Unassigned funds that total just over $4.6 million may be tapped to help reduce the tax burden on Nisswa residents.
At a budget workshop Tuesday, Nov. 27, the Nisswa City Council again considered its 2019 budget and general revenue tax levy. The proposed levy currently is $2,342,653, or 8.71 percent higher than this year's levy.
Employee wage increases and bonds issued for road improvements equate to a 5.22 percent levy hike, which the council can't change.
Council consensus Nov. 27 was for City Administrator Jenny Max to use some unassigned funds to reduce the levy increase to between 6-7 percent. The council also agreed the city needs a policy dictating how much money to keep in the unassigned fund.
The unassigned fund balance totals $4,656,890, which is 200 percent of general fund expenditures, or two years of expenditures. The state auditor's office recommends that cities have a minimum of six months of expenditures in the fund balance, which would be $1.4 million.
Council member Don Jacobson said it needs to be a "prudent amount." He has advocated for a lower tax levy, reiterating that Nisswa taxpayers are seeing increases in the Crow Wing County and Brainerd School District portions of their taxes, along with increased market values of their homes.
Council member John Ryan warned against dipping into unassigned funds.
"Just because you have money there doesn't mean you have to spend it," he said, noting then the money might not be there one day when the city really does need it.
Council member Ross Krautkremer said he struggled with using unassigned funds, because that money simply has to be made up the next year.
Mayor Fred Heidmann said about $29,000 would reduce the levy by 1 percent, so he was comfortable taking around $90,000 from the $4.6 million in the unassigned fund.
"We're giving it back to the community," he said.
Max warned the council against balancing the budget using unassigned funds too often, saying credit rating companies frown upon that practice. The city currently has an excellent credit rating.
The council will adopt a final 2019 budget and general revenue tax levy after seeing new numbers and hearing from residents at its 6:30 p.m. Wednesday, Dec. 19, meeting.
Max also shared that when comparing tax rates among cities in Crow Wing County, Nisswa has the fifth lowest rate of 18 cities in 2018. When comparing tax rates among similar cities (Breezy Point, Crosslake and Pequot Lakes), Nisswa has the second lowest rate.
The council also met Thursday, Nov. 27, to approve a funding method to buy a fire truck to replace a 1966 model.
Total cost is $466,133 for a pumper truck and $44,100 for equipment. Payment includes down payments from the department's truck and equipment funds, fundraising and a loan for $202,717.
The council agreed to use unassigned general fund reserves to pay for that remaining amount ($202,717), and the fire department will make seven annual payments back to the city, pending approval by the city attorney.
If the attorney identifies a reason this cannot happen, then the city will use a lease purchase agreement with Community Leasing Partners for that portion of the new pumper truck.
Ryan was absent because of illness.