Staffing changes, building permits to impact 2021 Brainerd budget
The council will set the preliminary budget later this month.
A property tax decrease is likely in the cards for some Brainerd residents and business owners in 2021.
With a projected increase in the city’s tax capacity, city council members learned during a budget workshop Monday, Sept. 14, some property owners would see a decrease in their city taxes even if the levy is raised by up to 6%.
Council members are expected to vote on a preliminary 2021 levy at their next meeting Monday, Sept. 21. With staff recommending a 2-4% increase, the general consensus coming from the workshop is a 3-4% increase for the preliminary levy, which can be lowered but not raised during final approval in December.
Council member Tad Erickson said he liked 3%, and Kevin Stunek, Wayne Erickson and Jan Lambert supported a preliminary levy of 4%, with the goal of decreasing the final number to 3%. Council member Dave Pritschet — who joined the meeting virtually due to possible COVID-19 exposure — said he would be OK with 3-4% for the preliminary levy, but nothing lower.
Council President Gabe Johnson, who has historically advocated for fiscal conservatism, said he would be OK with a 3% increase for the final but was glad to see the likely decrease in the city’s tax rate. The city’s tax rate for 2020 was 79.33%, which Johnson said is too high for a city of Brainerd’s tax capacity. The city’s tax rate is equal to the total levy divided by the tax capacity, which represents the taxable property value within the city.
“So if we can get that down to 75, 72, 70(%), we are more competitive than equally sized towns across the state,” he said. “... We have another opportunity this year to lower it down without being too aggressive to make us have to jack it back up again next year.”
Council member Kelly Bevans, who didn’t specify what he would like to see the levy at, said people probably care more about how much they’re paying versus the city’s tax rate.
“I think everybody cares about what the value is on their house — which is set by the county — and how much they have to pay in taxes,” Bevans said. “So if we can reduce what they have to pay in taxes and maintain the level of services, if not increase them … I think that’s a bargain.”
Bevans also said he thinks Brainerd has different challenges than suburban metropolitan cities of the same tax capacity.
Johnson said that’s true but noted he has heard from several people who have found taxes would be cheaper on a lake home in some neighboring townships — like Lake Edward — than on a home of the same value in Brainerd.
The city’s 2020 tax capacity was about $7.73 million, after steadily increasing from $7.07 million in 2016. Finance Director Connie Hillman said she projects about a 9% increase for 2021, based on preliminary data from Crow Wing County and her own estimates.
Taking that 9% increase into account, those with a home valued at $120,000 would see an annual property tax decrease of $34.01 if the tax levy were raised 4%.
Those with commercial property valued at $363,500 would see an annual decrease of $234.77 in the same scenario.
The tax capacity will not be certified until later this fall.
Under the proposed 2021 budget, expenditures are estimated at about $14.29 million, an increase of $158,976 — or 1.12% — over 2020.
Expected changes in spending for 2021 include:
An additional temporary engineering employee to help with a street condition analysis, estimated at about $8,100.
Wage increases for staff members eligible for step changes on the wage grid.
Parks director and police chief retirements.
Police officer hirings. The budget accounts for 27 officers, with only 21 staff now. The budget assumes two more will be hired before the end of the year, two will be hired on March 1 and two will be hired June 1.
A $30,000 decrease in the city’s contract with Crow Wing County for facility maintenance.
A $37,569 expense to contract with a building official who has a state delegation agreement, meaning the city can issue permits and conduct inspections for building projects overseen by the state.
Reorganization of the community development department, estimated at about $2,500.
A 10% increase in workers compensation insurance.
A 10% increase in auto/general/liability insurance.
Parks department repairs and maintenance, including professional tree removal and roofing/shingling of various buildings.
An increase in the amount transferred to the fire capital fund, part of which is realized in a debt levy reduction.
Under the community development restructuring, the vacant housing inspector position will turn into an assistant planner, and the zoning specialist will turn into an administrative position. A temporary position would be eliminated.
Johnson reminded the rest of the council he voted against the creation of the zoning specialist last year, citing concerns about the position just turning into a city planner role after the city changed from a planning department to a community development department in 2018, following the retirement of City Planner Mark Ostgarden. He voiced the same concern about the initial department change.
“And I was the only one to vote ‘no,’” Johnson said. “You all voted ‘yes.’”
Hillman said staff is just looking at what the city needs.
The proposed 2021 capital fund is $1.3 million. That cost includes $50,000 for a zoning code update, $68,900 for the IT department, $260,000 for Memorial Park updates, and a possible $100,000 match for a splash pad at Memorial Park.
Total revenues are estimated at about $8.14 million, a decrease of $5,009 — or 0.06% — from 2020.
Expected changes in the 2021 revenue include:
A $100,000 decrease in building permit revenue from 2020 due to the high volume of Brainerd School District projects this year.
An increase of $112,735 — or 2.5% — in Local Government Aid funding.
A projected decrease in revenues from Baxter and Nisswa for prosecution services based on the contract agreement.
A projected decrease in court and parking fines based on recent numbers.
Theoretically, Hillman said the council could decrease the levy $10,000 from 2020 for a perfectly balanced budget, meaning expenditures equal revenue.
The council is expected to approve the levy next week and will have another workshop in October or November before hosting a public hearing for feedback and approving the final levy in December.
The next council meeting is in person at 6 p.m. Monday, Sept. 21, at city hall. The meeting will also be livestreamed on YouTube, and members of the public will be able to participate virtually via WebEx. Details to access the meeting via WebEx will be available later this week.
THERESA BOURKE may be reached at email@example.com or 218-855-5860. Follow her on Twitter at www.twitter.com/DispatchTheresa .