From analyzing the costs associated with new property developments to stepping up the street maintenance program, the City of Minot wants to take a longer term view on spending in an effort to save taxpayers money.
City Manager Tom Barry conducted a budget workshop for current and incoming city council members, city staff and others Thursday that focused on the history and trends for city revenue and expenses. A second workshop to delve more deeply into 2019 budget planning will be held this coming Thursday at 4 p.m. in the Room 203 in Minot Municipal Auditorium.
Barry said city staff are working on developing a way to create financial statements for new property developments to help guide the Minot Planning Commission in determining which projects will pay for themselves.
“Right now, we are kind of flying blind,” he said. The result can be approving housing subdivisions or other developments that won’t generate the tax revenue over the years to pay for the cost of servicing them, he said.
The city also needs to consider ongoing maintenance costs when it invests in capital projects, Barry said. The city shouldn’t budget for projects without first finding out whether it can afford them, he said. While the mechanisms for making those determinations won’t be available for 2019, the city is in the process of creating those tools, he said.
In embracing a long-term budget view, the city will be projecting revenues and expenses over five years, installing five-year budget modeling, developing capital project and capital replacement plans and reducing city-funded grants and donations.
The city’s decision to give away $40 million to outside organizations in the past seven years is a concern that Barry wants the council to address. That giveaway, combined with the decision to use sales tax to pay for traditional property-tax-funded functions, has cost Minot millions of dollars in operating revenue that cannot be recovered, he said.
“The challenge we are going to face as a community when it comes to budgets in the future is trying to make up some time,” he said.
In addition, deferred road maintenance has resulted in more costly repairs in the long run, Barry said. Minot has stretched out to as much as 17 years the typical five-year maintenance schedule for paved streets, he said.
He indicated Minot has a backlog in maintenance of $15 million to $20 million.
On a more positive note, Barry said, the city paid down debt from $104 million to $88 million, which places it in a better position for the future as it prepares to fund $108 million in flood protection and $49.7 million for the Northwest Area Water Supply project.
However, sales tax has dropped off 34 percent and state aid 27 by percent, while special funding for oil-impacted communities has dried up.
“We have been using reserves to balance the budget for some time,” Barry said. He noted $7 million has gone for that purpose in the past three years “because we haven’t made the modifications to revenue or expenses sufficient enough to close those gaps.” Without the use of reserves, city taxes would have been another 7 mills higher this year.
Even with the past year’s tax increase, Minot’s property tax burden is lower than Bismarck, Grand Forks or West Fargo, Barry pointed out in a comparison. The U.S. Census Bureau estimates the typical consolidated property tax burden is $3,296 a year nationally, compared to $2,539 in North Dakota and $2,100 in Minot in 2016. Minot’s tax average in 2018 was $2,524.