City of Alexandria crunches budget to deal with state cuts

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The Minnesota Legislature’s cuts to cities are coming home to roost.

At its meeting Monday night, the Alexandria City Council amended its 2011 budget to make up for $673,695 in reduced Local Government Aid (LGA) and the elimination of the market value homestead credit (MVHC).

The council couldn’t raise its levy – taxes have already been collected this year – so it had to make cuts within the budget that was already set.

The result?

It slashed equipment funds for streets, parks, the Runestone Community Center, and police and fire departments in half. That made up for $175,000.

Other cuts: capital improvement fund (by nearly one half, making up $122,207); transfers to the storm water fund for drainage projects (cut in half, making up $32,500); planning commission development fund (cut in half, making up $16,000), employee benefit fund (cut in half, making up $7,500); and no longer providing subsidies for senior citizens to take taxi rides ($2,500). Those cuts add up to $180,707.

The city also increased the payment it will receive from its utility, Alexandria Light and Power, from $746,000 previously budgeted to $1 million, making up $254,000. Because sales are down at the two city liquor stores, however, it also adjusted the amount it expects to transfer from their operations, reducing it by $200,000, so the net change in receipts adds up to $54,000.

Expecting the loss of the MVHC, the council had previously made operational cuts and revenue additions totaling $263,988.

Monday’s budget decisions didn’t come easily, noted council members. They met for three hours in an informal work session before the council meeting began, going over all the budget items.

“This was not a snap decision,” said Mayor Dan Ness. “We had a very thorough discussion.”

The Legislature’s decision to cut LGA after the city had already set its budget based on the state-certified amounts was a bitter pill to swallow.

“What’s frustrating is that when it’s the middle of the year, you can’t do anything about it,” said City Administrator Jim Taddei. “It puts the mayor and council in a tough situation.”

The state aid cuts hit Alexandria especially hard, Taddei said. Statewide, the reductions to cities amounted to 26 percent but in Alexandria, it totaled 36 percent.

The city’s reserve fund is equal to about 36 percent of its annual budget, only a slim percentage point above the state’s recommended reserve amount of between 35 and 50 percent.

Council member Virgil Batesole said he’d like the city to put more money in reserves when it can, hopefully in 2012, so it could reach 40 or 45 percent. “2011 caught us real short,” Batesole said. “There was no time to make changes in LGA.”

Besides the budget, a variety of other items were on Monday’s agenda. The council:

• Approved the issuance of a revenue bond to the Alexandria Technical and Community College Foundation of up to $7.5 million. The money will be used to build a new 150-bed student housing facility at the southwest corner of 17th Avenue and Jefferson Street.

• Agreed to purchase a new outdoor alert siren to be installed at Highway 27 East and Sugarbush Lane. The total cost is estimated at just over $14,000, according to Dennis Stark, emergency management director. It will alert residents in the Victoria Heights/ South Lake Geneva area of severe weather and other emergencies.

• Authorized Public Works Coordinator Bryan Bjorgaard to hire a street maintenance supervisor, Dane Bosl, at a salary of $4,166 a month. Bjorgaard said 44 people applied for the job. He said Bosl, who worked with Central Specialties for eight years, will take the street department to the next level.

• Approved a resolution to provide deferred assessments to senior citizens with low incomes who would experience a financial hardship in paying for special assessments. The assessments would be paid only when the property is sold or the owner dies. The deferments would carry an 8 percent interest rate. To qualify, seniors must meet income guidelines of $21,000 or less for a family of one, $24,000 for a family of two or $27,000 for a family of three. The council may consider a lower rate by the beginning of the year.

• Approved a new agreement to blacktop Cardinal Lane and make other improvements. At one time, the project was scrapped because the bids came in higher than estimated. However, the Douglas County HRA has indicated it will make up the difference for the city’s portion of the project and the LaGrand Township Board will pick up the extra costs for the township residents. Residents will be assessed the amount that was previously estimated – $4,400 per lot. Batesole voted against the improvements because township residents opposed the cost.

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