Council’s second thoughts bump up taxes

Worries about whether a proposed Voluntary Separation Incentive Program will hit its employment reduction target led the Minot City Council on Monday, Sept. 21, to scale back the program, raising property taxes in the 2027 budget by $765,250 in the process.

The council voted 4-3 to approve a final budget with the addition to a levy that already was up about $2.3 million. Adding another $765,250 amounts to about $77 on a median value, $244,000 home. The increase reflects the higher median value, up from $229,000, as well as the levy addition.

"Go ahead and charge the public because the City of Minot will not tighten its belt. It will not. That is the question we have in front of us," council member Mike Blessum said in frustration. "We have to get our spending on track, and we just continue to kick the can down the road rather than actually addressing the side of the issue that's the problem, which is spending.

"We are still severely off track because even though we're increasing property tax by almost $3 million this year, we're still using $2 million in reserves. We are still not on track to actually be solvent as a city," he added.

Council member John MacMartin had moved to reduce the assumptions in the new Voluntary Separation Incentive Program (VSIP), shaving the $1.26 million proposed budget savings to $500,000.

Finance Director David Lakefield said the target to achieve the $1.26 million savings is 17 to 26 people who would take the full voluntary separation incentive, with no backfilling of the positions. The range is based on when during the year employees leave and the specifics of the savings with the positions. By reducing the scope of the savings to $500,000, the number of employees who would need to separate is seven to 11, he said.

Not all employees would be eligible because the program targets the approximate 250 staff members in positions supported by property taxes rather than enterprise funds.

Fire and police employees are among the tax-funded positions. City Manager Tom Joyce said those are included in the VSIP, even though they aren't positions the city is necessarily looking to reduce.

Council member Rob Fuller supported keeping the voluntary separation program intact, and if it fails to attract the necessary number of departing employees, the city should take the difference out of reserves rather than residents' pockets.

"It's not for the people to pay. Let the city figure it out, and let's go ahead and get done what we said we were going to get done for them," Fuller said.

MacMartin responded the city has been depleting reserves. The city has spent its reserves so low that it doesn't have the funds to address improvements needed at the police station, he said.

Council member Stephan Podrygula said he will be bringing proposals in October that call for an analysis of city spending.

"I don't think it makes any sense to be pruning positions or pruning activities until we've decided on what our goals are as a city and to establish meaningful objectives that we can measure citywide," he said. "I think slashing and burning at this point is not appropriate."

The vote to scale back the VSIP passed 4-3, with MacMartin, Podrygula, Eric Locken and Mayor Mark Jantzer in support. Blessum, Fuller and Scott Samuelson dissented. The vote was the same in passing the final budget.

The nearly $218 million budget calls for $23.2 million in property taxes. It comes to $387.63 per $100,000 of residential property value, an increase of $36.63 from the 2026 budget. The impact on individual homeowners will depend on whether their property values saw any adjustments this past year to keep pace with market values.

The median home value last year generated a property tax of about $804. The current median home value will generate an estimated property tax of $946 under the city's adopted budget for 2027.

Although the levy will go up, the tax hike of around 10.4% is less than the 27% increase originally proposed in the preliminary budget, which saw a number of reductions by the council before coming up for final reading Monday.

The $217.99 million budget has $176.7 million in capital projects, including $8.89 million for flood control.

The budget adds a dollar to monthly garbage collection fees for the first cart. Water and sewer rates also would see some increase for all categories of users.

Related to the budget, the council approved an ordinance change on final reading that will enable the city to transfer about $1 million from unspent sales tax dollars collected for economic development -- as well as another $1 million collected in 2027 in sales tax -- to the general fund for property tax relief. The relief was included in calculating the estimated levy for 2027.

Previously, the ordinance allocated 15% of the first penny to permanent flood control, creation of jobs, city economic development activities or any combination of those. The change adds property tax relief to those potential uses.

Use of the other 85% remains unchanged and includes flood control, 50%; capital improvements, 25%; and property tax relief, 10%.

The council during budget discussions last year attempted to make a similar change to the sales tax ordinance. The council passed an amendment on first reading to include property tax relief in the 15% for economic development and flood control but failed on a 3-4 vote to pass it on final reading.

The council set the effective date of the sales tax ordinance change for Dec. 21, rather than Jan. 1, as an accounting procedure that keeps the sales tax transfer within the 2026 budget year.

Lakefield explained that, even with budget cuts previously made to reduce property taxes for 2027, adding the sales tax transfer to the 2027 budget would have the effect of raising the city's overall budget spending to an amount greater than the preliminary budget. State law prohibits a taxing entity's final budget from exceeding total spending in its preliminary budget.