DETROIT LAKES—The City of Detroit Lakes Finance Committee reviewed preliminary budget recommendations on Tuesday, Aug. 30, and agreed on a plan to recommend to city council on Tuesday, Sept. 13. The council meets at 5 p.m. in council chambers, 1025 Roosevelt Avenue.
Heidi Tumberg, the city’s finance officer, reported the preliminary levy is an increase of $650,433 or 9.86% over the 2022 final tax levy.
The levy increase is a product of several major factors, including Local Government Aid (LGA). LGA began in 1972 and contributes $570 million in funding from the state coffers to municipalities.
According to the Minnesota Department of Revenue, the certified LGA amount for
2022
for Detroit Lakes was $537,802 and for
2023
it is $393,203, a decrease of $144,599.
Wages and health insurance costs were also considered with the proposed levy increase. Tumberg explained the city is in union negotiations with the current contracts expiring at the end of the year.
The city is also looking at workers’ compensation insurance increases, which have seen large increases in the premiums. Tumberg explained the increase is a statewide issue. An example of the increase may be most noticeable in the police department. For officers, workers’ compensation premiums are doubling ($60,000 to $120,000), Tumberg explained.
The increase in natural gas also added funds to the proposed city levy. She said projections of increases are potentially higher than in past years, therefore the city budget reflects the increased costs.
The proposed levy also includes a full-time fire chief salary in the 2023 budget. The newly added position comes with a $91,096 increase in wages in the fire fund.
Capital equipment is also a reason for the proposed levy increase. Tumberg explained those items include capital equipment purchases that were planned for 2023, as well as regular equipment in set rotations, such as new police or street department trucks. While there are funds budgeted for the purchases, the significant cost increases due to inflation require additional funds for the required updates to stay on schedule.
“For example, a single axle plow truck used to cost the city approximately $220,000, however, now those costs are around $255,000, and that is if you can get the equipment,” Tumberg said. “There have also been huge issues with obtaining equipment and vendors not honoring state bid prices, so planning for and being able to maintain our equipment replacement schedules has been challenging.”
The outstanding governmental bonds that rely on levy support also saw an increase, which was expected. Bonds that rely on levy support total about $16.16 million. Tumberg said the amount levied to pay the debt can vary from year-to-year, and for the upcoming year it increased about $30,500.
The proposed levy also includes funding for a new public works facility, which is in the final design stages and potentially could go out for bids later this year.
