December 7, 2020 Truth-in-Taxation Public Hearing and Input Meeting Minutes

Mayor introductions 

Mayor Droba stated this was one of the toughest budgets to prepare in the six years he has been on the City Council. Mayor Droba explained that the preliminary levy was set with a 6% increase in September. This was primarily because of the uncertainty about using CARES Act funds for Airport operating expenses. Mayor Droba stated that it has been clarified that CARES Act funding can be used towards Airport operating expenses, thus allowing the 2021 levy to be reduced from a 6% increase to a 1.7% increase over the 2020 levy. Mayor Droba noted the reductions in appropriations including those to Backus Community Center and the Bronko Nagurski Foundation/Museum, as well as the removal of body camera funding from the 2021 budget per Chief Mastin’s request.

Presentation of proposed City of International Falls 2021 Budget and Levy Collectible in 2021

City Administrator Kenneth Anderson indicated an information packet that was prepared by staff included the following items: 1) Summary of the 2021 proposed Budget and Levy – Highlights in Review; 2) Draft Resolution Approving the Final Tax Levy, Collectible 2021 and 2021 Budget for the City of International Falls, MN, with Exhibit A anticipated to be adopted December 21, 2020; 3) Pie charts illustrating Proposed 2021 Revenues and Expenditures, 4) Local Government Aid (LGA) bar chart for amounts received in years 2006 through 2021 (Proposed); 5) Bar chart reflecting LGA and Property Tax Levy Trends for 2010 through 2021 (Proposed); 6) Table of LGA for years 2002 – 2021 trends in actual LGA paid to the City; 7) LGA and Property Tax Levy Trends and Changes for years 2010 – 2021; 8) 2021 Summary of Partnership Agency Funding; and finally, 9) background information from the League of Minnesota Cities including preliminary local government levy changes statewide.

Administrator Anderson started his presentation with a review of highlights and expenditures by fund as listed in Exhibit A. He noted that LGA was certified to increase by $83,263 in 2021. The total amount of LGA from the State is proposed to be $4,382,111. The actual tax levy was proposed to increase in the amount of $49,828 or 1.7% over the levy for 2020. The statewide average increase in the 2020 preliminary levies for all cities is 4.5%. The total property tax levy is proposed to be $2,980,864. City Administrator Anderson noted that the projected 2021 budget has the City using $87,243 from existing cash reserves to balance the budget deficit and to minimize the increase to the property tax levy. City Administrator Anderson pointed to the growing Ambulance Fund deficit and the need to pursue either 1) an Ambulance taxing district, or 2) a contractual arrangement with other jurisdictions serviced by the Ambulance to offset costs not funded by insurance reimbursements.

City Council questions/comments 

Councilor Buller inquired whether the unspent travel and training budgeted monies for 2020 could be put towards reducing the 2021 levy. City Administrator Anderson cautioned the Council about making a decision like that as there are many unknowns and until the audit is completed and finalized for 2020 in June 2021, there are many uncertainties.

Mayor Droba stated that treatment costs paid to NKASD for sanitary sewer treatment is significantly lower than what was budgeted for 2020 due to a dry year. The possibility of rolling unspent money into the Permanent Improvement (PI) fund was discussed to fix Inflow & Infiltration (I&I) problems. City Administrator Anderson stressed that the Water (601) and Sewer (603) funds are enterprise funds and are supposed to be self-sufficient, meaning they must maintain a positive fund balance. City Administrator Anderson noted there are many infrastructure improvements that need to be made including the reconditioning and painting of the above-ground storage tanks.

Public input/questions/comments 

Mayor Droba welcomed comments from the audience at 6:41 P.M. Julie Melstrom of 904 6^th Street was present to address the City Council. Discussion ensued about appropriations for other organizations, and the negative impact a levy increase might have on taxpayers during the COVID-19 pandemic. City Council members noted that they worked to minimize the levy increase as best possible while still providing critical public services and maintaining necessary infrastructure.

Councilor Briggs made note that he would not vote in favor of a 1.7% levy increase due to the current COVID-19 pandemic and the financial constraints imposed on businesses and citizens. Councilor Briggs said he would like to see the appropriations for the Backus Community Center and the Koochiching County Museum be lowered, as he believes everyone needs to take a cut, including appropriations to external organizations. Councilor Briggs said he would be in favor of approving a budget with a 0% levy increase.

CLOSED the public hearing

There being no further public comment, Mayor Droba called for a motion to close the public hearing and input meeting. MOTION by Councilor Krause to close the public hearing and input meeting. Motion seconded by Councilor Buller and carried unanimously.

Mayor Droba further explained the proposed Resolution Approving the Final Tax Levy Collectible in 2021 and 2021 Budget for the City of International Falls, MN, would be on the December 21, 2020 regular meeting agenda for action by the City Council.

ADJOURNMENT

Mayor Droba adjourned the meeting at 7:00 P.M.