The Canton, Minn., City Council spent a large part of its meeting Wednesday, September 13, discussing the city’s 2024 budget and proposed tax levy. Integrated into the finance discussions, the need to raise utility rates was also reviewed as the sewer and garbage funds are not sustaining themselves.
As Clerk Anne Koliha presented the budget, she explained that she had not “balanced” it because there were several issues to discuss prior to doing so. She highlighted an increase in wages, considering a cost of living adjustment of 3% plus an insurance stipend. She also noted there was an increase in the contract for law enforcement services with Fillmore County.
The main item for discussion, however, was whether the council wanted to include the costs for a new plow truck, which is needed, or include an amount for a “healthy down payment” for further financing options.
Public Works Director Jon Nordsving explained that he had obtained an estimate for a plow truck in the amount of $98,000, the cost of which does not include any possible rebates or discounts. The trade-in value for the current plow truck is expected to be somewhere between $30,000 and $40,000, he added. He also noted that if the new truck is ordered this fall, it would be next fall and winter before it was actually put into service.
Koliha explained that with that expenditure, a 6% tax levy increase does not balance the budget. In order to cover the costs of that “big ticket item,” she said the tax levy increase would need to be 11%.
She reminded the council that preliminary tax levies are set in September, but the final levies are adopted in December and can be lowered, but not increased. Budget discussions can continue through the next few meetings to continue to whittle down that amount.
Delaying the purchase of a plow truck was also discussed, but quickly dismissed as council members realize the costs of this type of equipment only continues to rise. Councilman Jason Magnuson also pointed out the trade-in value of the current truck would also decrease the longer the purchase is delayed.
Mayor Josh Nordsving stressed the importance of levying enough to cover the expenditures in the 2024 general fund budget. “I don’t want to approve a levy increase that’s going to put us in the hole – don’t like being negative in accounts,” he said.
The council ultimately set the preliminary tax levy at $188,150, which is an 11% increase over the 2023 levy.
Koliha once again told the council that she and city staff will continue to look at the budget and make their “best efforts” to reduce expenditures.
Councilmember Kristy Ziegler, who serves on the utility committee, reviewed some proposed changes to the sewer and garbage funds. She explained that the water fund is sustaining itself and no rate changes are recommended for that service.
The sewer fund is operating in a deficit and the utility commission provided three different options for increasing revenue. Current rates include a $35 base charge and a user fee of $3 per 1,000 gallons used.
The first option for change would be to increase the base charge to $38 and the user fee to $5 per 1,000 gallons. This would result in a gain of about $1,200.
Option two would increase the base to $40 and set the user fee to $5 per 1,000 gallons, resulting in a gain of about $5,000.
The third option would be to keep the base rate at $35 and raising the user fee to $7.50 per 1,000, which would result in an increase of about $6,000.
Koliha explained these numbers were based off average use of 158 customer meters and 350,000 gallons of water sold each month.
Ziegler also pointed out that the second option spreads the increase evenly over the number of customers while the third option places the increase more heavily on the bigger users.
Mayor Josh Nordsving noted that he prefers a method that guarantees increased revenue, like adding to the base charge, as higher user fees may cause residents to work harder to conserve water, resulting in less income.
Koliha also noted, in other cities, the sewer base rate is usually higher than its water base rate, which is not the case currently in Canton.
Ziegler also explained the importance of making the utility funds self-sustaining. “If our utilities cannot sustain themselves, it makes our city less eligible for grants, loans or any financing from the USDA,” she said.
When discussing changes to the garbage fees, there were also several options, including adding a certain amount to each bin, either 50 cents or 75 cents per bin. Because each customer has a garbage tote and a recycling tote, this would result in a revenue increase of $1 or $1.50 per customer each month. The third option was to increase the garbage fees at 3% a year, correlating to the contracted increase by Richard’s Sanitation.
Koliha and Ziegler also discussed the fuel surcharges that are passed along to the city when the cost of diesel reaches $4 a gallon. These fees place a larger burden on the city as the surcharges are not currently passed on to the customers.
No decisions were made on this issue and the council agreed to review the options and discuss the possibilities more at the October meeting with a public hearing to be held in November.
In other business, the council discussed several items, including the repairs needed at the Mitson House. The council agreed that further conversations need to take place with the Canton Historical Society about the future of the house and the community artifacts that are housed within that space. Mayor Nordsving and Koliha had walked through the house after the last meeting and had some concerns. “I think we need to proceed with caution there,” Nordsving said. “We want to make sure any repairs we make are practical and what is needed to be done.”
It was also noted that Bill Tate will donate the labor and materials for fixing the window at the Mitson House, which is the most immediate concern right now.
Koliha told the council that Hawkins Ash had sent a letter to the city explaining the city auditors would no longer be able to provide services for Canton. She told the council that she has started the legwork in finding a new firm and hopes to have something in place within the next couple of months.
Amended ordinances discussed at previous meetings were approved, including restricting U-turns and parking limitations in front yards of residences. The council also approved publication of those changes in the Fillmore County Journal.
Temporary liquor licenses were approved for the Canton Community Association for October 28, which will be the Halloween Dance, and for the Canton American Legion for October 7, for a private event.
Fireworks were approved for December 9, following the lighted parade in Canton. Temporary closure of Main Street was also approved for that event.