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Menahga raises levy by 4.7%

The first city property tax levy increase in two years was discussed by residents at a truth-in-taxation hearing Dec. 13.

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Interim City Administrator Betty Thomsen explains the expenditures budgeted for 2022 at the city council's Truth in Taxation hearing Dec. 13, 2021 in Menahga. Robin Fish / Park Rapids Enterprise

Interim City Administrator Betty Thomsen made a pitch for the services Menahga provides for its residents at the city council’s truth-in-taxation hearing Dec. 13.

Looking at a table of the city’s 2022 expenditure budget, Thomsen showed the city plans to spend about $381,000 for police, $252,800 for administration, $147,400 for streets, $106,500 for fire protection, $68,700 for the city park, $40,500 for contractual services, $36,500 for government buildings, $32,000 for general government, $25,000 for cemetery costs and $25,000 for seal coating – a capital outlay that will cost a total of $50,000 including funds previously set aside for the project.

Also on the budget are expenditures of up to $19,800 for the city beach, $17,800 for mayor and council, $15,300 for street lights, $5,000 for elections, $2,500 for the planning commission, $29,000 for miscellaneous costs and $88,460 for unallocated expenses.

Regarding the “miscellaneous” budget item, Thomsen explained this money will be transferred from investments to pay the lease on a fire truck. Also, the fire department budget is a pass-through for fees that the department collects.

Meanwhile, she said, “Contractual services” is for working with engineers, auditors, etc. Also, public works employees’ wages are prorated among the funds they are working for.

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These general fund expenditures total $1,293,522. To cover that, Thomsen explained, the city plans to collect $478,397 from other revenue – grants, fines, fees, etc. and $419,542 in local government aid, a legislative allocation from the state. And so it needs to levy the remaining $395,583 from property taxes.

In addition to this general fund levy, Thomsen listed some bond payments the city needs to make in 2022, totaling $100,089. This raises the city’s total 2022 levy to a projected $495,671, an increase of 4.7% over 2021.

Thomsen said the bulk of the budget, 48.5%, is for salaries and benefits, with insurance making up about 10% and other areas decreasing from there.

Public input

Responding to questions from the public, Thomsen called this a “very bare-bones budget,” using transfers from the liquor store fund and investments to pay for street maintenance.

Residents also brought up rumors that the city has several checking accounts with funds totaling $2-3 million, designated for unknown purposes. Thomsen denied knowledge of these accounts, noting that other than about $1 million invested with Ehlers, all the city’s known funds are in checking, savings and money market accounts earmarked for specific funds.

Challenged to check with the bank, Thomsen said she did so.

Asked who writes checks for the city, Thomsen said the council approves them, the city treasurer writes them and two people, the city administrator and the mayor or a council representative, sign them.

A resident asked why the taxes on her preliminary levy property tax statement increased so much. Olson replied that the final budget and levy are considerably lower than the preliminary amounts, and residents’ spring 2022 tax statements will reflect that.

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A resident asked about a media report that 50 Menahga residents were not paying their water bill, and he suggested shutting off their service.

Public works director Ron Yliniemi corrected the record, saying there are 50 water meters that don’t read correctly. He said those residents are still being billed for their usage up to when the meters stopped reading, and his department is working on the issue.

In a follow-up to the previous question about why the preliminary tax statement was so high, a woman noted that although the final tax statement doesn’t come until spring, the Truth in Taxation hearing is residents’ only opportunity to question the levy. Although she commended the city council for reducing the preliminary levy, she urged city officials not to mislead taxpayers by suggesting that they can bring complaints to city hall when they receive their final tax bill.

“The only thing we can do is come out and re-evaluate your home and your property,” said the woman. “It’s no recourse for us at all. This is our recourse. I just wanted to remind people of that.”

Thomsen urged residents to note that their county and school taxes are in addition to the city levy, and the city has no control over them.

She added that the levy’s 4.7% increase is lower than the national average of about 5%, and there was no increase last year.

“When you think about it, every year wages go up, the cost of food, everything goes up,” Thomsen said. “For the city to keep it at a zero maybe felt good, but in hindsight, maybe wasn’t the best idea.”

After a few more questions about the county and school levies, the public hearing closed. Later in the evening, the council adopted the city’s 2022 budget and levy with a vote of 4-1 with council member Art Huebner opposed.

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Huebner disrupts hearing with digressions

Throughout the Menahga City Council’s Dec. 13 truth-in-taxation hearing, Huebner pulled discussion away from the 2022 budget and levy, questioning reductions in the 2021 budget that Olson said were necessary for the city to break even.

Huebner raised questions about the confusing history of the city’s accounts and challenged the financial decisions made by Olson, Thomsen and the council. Despite several attempts by Olson to redirect discussion back to the topic of the hearing, Olson and Thomsen spent most of the time responding to Huebner’s claims.

Huebner questioned why the city is investing money instead of using it to provide city services. Olson said those funds are earmarked, for example, for the water tower project.

When Huebner pressed Thomsen about money previously set aside for seal coating, Thomsen said, “I can’t answer that. I wasn’t here.”

Huebner then challenged Thomsen about $168,000 he said was cut from the 2021 budget, to which Thomsen said, “I can’t answer questions to what happened to your budget for 2021. I’m sorry, I wasn’t here.”

Olson and Huebner argued for several minutes about 2021 budget funds that Huebner claimed were set aside for certain projects, which Olson said the city does not have funds to cover. At one point, Olson ruled Huebner out of order and asked for discussion during the hearing to be limited to the 2022 budget and levy.

When Thomsen read from city financial reports, Huebner asked if they were Banyon reports and when told they were, asked how they can be trusted.

“Trust has to start someplace in this city,” Thomsen replied. “I can’t be held accountable, and I won’t be held accountable, for things that happened before I got here. This is the information I was given. I’m working from the information I was given.”

Huebner said he was only asking why information from 2020 is so different from what was being presented now. Olson suggested that he seek answers from department personnel who would know how much money they were allocated.

“We went through that whole budget process and it was approved by everybody here at the table,” Olson said, attempting to steer the meeting back to the topic of the 2022 levy.

“No, it wasn’t,” Huebner said over her.

Huebner continued to speak while Olson and Thomsen were taking questions from residents, until Olson admonished him that someone else was speaking.

Later, Huebner suggested that instead of cutting budgets, the city could take money out of Local Government Aid (LGA) and American Rescue Plan (ARP) funds. However, Thomsen reminded him that LGA is already accounted for in the budget, and ARP funds can only be used for certain things.

Another argument broke out after Thomsen mentioned Huebner’s past suggestion to spend ARP money on the water tower.

Olson reminded Huebner the council decided to take money out of investments to pay down the water tower, “so we aren’t levying on and have to go out for a bond.” She stressed that there are funds that can only be used for certain purposes.

“I do believe that we can touch them funds,” said Huebner. “We just haven’t decided what we’re gonna do with them yet. It’s up to this council to handle those funds. We should be managing the city with our employees instead of investing.”

Olson said the only way the council can transfer money from a restricted account to the general fund is a transfer from liquor store profits.

Thomsen clarified that money the council earmarked for specific projects can, in fact, be used for anything.

Robin Fish is a staff reporter at the Park Rapids Enterprise. Contact him at rfish@parkrapidsenterprise.com or 218-252-3053.
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