#3: Contracting economy impacts budgets

Photo by Andrea Johnson/MDN Erik Ramstad Middle School entered the fall at or near capacity enrollment for the 2017-18 term.

Taxing entities facing declining property valuations and lower revenue forecasts had to make difficult decisions at budget time in 2017.

Taxpayers who were to receive their statements just before Christmas likely saw higher bills, particularly with the elimination of the 12 percent state discount on property taxes. The state ended the discount while instead picking up most costs incurred by county social service agencies, which is expected to have less impact in lowering taxes.

The year began with significant state budget cuts. Minot State University students were expected to see 4 percent tuition hikes in each of the next two years and decreased services to offset state funding cuts. President Steve Shirley said state budget cuts forced $8.6 million in budget reductions over the past two years, prompting the elimination of 51 positions — equaling 20 full-time faculty positions and 31 staff positions. Of those, many were eliminated through attrition. About 16 people recently received notification that their contracts will not be renewed this year.

Other cost-cutting measures included reorganizing academic administration positions by eliminating dean positions at MSU’s three colleges, reducing departmental operating budgets, consolidating some departments and changing the ways that adjunct faculty and professors teaching overload assignments are calculated.

The Minot Public School Board gave final approval to a 2017-2018 budget with a $3.36 million deficit. Total estimated revenue is $98.6 million and total estimated expenditures is $102 million. About 17 percent of the district’s operating budget is in its reserve fund, which will be reduced to 14 percent to make up the budget deficit.

The district’s operating budget was reduced by $700,000 and eight teaching positions were eliminated. There were reductions in equipment purchases and building maintenance projects. Baseline wages for school employees increased by only a quarter of 1 percent.

Property valuation in the district is down about 7 percent, causing the number of mills levied by the district to increase by about 1.6 mills.

School district funding received from the state and county oil and gas related revenue also went down. About 64 percent of the district’s budget is funded by the state. Per pupil state aid, at $9,646, did not increase for the 2017-2018 school year.

“This is the most challenging budget I’ve ever dealt with in my 30-plus years of being a business manager,” Scott Moum told the school board in presenting the preliminary budget.

The City of Minot’s share of the property tax on a median home valued at $182,000 was projected to go up $192 to satisfy the 2018 budget given final approval by the Minot City Council.

The council rejected a proposal to replace reduced employee wage increases with other assorted budget cuts. City Manager Tom Barry, working with department heads, had found $531,622 in cuts that were offered as an alternative to lowering the proposed pay increases in the preliminary budget by half. The council voted 2-5 to reject the city manager’s proposed cuts and keep the reduced wage increase. Delaying implementation until July reduces the cost of the city pay plan, which had called for an overall 3.5 percent increase in spending on employees.

Council member Stephan Podrygula expressed his objection by voting against the final budget, which includes $101.6 million for operations. With debt, capital improvements and pass-through funds, the budget totals $141 million.

“The budget is really a statement of our priorities, and I don’t agree with those priorities,” Podrygula said. “We are facing significant cutbacks in the quality and quantity of city services. I just can’t justify that.

The city had eliminated 19.5 full-time staff positions through attrition and reassignments. The budget pushes back some capital improvement projects to hold off $2 million in spending and limit debt. In drafting the preliminary budget, requests from departments were scaled back, affecting fire and police, engineering, streets, equipment, property maintenance, inspection, sanitation, airport, public works, cemetery, water and storm sewer. The result was a preliminary budget proposal that already included about $5 million less in spending than requested, or about 19 mills.

The Ward County Commission approved a $51.76 million budget for 2018 that includes a $1.28 million property-tax increase.

Estimates were the owner of a $200,000 home would pay an extra $61 on the county portion of the total tax bill, assuming no property valuation change. Valuations have dropped for many residents. The owner of a quarter of farmland at an average assessed value per acre of $586 would pay almost $32 more per quarter, assuming no valuation change.

Overall spending is down $3.8 million in the 2018 budget. The largest decreases are $5.4 million in the highway department and $3.8 million in Social Services, due to the state picking up social services expenses in a two-year pilot study. However, on the revenue side, income other than property tax is expected to be down 29.6 percent, and lower valuations are reducing the income per mill of property tax.

In drafting the budget, the commission fixed a tax error that was generating more money than allowed by law for senior citizen programs. A misreading of a state guidance manual on mill levy limits led to too much levy being assessed. To correct the error, tax collections for the remainder of 2017 were to be held in account for the aging council and distributed as part of the 2018 allocations. Meanwhile, next year’s 1-mill levy will be cut back to account for the excess taxation in 2017.

In its budget, Minot Park District proposed to finish bringing irrigation to the soccer complex and provide for portable, off-season turf at Maysa Arena. The projects won’t have much impact on the tax levy. The park board adopted a $9 million budget that is up only about 1 percent and includes a $7.2 million tax request that is largely flat from the past year.

The budget revives a building levy the park board let lapse this past year. The levy is projected to raise $467,650 for future projects.