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EGF eyes 10 percent levy increase in budget talks

Leaders in East Grand Forks say they are nearly out of the woods on budget issues that have led to property tax hikes and belt tightening in recent years and are considering a more modest tax levy increase in 2018.

At a workshop meeting Tuesday, the City Council agreed to propose a 10 percent property tax levy increase when it sets its preliminary 2018 budget at next week's meeting.

The increase will likely mean about a 5 percent property tax increase for homeowners.

The preliminary 2018 budget will project $11.125 million in revenue and $11.12 million in expenditures.

The 10 percent increase to the property tax levy will put an additional $452,800 into city coffers in 2018. Last year, the levy increased 19 perecent.

Once the preliminary budget is set it cannot legally be increased, but it can be trimmed.

City Administrator David Murphy said after 2018, natural growth will enable the city to raise the levy at rate more consistent with normal inflation.

'We should be more stable after this year," Murphy said, adding that this year will be the least stressful budget season since he arrived in 2013.

"It's was a tough couple years but I'm very comfortable with where we are now," he said.

The state of Minnesota suggests cities keep a 35 percent to 50 percent fund balance, meaning those dollars are unassigned. Best practices note a city should have enough cash on hand to cover about six months of operating expenses. The city is currently sitting at 44 percent in its fund balance and wants to stay in the 41 to 45 percent range with this budget.

Going into the 2017 budget, the city was aiming to get the fund balance up to 35 percent.

Murphy said the council wants to see an additional $20,000 in the general fund balance and another $100,000 placed into the street repair fund. Department heads proposed eliminating $126,000 in 2018 funding by not purchasing new vehicles for the Fire Department and parks and recreation and holding off on a new ATV and LED street sign for the police department.

The city is not expected to make any staff reductions under the 2018 budget, but Murphy said one vacant position within the Parks and Recreation Department was likely to go unfilled.

The City Council is expected to approve the preliminary budget at its Sept. 19 meeting. Public hearings will be held throughout November, and a final budget will be approved in December.