The Pequot Lakes City Council considered proposed 2020 preliminary budgets and the tax levy for city operations on Tuesday, Aug. 20, to give city staff direction before taking action at the Sept. 3 meeting.

No action was taken Aug. 20.

The deadline to set the preliminary tax levy is Sept. 30. That number can then be decreased, but not increased, before the council adopts the final levy in December.

Pequot Lakes tax levy fund budgets project a preliminary tax levy of $1,833,830, which is a $134,645 levy increase (7.92%) from 2019, and an estimated tax rate decrease of 0.04%.

City Administrator Nancy Malecha explained that the city can raise its tax levy and have a tax rate decrease because Crow Wing County is projecting the city to have an 8%-9% increase in market value.

The council had directed staff to aim for no increase in the city’s tax rate.

After going through the proposals, the council directed Malecha to include a more accurate estimate of health insurance costs and electricity costs for street lighting and signals, and to remove recycling funding from the 2020 preliminary budget. A memo from Crow Wing County says the county’s proposed 2020 budget would eliminate funding to curbside recycling programs, resulting in no funds being allocated to haulers who provide service in Pequot Lakes. City ordinance requires haulers to provide recycling service.

The city won’t get its tax rate number from the county until around November.

For perspective, past year city levy increases were:

  • 2014-15: $25,720 levy increase.

  • 2015-16: $39,259 levy increase.

  • 2016-17: $43,878 levy increase.

  • 2017-18: $40,555 levy increase.

  • 2018-19: $61,400 levy increase.

Larger operational expenditure increase proposals (over $2,500) include:

  • Employee wages: 2% cost-of-living increase and step increase based on successful performance reviews.

  • Health insurance: 20% increase for premiums.

  • Elections budget: 2020 is an election year. New will be a presidential primary election in March 2020.

  • General building: engineering fees for needs study and design services for potential upgrades to city hall.

  • General building: for various contract services.

  • General building: capital outlay carryover for improvements to buildings.

  • Police: for legal fees for a change in prosecuting attorney.

  • Fire contracts: for contract services for Pequot land and Nisswa fire services.

  • Roads and streets: for various contract services.

  • Park: for operating supplies.

  • Insurance: for various insurance costs.

  • Recycling: for increased recycling by refuse haulers.

  • Highway 371: capital outlay to buy a front end loader.

Council member Jerry Akerson asked to add $9,000 to the budget to provide handicap accessible doors at city hall and at the Cole Memorial Building before the next election.

“I know it got kicked out of the budget last year, and I don’t want it to get kicked out this year,” Akerson said.

Malecha said she proposed to upgrade doors at the Cole Memorial Building this year, and doors at city hall next year.

Akerson also said he favored a 0% increase in the city tax levy for 2020 after years of increases.

Considering just employee wages and benefits, the budget increase is more than $100,000, council member Scott Pederson said, pointing to the importance of the tax rate in dictating property taxes. The costs to run a city aren’t decreasing, he said, but if the city grows and attracts more residents, that helps increase the city’s market value and decrease the tax rate.

The council also talked about its capital improvement plan and corresponding costs. Jason Murray, with David Drown Associates, shared examples of how road assessments would affect the city property tax levy.

In other business Aug. 20, the council:

  • Approved an agreement for water and wastewater operation services with the Pine River Area Sanitary District for 2020-24 for $7,052 per month with future increases as defined in the agreement.

  • Took action to rectify an outstanding balance of $153,662 relating to the Trailside Park master plan project.

  • Adopted a resolution to execute a cooperative agreement with the state to be able to develop recreational trail connections from Main Street as part of the city’s flag display project in Trailside Park.