Jill Schramm/MDN Mayor Shaun Sipma, left, presents a certificate to Vickie Phippins, right, as Minot’s Citizen of the Year during Tuesday’s Minot City Council meeting. Sipma announced Phippin’s selection during the Feb. 2 State of the City Address. First International Bank provided a $1,000 donation to the charity of Phippin’s choice, and Phippins selected The Lord’s Cupboard Food Pantry, one of several organizations to which she volunteers her time.

Minot property owners are receiving an inadvertent – though small – tax break this year.

The break amounts to about a 1.85% savings for the average taxpayer. The City of Minot’s 2021 budget had projected the tax on a $200,000 house to be similar to last year’s $1,097. Instead the city tax is $1,080.

While not significant for individual taxpayers, the cumulative $477,160 in lost dollars prompted the Minot City Council Tuesday to shift money in its budget to cover shortfalls in some areas.

The shortfalls result from a change in how the state Homestead Tax Credit and Disabled Veterans Tax Credit are handled in tax calculations.

Finance Director David Lakefield explained that properties receiving the tax credits previously weren’t included in the city’s overall property valuation for tax purposes. The city budgets its state money for those tax credits separately from its property-tax collections. During the budgeting process last year, the city anticipated receiving $366,000 from the state for the tax credits.

The city was unaware that, this past year, the state instructed counties to include tax credit property in the valuations. That raised the city’s valuation, which in turn lowered the levy that appeared to be needed to generate the tax dollars requested by the city. The result is a $477,160 shortfall between the budgeted $25.78 million in property-tax collections and the amount actually being received.

“It was unexpected,” Lakefield said. “Ultimately what happened here is the taxpayers got a slightly lower bill.”

The council voted on first reading of an ordinance to use cash reserves in the general fund to make up the difference. Affected were accounts that receive property-tax dollars. It includes about $361,000 in general fund spending and smaller amounts for the airport, library, cemetery, debt and equipment and public transportation funds.

Going forward, Lakefield said, the city would do better to not budget separately for the tax credits but to include those properties among other properties in the tax base for mill levy calculation purposes, he said.

The council also voted to dip into general fund cash reserves to cover an unexpected $27,040 bill for integrating the city’s new Cityworks software with its financial software, Munis. The transfer was requested because the total bill for the integration exceeded the city’s estimated $50,000 cost.

The additional cost caused some heartburn on the council.

Council member Tom Ross noted the added bill is more than a 50% increase.

“That’s where the flag raised for me,” he said.

City Manager Harold Stewart said software companies that promise more than they can deliver is a common problem discussed by city managers across the country.

“We help council and communities make significant financial commitments to go to the software and then once we get into the meat and potatoes in trying to make all of this work, we find out that it doesn’t work quite as well as was sold, and this represents significant cost adjustments to communities throughout the country,” he said.

However, council member Mark Jantzer said it is not uncommon to put additional time into getting two systems integrated.

Council member Stephan Podrygula also said it was apparent the new software project was going to be expensive and time consuming at the time the city was selecting vendors.

“I don’t feel we were deceived in any way. It was very clearly, a very, very ambitious and also very much overdue set of projects,” Podrygula said. “If we are only $27,000 off, I think we have done pretty well. It’s very complex.”

The council voted unanimously to support the budget amendment to pay the bill.

The city is working on three major software projects. Munis is one piece, and CityWorks, which manages infrastructure assets, is another. The third is AssetWorks, which governs fleet management.

In good financial news, the city was approved for a grant from the North Dakota Department of Environmental Quality through the Volkswagen Environmental Mitigation Trust for cost sharing on a new fire engine. The trust was formed in a settlement with Volkswagen. The primary goal of the trust is to reduce nitrogen oxide emissions and mitigate the negative air quality impacts caused by Volkswagen’s use of devices to cheat emissions testing.

The Minot Fire Department wants to replace an older engine that has been in service for 24 years. The movement of the older engine into backup status will provide a more reliable engine as the city’s backup engine while putting a new engine on the front line. The cost of a new engine is $581,006, according to information provided to the council by the fire department, and half would come from the trust fund.

The Minot airport also will receive additional COVID-19 relief in the form of a grant of $689,084 for operations through the Coronavirus Response and Relief Supplemental Appropriations Act. In addition, $35,147 is available to local airport concessionaires, including car rental companies and restaurant operations.