With Molly Bonnett off the City Council, a new council majority in Forest Lake wasted no time in looking for a change in the city’s financial direction. In a Nov. 10 motion backed by Councilman Michael Freer and new Councilman Richard Weber, Councilman Ben Winnick asked city staff to come back to the council with recommendations on how to cut $1 million from Forest Lake’s 2015 budget.
City Administrator Aaron Parrish said he will do his best, but he warned the council that such a cut would likely cost some of the city’s 55 employees their jobs.
The cuts were first proposed during a budget discussion placed on the council’s agenda do to a change in council makeup. With just over a month to go before the city’s final 2015 budget was set to be approved, said City Administrator Aaron Parrish, staff wanted to make sure the council was still comfortable with the preliminary budget of about $9.38 million approved in September. Winnick, who along with Freer voted against the YMCA project that brought the budget to that size, was the first to speak.
“I want to see a million dollars reduced from our budget,” he said.
After the ensuing discussion, the council voted 3-2 to ask city staff on recommendations for cutting the budget by that amount, leading Mayor Chris Johnson to jokingly point out the first 3-2 vote of the council’s new era – with the more conservative faction of city leaders in the majority instead of the minority.
The move was made possible by an unusual local election cycle. In 2012, Forest Lake elected Winnick and Jeff Klein to the City Council. However, Klein resigned around a year later. The council attempted to appoint a new member to serve Klein’s term until city voters could elect a new person during the 2014 election, but the votes on who to approve were split. Ultimately, Johnson exercised his mayoral ability under state statute to appoint Molly Bonnett to the position, an at-times controversial move that received its most scrutiny during the discussion this summer and fall over whether the city should expend funds to bring a YMCA to town.
Bonnett was a strong advocate for bringing the nonprofit to Forest Lake, and she joined Johnson and Councilwoman Susan Young for a series of 3-2 votes that committed city land and $9 million in city funding to the project. During the process, Bonnett and Johnson acknowledged that they wanted to get the project approved before the fall elections, and the development agreement appears ironclad: By the time voters went to the polls, the city had already conveyed the land and the money to the YMCA. The only way the city could back out of the deal now is with the YMCA’s full cooperation.
Johnson and Bonnett did not run to keep their seats, and Young lost her re-election bid. While Johnson and Young will be replaced by Stev Stegner and Ed Eigner in January, Bonnett, who was serving an appointed term only until it could be filled by voters, was replaced immediately after the election by Richard Weber, who was sworn in at the start of the Nov. 10 meeting.
Johnson told the Times that Weber’s arrival on the council signaled the start of a “quantum shift” in city leadership that will take its full effect when he and Young are replaced in 2015. To Winnick, it’s a chance to right a ship he said has been listing toward financial irresponsibility for the last few years.
“Since day 1, I’ve been trying to keep spending under control, and that’s (fallen) on deaf ears of the council,” he said, adding that since the combined costs of the new city center and the YMCA funding will cost city residents more than $1 million in debt service in 2015 alone (not counting the value of the land given to the YMCA), a $1 million cut seemed like “a fair compromise.”
Winnick is correct that the city’s 2014 budget and levy and its preliminary 2015 budget and levy are considerable increases over previous years. The 2014 levy of $8.04 million is a 12.2 percent increase from 2013’s $7.16 million, and the original 2015 proposal of $8.93 was 11.2 percent above this year’s levy. If the preliminary levy for 2015 is approved as is, it would signal a 24.8 percent increase in the levy in two years, growth that Winnick believes is unsustainable and irresponsible.
“(The budget cut) is a tough thing to do because we’re dealing with human beings and their income, but I think that’s going to be part of it,” he said.
Freer agreed that finding cost savings was a responsible move, though he said he wasn’t holding hard and fast to a specific dollar amount.
“One of the issues I’ve had with the budgeting process is that as a council member, I’m expected to come up with the budget cut, if you will, versus the people who are the experts: the department heads, the city administrator,” he said. “That’s not my expertise. I don’t work in the city every day.”
