FARGO – Mayor Tim Mahoney's proposed budget has a little more in it for city services and just a touch of tax relief for homeowners who have seen a steady increase in home values.
The budget presented to city commissioners Friday included $94.2 million in General Fund spending, meaning the city's main operating fund will be 4.9 percent bigger than it is now.
This will pay for a 1.1 percent increase in city staff, most of that going to the Police Department in recognition of the public's concerns about rising crime.
City staff is projecting $94.5 million in revenues, a 4.9 percent increase, including more money from property taxes despite a 1-mill cut in the property tax levy.
That 1 mill is worth $4.50 for every $100,000 in assessed value of a home and $5 for all other properties.
This is Mahoney's first budget since becoming mayor in April. Unlike under previous mayors, he's getting commissioners involved in the budget process from the start, including having commissioners attend meetings with the heads of departments they are liaison to. They'll also have until Friday to suggest changes to the budget.
Commissioner Tony Gehrig suggested the city cut its budget for the new $27 million City Hall building to save more money, but other commissioners didn't have immediate changes in mind.
Commissioner Dave Piepkorn, who occasionally clashes with Mahoney, said he greatly appreciates the more inclusive budgeting process.
On the revenue side, the $4.4 million in additional revenue is expected to come mostly from three sources: property taxes, state aid and utilities.
The growth in property tax revenues is not unexpected. The city assessor's office has estimated that the taxable value of all properties increased 12.1 percent in 2015 because of new construction and the rising value of existing properties. If the mill levy doesn't change, tax revenues would also go up 12.1 percent. With the 1-mill cut, they would increase 9.7 percent.
Gehrig earlier argued the city should cut the projected property tax revenue 20 percent, equivalent to 10.3 mills, to balance out the valuation increase that's been ongoing for several years. He failed to extract a promise from the commission to do this a few weeks ago, but said he'll keep trying.
Mahoney said the city doesn't act in a vacuum. Other local governments that also levy property taxes are expected to cut 6 mills next year, he said, so the tax relief will be more substantial.
State aid is expected to increase 5.3 percent. City staff had been told to expect no increase given the softening of the oil boom, but a more recent projection shows the state will likely see more sales tax revenue.
Utility fees are expected to stay the same, but the city is making enough of a profit to increase the transfer of fees by 16.5 percent.
On the expense side, the $4.4 million in additional spending will mostly pay for a 1.1 percent increase in the number of employees and 2.8 percent increase in the cost of running the city.
Department heads will be able to hire the equivalent of 16.6 more full-time employees. The Police Department will get five of these, the most of any department. The department has struggled to hire new employees and is currently short five officers. Interim Chief David Todd told commissioners he expects to hire four out of the academy at the end of the month and will find out if he'll get federal grants for four more in September; the grant positions are not included in the 16.6 figure.
Mahoney noted how his administration has walked a fine line between keeping staff pay competitive, but not letting raises get out of hand. Department heads requested $709,000 in raises, but only $38,000 was approved, he said.
Pay and benefits have been drivers of city spending increases for years. Since 2010, the budget has increased 13 percent, adjusted for inflation.
One category of spending that decreased was building and equipment, which was cut 5 percent. Mahoney said staff is looking for ways to delay buying new computers, vehicles and other equipment.
A preliminary budget will go for a vote before the City Commission on Aug. 31, after which the mill levy will not be allowed to increase though it can decrease. Final approval is scheduled for October.