City property owners will not see increase in taxes

     As things wind down for the budget season, the Monticello City Council held a work session on Feb. 26 to continue to finetune the city’s FY2025 budget.

   Before any discussion took place, however, Council member Mary Phelan said she wanted to hear from City Administrator Russ Farnum City Clerk Sally Hinrichsen in terms of their comfort level with the budget.

   “What do you think this budget means to you?” she proposed. “Maybe you can confirm that this is not as much to worry about as I think it is. If you were presenting this to a board, how would you present this to relay the information, what are the key concerns, how we can close these gaps with the $1.7 million expenses that exceed the revenues, what were some of the key drivers of the increases, does this budget address all of the priorities of the city, things like that.”

   Farnum explained Phelan’s claim of having almost $2 million in expenses in the proposed budget.

   “The simple answer is we’re $2 million short on expenditures over revenues because we already have that $2 million in revenues,” he said. “That was the bond we did this past year, which pays for Chestnut Street, the Sixth Street Ditch, and the south water tower repainting. So more or less, that’s equalized right there.

   “The big impact in this budget is the waste water treatment facility,” he continued. “You’re talking about trying to build a $23 million project over a three-year period. Our second biggest impact is really personnel. We’re in the service industry. We spend a lot on your people: overtime, staff benefits, equipment, and operations.”

   Farnum said he is happy with the budget as it stands today.

   “It’s a relatively frugal budget. I’m sure there are always places where we could cut.”

   The biggest question most people within the community, property owners, will have for the city is how the budget impacts their property taxes. Farnum said he’s happy with where that sits, too.

   He said there are multiple factors that impact the city’s tax levy.

   “One, the state rollback is the biggest it’s been in 20 years.”

   Residential property is rolled back to 46 percent, compared to the 54 percent in previous years.

   Due to HF 718, cities and counties have to now base their property taxes off of a new formula. The law also places a limit on both the General and Rural funds.

   As far as the city is concerned, the General Fund was at $8.10 per $1,000 of assessed value. Despite $5 million in new growth within the city, that fund is lowered to $7.94.

   The city’s tax levy rate is proposed at $15.80224.

   “That’s .7 of a penny above last year,” said Farnum. “Despite that, because of the increased rollbacks, the average homeowner is going to pay less on their (city) tax bill, because we have the advantage of new growth being added into the system and the increased rollbacks from the state.”

   So what does that mean for the average homeowner? If you have a $100,000 house, your city taxes will decrease by $131. A $250,00 home, a drop of $328.

   “You need to go up to a $10 million commercial building to even see an increase in your tax bill with this levy for the coming year,” said Farnum. “As far as I know, your largest commercial taxpayer is $6.8 million. Your assessed value would have to increase more than 8 percent and then you’d be paying a little bit more.”

   The council also discussed staff wages during the work session.

   The Compensation Committee met a few weeks prior and proposed a 6.5 percent pay increase. The library board set wages in their budget at 5 percent.

   Phelan, who served on the committee, commented that she felt an hour-long meeting to hash out wages was not long enough. She also conducted her own analysis and pulled her on data and came to the conclusion that 6.5 percent is too high.

   “We can’t afford it,” she said. “Not that people don’t deserve it.”

   She recommended 4 percent.

   “Our people are still very low,” commented Council member Candy Langerman of staff wages. “We’re going to start losing employees.”

   Mayor Wayne Peach said it would cost the city more to replace and rehire staff versus offering the proposed pay increase.

   Farnum provided the Compensation Committee with data and comparables pertaining to staff wages. He offered to share that with all members of the council, with only three having been on the committee.

   Goedken also brought up Farnum’s residency. He said the council should require Farnum to reside within the city, per his contract agreement. He said Farnum didn’t get a pay increase last year because he was not living in the city.

   “I question whether he should be lumped in with the rest (of the city staff),” Goedken said of the pay increase for FY2025. “We need an incentive to keep him here.”

   Farnum said he understood where Goedken was coming from and is fine with whatever decision the council made regarding his salary.

   “It’s not like he’s not looking,” Langerman said in defense. “There are not a lot of choices right now.”

   “And our building lots are down,” added Council member Scott Brighton.

   Peach said he’s never run into an issue where Farnum was not available to city officials and staff.

   Goedken said it’s a problem when “primary city decision-makers are not paying city bills” themselves.

   “We’re the primary decision makers; Russ is not the decision maker,” corrected Brighton.

   “Not everything comes before the council,” argued Goedken.

   The council will make a decision regarding staff wages during the March 4 regular council meeting.