The Ways & Means Committee met Wednesday night to set the preliminary levy. Interim City Administrator and Finance Director Angel Weasner presented the committee with a seven percent levy increase to reduce the reliance on Local Government Aid (LGA) funding.  The total budget submitted for the City of Crookston was $14,034,644, with the proposed seven percent tax levy generating a total of $2,388,980 in tax collections, up from $2,232,692.

Councilman Jake Fee said he thought he could cut one percent from the tax levy, approximately $22,000, from the levy pretty quickly by removing funding for the Small Business Development Center and some concrete work at the Crookston Police Department.  Fee said he believed the preliminary levy should be set at five percent.

All of the council agreed they believed they could get the tax levy to five percent or lower. However, most felt it would be prudent to have a six percent preliminary levy to give the City Council some wiggle room to reach five percent.  Councilman Don Cavalier motioned to recommend a preliminary levy of six percent, seconded by Councilman Clayton Briggs that passed 6-3 with Councilmen Steve Erickson, Bobby Baird, and Fee voting against the recommendation.

Fee said he would’ve liked to have the committee take the time to make additional cuts Monday as well. “We had a good discussion tonight, and there were good arguments on both sides for where we wanted to be,” said Fee. “The recommendation was seven percent, and some felt like we should keep it at six to have a little buffer zone in there. We felt like we could easily get by on a five percent preliminary budget, but the council decided to stick at six. That’s fine, but I think myself and a couple of others that voted no felt like we could’ve addressed those cuts tonight and got it down to five. Rest assured, we will be working the next month or two to get it down to five percent if not a little bit lower.”

Interim City Administrator and Finance Director Angel Weasner said she’ll be meeting with department heads to work on additional reductions of approximately $22,000 to complete the levy goal set by the committee. “That brings the levy to $2,366,653 that will be requested,” said Weasner. “The council has asked us to look into reducing an additional one percent, which is approximately $22,000.  I will be meeting with the department heads and making adjustments. They want us to look and see if we can get it down to five percent, which would be roughly $2,344,653. We will be looking into those options and other modifications we can make to the budget to reach the goal the council has set.”

A six percent levy means the City of Crookston’s tax levy budget increases by six percent. Property taxes are based on the value of a property as a portion of all taxable properties within the city, so as the tax base increases, the effect of a levy increase on individual property decreases. Two new homes will no longer have their taxes abated in 2021, while seven newly built homes were added to the abatements in August through 2022. 

Property Values 6% tax levy 5% tax levy
Total Property Tax Collection Increase $133,961 $111,961
$50,000 home value $13.30 increase $10.36 increase
$150,000 home value $39.91 increase $31.09
$300,000 home value $79.81 increase $62.18 increase

For the past several years, the City of Crookston has used between $200,000-300,000 annually from reserves to balance the budget and lower the tax levy increase.  This year, an increase in LGA funds allowed the presented budget to come in balanced without drawing on reserves. “We were very fortunate and received additional LGA funding this year,” said Weasner. “We were able to get ourselves off of using reserves to balance the budget.”

Weasner also noted that the City of Crookston relies heavily on the LGA funding to fund city services. Given the state’s $4 billion deficit in 2020 fighting COVID-19, there is some concern that could impact LGA funding in the future. “LGA is 63 percent of our budget,” said Weasner. “It’s always been a large factor. If we were to have an LGA problem, it could seriously impact the services the city can provide. I’m trying to make sure we always look at getting reliance on LGA reduced.”

Crookston is set to receive $3,770,527 in LGA funding in 2021.  The state does have the ability to enforce the un-allotment of that funding if the state statute is met. The City of Crookston does have mitigation procedures in place to handle up to one-year of a $500,000 reduction as a worst-case scenario should it come to that. Fee said being reliant on LGA funding is dangerous, but so long as it’s there, the city funding is in a good position. “That’s a very dangerous thing to do, especially in times they (the State of Minnesota) are at a $4 billion deficit,” said Fee. “They’re going to have to look at cuts and is we’re not sure if LGA is going to be on there. You do have to stop being so reliant on it. Overall, the city residents should be pretty happy that we’re in a pretty good financial state, and as long as LGA sticks through, we’ll be alright.

The Crookston City Council will vote to set the preliminary tax levy on September 14.  The City of Crookston’s Truth-in-Taxation meeting and final levy will be set on December 14.

The committee also didn’t set a temporary board for the Crookston Visitors Bureau as had been discussed last Monday because the meeting between the City of Crookston and the CVB originally scheduled for Wednesday, August 26 didn’t take place until earlier Monday.