At least for the moment, East Grand Forks plans to dip into its savings in 2021.

City Council members on Wednesday took their first whack at next year’s budget, which outlays $12.11 million worth of city spending that overtakes $11.48 million worth of revenue -- a $638,000 gap that the city would fill with money from its swelling cash reserves, which now total about half of its annual budget.

But those figures are preliminary and it’ll take several more months -- and several more meetings -- before next year’s spending plan is set in stone. In last year’s budget cycle, East Grand Forks leaders kicked around varying levy increases and trimmed large-scale spending requests before they settled on finalized numbers in December.

The increase in city revenue would largely come from a budgeted 3% increase to the city’s $5.44 million property tax levy that would make up for an expected drop in state aid.

Mayor Steve Gander asked finance staff to put together a budget that assumes a 5% increase as a starting point but, even if it wasn’t changed, that idea would not necessarily mean Eastside residents would pay 5% more in property taxes. That's because that figure would at least partly be a product of increases to the size and value of the city’s tax base. Polk County’s valuation of all the properties in East Grand Forks rose by 2% for taxes payable in 2020, which, at least in theory, means the 5% levy hike Council members approved last winter for this year’s budget produced a 3% property tax increase.

WDAY logo
listen live
watch live
Newsletter signup for email alerts

“The goal is to keep the average change in tax for the average resident as close to the rate of inflation as we can,” Gander said Wednesday. “If we have somewhat artificially kept those tax increases low, artificially low, and depleted our reserves, then you have got to pay the piper on the back end, and we’re just not going to do that.”

The increase to city spending would largely be new “capital” spending to replace city vehicles and equipment, and, unlike the past few years, the preliminary budget presented to council members does not assume any raises for city workers. East Grand Forks negotiates with all four of its employee unions -- police, fire, public works and department heads -- on concurrent three-year cycles, all of which are set to expire at the end of this year. That means a fresh round of negotiations this fall on contracts that will presumably last through the end of 2023 and influence city leaders’ budget deliberations in the coming weeks and months.

This year and last, each city employee in a union received a 2% wage increase, and non-unionized workers received the same. Supplementary budget documents indicate that another 2% wage increase for all employees in 2021 would increase the city’s preliminary budget gap to $737,000.