Preliminary levy set with 18 percent increase in order to fund large bond issuance
Could a massive street improvement project be in the cards for Wyoming? If the preliminary 2013 levy is any indication, it appears so.
The Wyoming City Council on Sept. 11 set the preliminary levy at $3,904,195, which includes $500,000 proposed to be used to finance a bond issuance of several million dollars for road repairs.
The levy cannot increase as the council finishes planning the 2013 budget. Downward adjustments can be made before a final figure is determined, so the street improvement plan could yet be taken out, as similar funding was a year ago.
Three resolution options were prepared for the meeting. The first included $288,215 to cover various existing bond payments and had a preliminary levy figure of $3,404,195.
The second option included an additional $400,000 for bond payments, resulting in a preliminary levy figure of $3,804,195.
The option adopted by the council bumps the preliminary levy to a total of $3,904,195. The additional money would be used to finance bond sales for street repairs.
Craig Mattson, city administrator, said there have been discussions about financing street improvements for two years. Under the city’s pavement management plan, streets are evaluated each year and a priority list is created for repairs. However, no money has been allocated to make the repairs.
Mattson explained that the $500,000 would “fund a bond issue of five to 10 million dollars,” which would be used reconstruct or overlay streets. The additional amount levied would be used to pay off the bonds sold. Unless there is a demonstrated revenue stream, investors are unlikely to buy the bonds.
The 2012 levy was $3.3 million. The preliminary 2013 mark is $604,195 higher, an increase of 18 percent. Likely there will be additional information about the impact to property taxes as refinements are made to the budget.
At the Truth in Taxation meeting in December 2011, establishment of a fund for street replacement was cut from the 2012 levy. Instead, a streets capital improvement fund was established with a $500,000 transfer from the general fund as a base for street repairs.
While he had no numbers, Mayor Eric Peterson told the audience that in discussions he has had with residents, “99 percent want streets fixed.”
Peterson favored the addition to the levy instead of homeowners being hit with $5,000 to $15,000 to pay assessments on streets. In the case of assessments, about 35 percent of that cost goes to engineering, legal, and financial services. Any increases in the levy would be tax-deductible for residents, while assessments are not.
Mattson explained that property owners would be assessed in proportion to the cost of improvements for streets that are structurally upgraded in ways such as widening or the installation of curb and gutter. Replacement of streets with the same specifications would not lead to assessments.
Linda Yeager’s motion to adopt a flat levy of $3.3 million died for lack of a second. Roger Elmore proposed adopting the preliminary levy, including the $500,000 for bond payments, in the amount of $3,904,195. The motion passed by a vote of 3-1. Yeager voted no. Joe Zerwas did not attend the meeting.
The preliminary levy includes $3,073,980 for the General Operating Fund, $42,000 for the EDA, and $788,215 for bond indebtedness. The deadline for reporting the levy to the Chisago County auditor was Sept. 15.
Council and city staff began the process with some good financial news. There will be no levied amounts for the fire hall or tax abatement line-items in 2013. Payments for these were $28,000 and $20,000, respectively, but they are now paid off.
Eight residents were in attendance.
The Truth-in-Taxation Hearing is scheduled for 7 p.m. on Tuesday, Dec. 4. If necessary, a continuation will be scheduled for 7 p.m. on Tuesday, Dec. 18. The final budget for 2013 will be adopted at the council meeting on Dec. 18.