Prior Lake finds cuts, changes for smaller property levy increase

Prior Lake American

Lower starting salaries, higher permit fees and parking revenue will allow the city's property tax rate to go up less than originally planned, city officials said.

The City Council earlier this month voted to increase the property levy by 5.8 percent, partly for an additional police officer and a new city clerk position.

The proposed budget for next year was originally based on a higher levy increase of 6.7 percent, but council members said they weren't comfortable with that number and asked city staff members to find a way to lower it.

City staff found about $103,000 in cuts and other spending and revenue changes to get to there, according to the city manager and finance director.

A tax levy determines the amount of property tax for the coming year based on the value of home.

With the 5.8 percent jump, an average home valued at $338,100 with a typical yearly change in value would see an increase of $28 in the city portion of the property tax, Finance Director Cathy Erickson said.

In practice, not all property owners see the same increase because of the fluctuation of property values.

A portion of the levy difference was made up through increased fees for building permits and increased utility rates approved by the council Dec. 3.

These changes included:

• 10 percent increase in sewer and stormwater trunk and connection fees,

• 4 percent increase in water and trunk connection fees

• 3 percent increase in water rates

• 5 percent increase in sewer rates

• Additional fees for driveway permits, demolition permits and a commercial contractor's deposit

Staff turnover at the Prior Lake Police Department and in the city manager position also contributed to the lower levy bump.

City Manager Frank Boyles, for example, will retire in March after 26 years in the position. He receives a base annual salary of almost $136,000 with an additional $22,500 in longevity pay. The next city manager, Michael Plante, will start out with a base annual salary of $140,000.

"The proposal for the new city manager is the pay is less than I make," Boyles said. "It should be — I've worked here 26 years. While the salary range is higher than the range is right now, the actual pay is somewhat less."

The Prior Lake Police Department is looking to fill four officer positions at the moment, three of which are due to officers' leaving the department and one of which was included in the budget as an additional officer. The officers who join the department will make less than those who left, since the latter were at the department longer.

"Instead of coming in at step eight, or a longevity step, they'll come in at a step one, two or three," Boyles said.

Most of the levy increase, or $525,000 in new revenue, is deemed "mandatory," such as for wages and benefits, police overtime, salt and ice management, fuel replenishment, debt service and an Economic Development Authority levy.

Part of the levy is for the addition of a city clerk position starting in July and an additional police officer starting in February.

For metro area cities with a population of 20,000 to 30,000, Prior Lake is the only city without a full-time dedicated city clerk, according to the council agenda report on the budget. City clerks prepare council agendas, schedule meetings, manage records, administer elections, issue licenses and more.

Prior Lake has had the highest crime rate index in Scott County for two years but the fewest sworn officers. Total calls for police service increased from 17,312 calls in 2016 to 18,323 in 2017.

In 2018, Prior Lake officers will have overtime hours equal the cost of 3.5 full-time employees with an additional 10-hour shift per week per officer, according to the city report.

Several residents spoke in favor of maintaining the police officer position in the budget during the public hearing on Dec. 3.

"We think it's extremely important you retain an additional police officer in the budget next year," said Prior Lake resident Woody Spitzmueller, who sits on the Community Safety Advisory Committee for the council. "Our department services calls and has no staff for enforcement."

The average proposed tax levy increase for cities in Minnesota was 6.2 percent, Erickson said.

Prior Lake's increase also will include $50,000 for trail replacement, $50,000 for equipment replacement and $95,000 for street overlay.

Historically, $100,000 in trail funding has been cut from the budget to maintain property taxes. The funding covers redoing and maintaining about a mile of trail each year, city officials have said. The trails and equipment funds were not reduced.

The budget had included about $50,000 for a contracted building inspector, but that amount is now lower. Boyles said staff is not sure if the demand for permits that was seen in 2018 will continue into 2019.

"As people start to build more houses and there's more activity, that's when we'll need an additional building inspector," Erickson said.

If the demand continues, Boyles said the revenue for the contracted building inspector would come from the increased revenue from the permits.

"We didn't remove the entire thing, but we backed off the amount of money, knowing this — if we exceed that amount, we will get counter revenues," he said.

A small portion of parking revenue at Sand Point Beach was also added back into the budget. Council had discontinued parking fees at the beach, but with the parks master plan underway, Boyles said staff wasn't sure if the parking fees should be removed completely. Instead, about $6,000 was included in the budget as revenue for the fees. It will be an honor system at the park.

"It's a flat-out guesstimate," Boyles said. "We wanted to be safe."

The stated goals of the budget are to establish financial stability for all funds, put in a comprehensive strategy for funding capital needs, ensure sufficient resources and staffing, attract and retain a "high-caliber" workforce, maintain a quality local street system and seek community engagement, according to a council memo about the budget.