Freer said he’s waiting for what Parrish brings back to decide what a reasonable budget cut will be.
“We’ll go from there, whether it’s a million dollars, whether it’s $200,000 or it’s $2.2 million,” he said.
The outline of what Parrish would be recommending to the council was not available at press time; Parrish indicated that residents would likely get their first glimpse later this week when the Nov. 24 council agenda packet is posted online. The administrator has been in talks with all of the city’s department heads, including police, fire and public works, which together make up the lion’s share of the budget.
“When you’re asking for a million dollar reduction, there will certainly be positions (affected),” he said.
A cut in the budget will result in a reduction in the city’s property tax levy. Unless the YMCA is willing to work with the city on its recent fund commitments – a possibility Winnick said he was interested in pursuing, even though it’s not a likely option – the city can’t reduce its debt service payments. That leaves what Parrish called the city’s “unencumbered” tax levy, at around $7.3 million. A cut of $1 million is a 14 percent drop. Of that money, said Parrish and Finance Director Ellen Paulseth, police services account for roughly 55 percent of the levy, with public works and fire combining for another 33 percent. The rest of the levy is taken up by smaller departments like building and parks.
“If you cut all parks, finance, building and administration (expenditures), that’s still only (12) percent,” Parrish said.
Put another way, out of the $7.3 million in the 2015 levy not being used for debt service, said Finance Director Ellen Paulseth, about 82 percent is dedicated to payroll. Parrish noted that city staff has already realized significant cost savings this year through its restructuring of some staff positions and its move to a pay-as-you-go system for most capital purchases – a transition that added some additional funds to the 2015 budget but is expected to save costs in the long run as the city avoids interest payments.
“As you look at the 2015 proposed budget, the lion’s share of the levy increase is due to the additional $625,000 in debt service for the YMCA,” Parrish said. “The operational growth in our budget was pretty limited.”
“I think (a cut) will significantly change the city in the way it operates and the services people get,” said Johnson, who wondered if the city might see increased complaints about the speed of services like street snow plowing if a department like public works has cuts.
He added that such sudden proposals can hurt the morale of employees and their families as they wait to see if they’ll survive the employment chopping block. If such cuts were to take place, he said, it would be better for them to be discussed earlier in the budget process.
“I think it’s a very poor way to run an organization,” he said, adding that using the YMCA approval as an excuse to “hold the gun to the head” of city employees is bad management. He remarked that he didn’t hear much talk of sudden major budget cuts when Freer and Weber were on the campaign trail this fall.
Weber, on the other hand, said that a close examination of the budget was imperative to those who voted for him.
“We ran on fiscal responsibility, and (those were) our marching orders,” he said.
Like Freer, Weber said he wasn’t tied to a specific number. He said none of the council members wanted to make cuts that would hurt residents.
“We’re not going to jeopardize public safety; we’re not going to jeopardize city services,” he said.
However, Councilwoman Susan Young said that a budget cut that affects staff will affect city services, particularly in the more rural areas of the city. She noted the incoming council members’ remarks about uniting the former township residents with the rest of the city and speculated that a reduced police force or public works staff would have less availability to patrol or service less traveled areas.
“I understand that when you have something in your favor, you’re going to try and make some changes,” she said of the new council majority. “My concern is that a million dollar cut without some kind of policy direction is difficult for staff and confusing to (residents).”
She believes that the $1 million number is “arbitrary” and said that the lack of specificity in the meeting on what should be cut suggests a move to lower the budget without a long-term strategy.
“If it was just an exercise to drive home that the majority has changed, I think that’s disappointing,” she said.
Winnick noted that his request is affecting so much of the rest of the budget because the previous council made it nearly impossible to reverse the YMCA decision. He added that he doesn’t want to hurt employees, but he said his constituents and the city’s long-term needs are his main concern.
“We can’t just continue to raise taxes because somebody needs a job,” he said.
When contacted before press time, Director of Public Safety Richard Peterson said talks were still ongoing and he did not yet know how the proposed cuts might affect the police department.