Barry

A 30 percent drop in state aid and 20 percent decline in city sales tax collections has Minot looking for ways to tighten its belt.

“We have already started to make some adjustments,” City Manager Tom Barry told the Minot City Council Monday.

As a preliminary measure, the city has identified $13 million in infrastructure improvements that could be delayed, including design work on a new fire station. Major projects that could be affected are storm sewer work on Puppy Dog Coulee, the Northeast Sewer from 13th Street to Broadway and lagoon transfer piping. Some traffic signal replacement and street light conversion to LED also might be affected.

Other adjustments likely will be considered as well.

“There are going to need to be further adjustments made – guaranteed,” Barry said. “We are working with department heads. We are going to to be proposing changes for future budgets and capital plans. We also want to encourage the re-evaluation of the first and second penny sales tax, and finally we will be working closely with elected officials on a consolidated plan to move forward.”

The council will re-examine the sales tax structure with the goal of possibly finding more money for a flood protection project. The city estimates that by 2019, it will not be able to meet the debt payment for the flood protection project with the current sales tax allocation, estimated to bring in about $4.56 million this year.

Minot’s first penny of sales tax is split among permanent flood control, 50 percent; construction, operation and maintenance of Minot area improvements, 25 percent; retention and creation of  jobs, 15 percent; and property-tax relief, 10 percent. The second penny is designated for infrastructure, 40 percent; community facilities, 30 percent; and property-tax relief, 30 percent. Each penny brings in just over $9 million.

In 2011, voters approved diverting the second penny tax from the Northwest Area Water Supply project to the current uses. The stipulation, though, is that NAWS can reclaim the tax if it ever needs more money.

NAWS has $34 million in its account with the city, Barry said. That may not be enough if a federal court rules favorably in February on a challenge brought by the province of Manitoba over organism transfer between river basins and from the state of Missouri over Missouri River water depletion. NAWS proposes to bring Missouri River water to the region.

Another $53 million from the city would be required beyond the $34 million on hand if the court allows the project to proceed, Barry said.

“We will have to re-deploy funds to eventually move that project forward,” he said.

If the ruling is unfavorable, the project will continue to be slowed and the funding need will only be about $25 million, which can be covered with existing funds, Barry said. Portions that could go forward are the $10 million Sundre line relocation, $10 million for water treatment plant upgrades and reservoir and booster station at Lansford and $5 million to design a pre-treatment plant at Max.

Another issue facing the city is debt that has increased about 165 percent in the past four years. The per capita debt of $989 in 2012 grew to $2,611 in 2016.

“Currently the city’s debt is about $104 million. About $60 million of that is tied directly to growth,” Barry said. “Debt is slated to grow to $132 million by the end of this fiscal year.”

Of particular concern is not only the amount of debt but how far into the future it is extended, he said. Debt once held for 10 years now is being held for 15 or 20 years, increasing the cost in interest payments.