’re not going to whipsaw people.”

“I don’t know what’s coming,” he continued. “You know, I keep hearing, and maybe I’m taking this personally; the budget isn’t mine. It isn’t staff’s. It’s yours to accomplish the things the community has evolved into. We think this represents the best way to spread these things out and accomplish what we need to.”

“We’ve got a good course going with us getting our fund balances healthy,” added Honsey. “I’d like to see us continue on that, on our evolution of getting healthy. We’re still not back to where we need to be.”

“There’s a big difference in doing what we can do and doing what we should do,” added Hallum. Ultimately the council adopted no increase for the 2014 cycle, passing the $740,000 levy by a 3-2 vote. Bunke and Colbenson were opposed.

The budget discussion lead into a recommendation from city staff to reconsider a motion made in March to end the part-time position of Public Works employee Curt Courrier. At the time, the motion made allowed Courrier to continue working in his current post for the city until December 31, 2013. With that date rapidly approaching, staff made a last ditch effort to reinstate Courrier, but at full-time, citing the workload as justification.

Having nine months to plan, Councilor Bunke noted that the city should be able to replace the workload with seasonal, part-time help. “I don’t discount Curt’s work, not a nickel’s worth, but the work that needs to be done can be done by lower cost labor. All across America we’ve seen business do this. Productivity is up and they cut, cut, cut. I don’t see why Rushford should be any different. “I’m suggesting that we live by that. There’s no reason to talk about it anymore,” he continued.

“We’re going to save money,” added Councilor Roger Colbenson.

“No, you won’t,” quipped Honsey, noting unemployment costs, the workload, and the hiring of a seasonal employee. “So we don’t throw good money after bad, I make a motion that we advance Curt Courrier to full-time.” After three calls for a second, Mayor Hallum seconded it himself. The vote was 3-2 opposed and the motion failed.

In other news, the city has approved a revolving flood loan request of $94,653 for Jessie Street Java & Feller Properties to assist in funding for a coffee shop and two upstairs apartments at 114 and 116 West Jessie Street. The city had agreed earlier this year to allow the Economic Development Authority (EDA) to act as a gap financer to move the project along. Recent appraisal of property came in at a lesser value than expected, limiting the amount that the bank could lend for the project. Due to the appraisal outcome, Fellers submitted a new gap financing request that reflected increased costs.

According to the EDA, the increased costs were mainly due to meeting plumbing and electrical codes for the building improvements, which have been extensive. Recalculated projections and a revised business plan will allow the city to continue as a gap financer while remaining under the 40 percent cost ceiling. The loan terms on the $246,223 final project include and the bank at 45.85 percent of funding ($112,884 at 5.15 percent over 20 years with a five year balloon), equity at 15.71 percent ($38,686), and the EDA at 38.44 percent ($94,653 @ 5 percent, 20 year amortization, 10 year balloon).

The EDA financing will also include one year deferral, with interest start date of January 1, 2015 and payments start of February 1, 2015. “We need to get them started up, let them get their feet under them, and help them to be successful,” noted Bunke. “This is a viable opportunity. It can be successful.”

Another EDA project, GForce Ink, came to the end of forbearance on November 1, but has not yet made the $5,064.57 payment that was due. However, the first ACH payment was drawn on December 1 and will continue as authorized. A 90-day provisional forbearance extension will be granted to GForce with three stipulations, including repayment, as soon as possible and prior to February 28. If the payment is not made within 90 days, the debt to the EDA will be re-amortized.

The next regularly scheduled council meeting is Monday, January 13, at 6:30 p.m., at city hall. The public is encouraged to attend.

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