Daunting task lays ahead for City’s 2025 budget, operating levy

Published 3:29 pm Tuesday, June 18, 2024

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The Austin City Council on Monday night took its first steps toward setting 2025’s budget and operating levy during its work session.

While a fair share of the discussion was formulaic in terms of what council members can expect of the process and deadlines, there were initial discussions about what council members hoped to focus on during the process.

However, that work will be daunting, hampered by the fact that the operating levy increase could be as high as around 10%.

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In addressing the council, Director of Administrative Services Tom Dankert told council members that the operating levy would need to be set at 9.9% just to remain steady with current operating levels. 

Dankert said that there would be around $1 million to maintain.

Last year, the council was able to whittle down its operating levy increase to 5.66% after starting at 11.18%. However, that ability to repeat is made more difficult due to a variety of reasons, one of which includes a lack of any increase in Local Government Aid.

Dankert said LGA this year will stay even with 2024’s amount of $9,793,547, a number that was set by the legislature in 2023.

The process will be further strained by any kind of staffing increase requests, including a possible addition to the Human Resources department. Discussions in the past of adding new positions have also included the Austin Fire Department.

In a memo to council members, Dankert explained that each new staffing position, depending on position, could add between $100,000 to $125,000 per person.

Under that same tag, any discussions of purchasing body cameras would also enter the equation, which along with needing funds for the cameras and infrastructure, will also require funding for additional administrative staff.

From yet another angle, the city is looking at possibly needing to spend around $1 million just for tree maintenance revolving around the emerald ash borer infestation in Austin, though, in that regard Dankert said that of the 57% of fund balance in the general fund, 7% has been sitting in the bank to help with that when the time comes.

Dankert cautioned council members that the upcoming budget and levy process could be a protracted process resulting in a close vote at the end, something that seemed born out Monday night by the different ideas of where the levy could ultimately go.

Council member Geoff Baker reiterated a sentiment he stated in past discussions that 10% is too high, warning members that this year could be challenging for other reasons.

“Ten percent is a tough sell … in an election year,” he said.

However, other board members seemed resigned to the levy rate prediction in the face of Dankert reporting that a “nickel and dime” approach taken in years past may not work this time. Of last year’s budget, the city spent 99% of that.

“We don’t have that luxury all the time,” Dankert said Tuesday. “Staff is working within budget realism, but I know they are putting band-aids on.”

As is the norm, the council must set its preliminary tax levy and budget by Sept. 30. After this, the levy can not be increased, but it can be decreased.

Between Nov. 25 and Dec. 28, the city will hold its truth in taxation meeting, required by the State of Minnesota. Prior to Dec. 27, the city was required to submit its final tax levy information to Mower County and the state.