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City Council approves preliminary budget

By Staff | Sep 30, 2016

The Rugby City Council voted, with all members present, to approve the preliminary 2017 budget last week at a public hearing in the Otter Tail Meeting Room.

Ward 2 Councilman Gary Kraft explained the budget-or the result of “hours and hours of work” by the city’s Finance Committee, as mayor Arland Geiszler put it.

Kraft said the city was levying $795,673 or a total of 101.78 mills, with a valuation of $7,817.49 per mill-$684,127 or 87.51 mills would constitute the city’s general fund. Last year the city levied $673,332 or 107.02 mills-with a mill valuation of $6,291.64.

Kraft said that while the total number of mills levied went down this year, costs did not. Added to levies this year were 5.84 mills or $45,646 for recreation programs and the levy for the Heart of America Library increased from $25,385 (4.03 mills) last year to $42,000-both of which were approved during the June primary election. Other levies include 1.52 mills or $11,900 for snow removal and $12,000 or 1.54 mills for the city Job Development Authority.

Kraft also said that costs for city utilities, and employee health insurance (which is projected to increase by 17.4 percent in July 2017) and cost of living are expected to increase while state aid, highway tax and sales tax are expected to decrease. In 2015 state aid was over $59.3 million, and was projected to drop to $44 million in 2016 and stay at that level in 2017. Rugby received over $329,000 in state aid in 2015, however the city received $164,911.05 to date-a decrease of 37 percent from last year.

“What we need to run the city has to come from somewhere,” Kraft said.

Ward 4 Councilman Chuck Longie said state aid funds are deposited into the city’s general fund as a means to keep property taxes low.

Highway taxes in 2015 were about $37.46 million, and was projected to decrease to $31 million in 2016 and decrease to $30 million in 2017. Rugby received nearly $203,000 in highway tax distribution, and Kraft said the receipt is 13 percent lower than it was this time last year.

The city received over $753,000 in sales tax in 2015, over $263,000 of which went to the JDA. To date, the city received nearly $520,000 in sales tax, which was a decrease of seven percent from this time last year. Sales taxes are also used by the city for infrastructure projects.

Kraft said that as the city was budgeting in the past, it did not have to raise taxes.

“We were able to toe the line,” Kraft said.

Rugby resident Don Rosencranz questioned why residents are billed for landfill surcharges if Rugby Sanitation owns the landfill. Geiszler said Rugby Sanitation pays the city. Rugby residents pay a $0.50 landfill surcharge.

Rugby resident Ron Olson questioned the amount of money being paid to the JDA executive director and the efficacy of the JDA in bringing jobs to the city. The city maintains a $12,000 reserve fund for the JDA, and over $80,000 pass through the city to the JDA director.

“If [the JDA] haven’t brought jobs, why justify paying?” Olson said. “We expect the money spent for the JDA on bringing jobs.”

JDA board president Fr. Tom Graner said that recently the JDA helped finance an incoming car wash, Rugby Broadcasters for their new FM radio station and Big Pauly’s-a new restaurant in Rugby; the board also helps finance loan request for prospective doctors at the Heart of America Medical Center on a case-by-case basis; and the board is also working on housing through direct investments or incentives. Ward 4 Councilwoman Sue Steinke said the JDA also helped bring in Ellie Ann’s Interior Design. Ward 1 Councilman Bruce Allen Rheault said former JDA Executive Director Gary Satern helped bring in the new complex that houses the Heart of America Correctional & Treatment Center and the Law Enforcement Center.

A resident asked how last year’s increase of over 21 percent factored into this year’s budget.

“To be honest, I don’t know,” Geiszler said, citing that on his property tax bill 26 percent went to the county, 37 percent went to the city and 36 percent went to the Rugby Public School District and that the value of some homes increased due to assessments by Vanguard Appraisals.

County Auditor-Treasurer Karin Fursather said that the county’s tax levy decreased 26 percent from last year, and if property values increased by less than that then property owners could see a decrease on the county side of their taxes.

Kraft said that on average, the value of residential land increased by 18 percent, while agricultural land increased by 10 percent and commercial land increased by 58 to 59 percent. The decrease in mills was due to an increase in mill value.

Rosencranz expressed concerns about the elderly. City Auditor Jennifer Stewart said elderly residents can fill out a Homestead tax credit application and are able to go back and file abatement requests on their properties.

“Do most elderly in town know this?” Rosencranz asked.

“It’s been presented quite often,” Geiszler said, adding that a lot who qualify either aren’t aware of it or choose not to apply. Geiszler also said disabled veterans can qualify for tax credits as well.

Ward 1 Councilman Neil Lotvedt was absent for the meeting.

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