Good morning, I’m Mayor Mahoney and I would like to talk to you about this year’s event where we just went over the 2018 preliminary budget. Now for many of you that don’t understand how a budget is made, I sit down with all of the commissioners and their portfolios and try to figure out what the needs are in the next coming year. And along with this, we talk to all of the department heads and look at their operating capital, what their operating expenses are and the need for new personnel.
The budget team goes through all the different requests for the year, we sort it out and then we come up with the preliminary budget for 2018. What I had requested of the department heads is to try have no growth in the general fund budget. To have no growth in the general fund budget, you have to keep your personnel costs down, not have increasing operating costs and try to minimize any new initiatives this year.
Also in regards to this, in light of the fact that the state is not giving as much support to the city government, we wanted to try and keep the mill levy at an equal rate or decrease it. We are fortunate to be able to fund a 2 mil reduction, which I am very pleased with.
Also, we are changing some things in the city government as far as our budget goes and we are going to have a capital fund. And having a capital fund, we know what the priorities are for each department and can fund them appropriately. This will make an operating budget for the City of Fargo so the citizens are better able to see the costs of government. We are going to continue push efficiency, technology and new add-ons in our departments to see if we can increase the amount of services we can give without necessarily increasing the costs.
The goals of the 2018 preliminary budget were five. Number one, no growth in the general fund budget. We are trying to keep our growth to a minimum or modest increase. Number two, a property tax reduction of two mills for 2018. Number three, a portion of the general fund capital moved to the capital projects fund. What this allows us to do is utilize some utility funds mixed with our general funds to better handle our capital needs. A portion of our regionalization revenue will be moved to the capital projects fund. By taking on water and wastewater, we are able to put more money into our capital needs for the city and minimize the burden of the taxpayer through their property tax.
And finally, we continue to invest in public funding of safety and police. In order to do this, we have to have a strategic plan with the Chief of Police and Chief Dirkson, chief of fire, and figure out what the needs of the city are going forward. So we will continue to invest in that to the needs of the city.
The Highlights of the Preliminary 2018 budget were a continuation of current initiatives.
- One is the Police Department lease of the Border States Electric warehouse. We can begin to move the Police Department personnel into the warehouse and utilize space for our needs.
- Number two, permanent flood protection (FM Diversion and in-town levees). This will be a continued construction of the protection we need throughout the city.
- Number three, the Mayor’s Blue Ribbon Commission on Addiction. We are going to continue to fund this and see if we can find some solutions for this difficult problem.
- Number four, growth of regionalization of utility services. Again, by making our infrastructure utilized throughout the community, we can provide water and wastewater for many of the communities in the surrounding area. This will help to decrease our costs and increase our revenue to the City of Fargo.
- Number five, completion and fit-up of the new City Hall. This is on-time, on-budget and should be done next spring.
Highlights of the Preliminary 2018 Budget, the New Initiatives:
- Number one, competitive wage adjustment of 2% on January 1, 2018.
- Two, investing in police staffing and equipment (5 new FTEs).
- Three, a new fire pumper truck.
- Four, a portion of the general fund capital moved into capital project fund.
- And five, we are going to focus on strategic planning and Governor Burgum’s Main Street Initiative. We are going to continue working on our workforce development and neighborhood revitalization. These are important initiatives for the City to continue to be active in.
In reorganizing the Department of Planning and Development, we are able to have the city strategically work with partners throughout the state and city for new economic growth. In addition to that, we can have some seats at the table to look at workforce development and how it can be helpful in that area. It also allows the department heads to work more closely with communities and neighborhoods to see how they can be helpful in our city.
As a reorganization of the Enterprise Utilities, by not replacing the enterprise director and having the three department heads run the departments. This continues to increase efficiency and allow us to have great services.
Demolition of the old City Hall and redevelopment of the City Plaza is something we are going to have to look forward to in 2018 when the new City Hall is done. We will be able to demolish the old City Hall, which offers a new opportunity for us to look at City Plaza and what we can offer to the citizens.
Potentially, we are going to re-purpose the Civic Center and we’ll figure out what to utilize that area for. Many people have talked about an arts center and we will look into this in the fall. Also, we are going to expand arts and culture opportunities for the city.
When we look at the general fund revenue projections, you will see that is goes up by $3,600,000. What people have to understand, the City has grown by 7.8% this year. Five percent is new growth and development within the city and the 2.8% is part of new evaluations on your property. By allowing this to take part of the 5% of new growth, we are able to expand revenue by 3.9%. This allows us to take the growth the city has had without taxing the homeowner at a higher tax rate. Since we are only taking the growth we get within the city of 3.9% increased revenue is a very small percentage of what we are getting from the growth of the city.
On a yearly basis for a city our size, we will more than likely have increased costs; approximately $3 million a year. If we try to keep our funding at a minimum, it’s best to take the growth that comes within the city and not add taxes to our property owners.
In running a budget process, what we do is that we have people go through the budget and my administrative team works with every department head to see if we can pare down some of the expenses. We are able to achieve a good reduction of expenses and it came down to a budget of $96,367,000. This is only a 0.7% increase in expenses over last year, which is really almost a net zero increase of expenses. With strict discipline with department heads, we were able to achieve significant cost savings for the taxpayers.
2018 Departmental Requests – Personnel: Every year people come to us requesting certain personnel to fill out their departments. There is a variety of different expectations that a department head might have, and in light of the financial capabilities at this time, we have to carefully weigh every personnel that is added to the city. There were requests for 26 employees to the city payroll and we allowed eight employees. We already have 4.5 employees that are on staff, so we are able to utilize utility funds to pay for those 4.5 so the net increase of employees for the City of Fargo is 3.5. I am very proud and pleased with how we worked with the departments on this and we’re able to take down the number of requests that we had to a reasonable number. Every year it’s a balance of adding the right amount of people to the city to provide the right amount of services to the community.
We continue to fund the Police Department with personnel required to give good service throughout the city. We added five more additional personnel to the department and we feel that will help with the strategic planning from Chief Todd.
Proposed fee adjustments for 2018 are the following: In property taxes, we are going to decrease the mill levy by two mills. We will go from 53 mills to 51 mills overall. In utilities, we are going to need some adjustments to keep up with escalating costs. Our water rates will increase by 3% as well as our wastewater rates. This is a modest increase for most homeowners and it will be a $1.50 of combined costs for our taxpayers. The offset of the two mills should make up for this increased rate that will help us manage our water costs at a better rate. When we look across the state, we find that we are still one of the low municipalities in the cost of utilities for a consumer.
The proposed general fund budget will move from $95,706,000 to $96,368,000. That is a 0.7% increase; unbelievably small. Our operating expenses are even more interesting because we will go from $23,929,000 to $22,592,000. This is a minus 5.6%. I think the team has done an excellent job in bringing our expenses down by efficiency, technology and better use of equipment so it is better service for the City of Fargo.
This is the preliminary budget for 2018. The commissioners have the opportunity from August 1st to August 11th to review and comment to our budget team. If you or commissioner thinks there is anything I can change in this preliminary budget, you are free to call, email or write in to tell us the areas in which we can improve upon.
I think this is a lean, solid budget for our city and it does help to bring down property taxes as well. The commissioners will receive, file and possibly approve the preliminary budget. If there are any changes that are requested, I would hope to include them on my next budget publication. As you all know, we are trying to provide good services for the City of Fargo at a reasonable cost. We have a fantastic city that is growing, has great city services and has great people working for us. Please help support me on this budget and I hope you like it as well.
Thank you,
Mayor Tim Mahoney