City Administrator Joe Hoffman presented numbers for the 2020 budget and levy at the council’s December 2 meeting. The Truth in Taxation hearing is required by state law to allow the public to comment before the adoption of the final budget and levy.
No one from the public was present to comment on the preliminary budget and levy. The final budget and levy will be adopted at the December 16 council meeting.
The total preliminary levy approved in September was $985,130, representing a $43,084 increase over 2019, or a 4.57% increase.
Hoffman broke down the revenues coming into the city: tax levy 49%, state aid 25%, police/fire 11%, tourism, library, park, EDA 7%; and utility reimbursements for staff, street lights fee, etc. 8%.
Local Government Aid (LGA) from the state in 2004 represented 42% ($449,252) of the total revenue coming into the city. The tax levy also represented 42% of the revenue and other sources came to 16%. In 2020 LGA ($499,120) will represent only 25% of the revenue coming into the city. The tax levy will have to make up 49% of the revenue and other revenue coming into the city will make up 26% of the total 2020 revenue. As expenses continue to climb, LGA has not kept up at the same rate.
In 2020 there will be an increase in General Fund expenses. As bond payments fall off there will be an increase in allocations to the Street Fund. There are no street projects scheduled for 2020, but a street project is planned for 2021; the actual project size has not been determined.
The General Fund represents 27% of the city’s expenses, streets represent another 17% and police another 17%. Other expense percents are as follows: 12% bond payments, 7% park board, 6% fire, 6% library, 4% tourism, and 4% EDA/National Trout Center (NTC).
Hoffman explained how the property tax rate is determined. The property tax revenue needed is divided by the total tax capacity in the city; this equals the property tax rate. He went on to explain that Preston’s tax rate is in the upper tier as compared to other local communities. However, because property values are lower in Preston, the property tax rate doesn’t mean property taxes in Preston are high.
Hoffman compared property taxes on a 1990’s split level, four bedroom, two bathroom, and 1,600-square-foot home in several nearby communities, which actually have lower property tax rates. Even though Preston’s property tax rate is higher than these cities, the annual property tax on a similar home is significantly lower.
It was noted that Governor Tim Walz predicts another positive budget forecast. Hoffman said this is important, as the biggest threat to LGA allocations is a budget shortfall. The state budget number is due out later in the week.
Councilman Robert Maust asked about the budgeted increase proposed by the EDA for the CEDA contract. This would increase the time Cathy Enerson works for the city. Councilwoman Holly Zuck suggested more of Enerson’s time is needed to work with the Housing Committee. Hoffman explained the council will determine whether or not or by how much to increase the CEDA contract.
Maust asked about the appropriation to the NTC. Mayor Kurt Reicks said the appropriation will be 10% less than it was last year and it has been proposed to drop another 10% in the next year.
Other business in brief
•A recent change in state law requires the city to annually designate/certify the official polling place. The polling place for the three scheduled elections in 2020 (March 3/presidential primary, August 11/primary election, and November 3/general election) will be the Preston Emergency Services Building/Fire Hall.
•The next meeting will be December 16 and the first meeting in 2020 will be held on January 13.
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