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Paynesville Press - November 27, 2002

Township looking at levy increase

By Peter Jacobson

Paynesville Township may look at raising its tax levy in 2003 for the first time in several years.

Last week, the township board looked at a proposal to raise the township levy from $331,000 in 2002 to $390,000 for 2003, a proposed increase of $59,000 or 17.8 percent.

Board chairman Don Pietsch told the board of supervisors on Monday, Nov. 18, that the township had used much of their surplus when they paid all the outstanding loans on the Koronis Civic Arena last summer. The board also borrowed approximately $121,000 from the road and bridge fund to pay off the balance of the arena's debt.

Tax levy chart of Paynesville Township The arena debt was in the form of two loans, one from Xcel Energy and the other from Farmers and Merchants State Bank, Paynesville. The board discovered that payments being used to pay off the debt were just barely paying the interest, with very little reduction in principal.

The arena payoff became possible when the township backed out of the joint airport commitment with the city of Paynesvillle. The financial commitment to the airport had been $200,000, which was used to pay off most of the $248,000 bank loan in August.

In September, the township board voted to pay off the remaining $75,000 on the Xcel Energy loan.

For last week's meeting, Pietsch and township clerk Don Wiese had prepared a breakdown of the township funds and the potential need for increases in revenues in each of them. Pietsch noted that the township had not increased any levies for several years. As costs have increased over the years, the township has been spending down its fund balance, he added.

The largest proposed increase ($39,000) comes in the revenue fund. The proposal includes creating two sub-funds in the revenue fund: one for recreation and one for the arena. For recreation, the township would budget yearly contributions of $5,000 for hockey arena operation, summer recreation through Community Education, for the operation of Veterans Park, and for trails and a possible community swimming pool. Budgeting $5,000 in these four areas yields a total of $20,000.

These expenditures were previously treated as donations. The recreation fund would more accurately reflect the nature of these expenditures, said Pietsch?. The township is also limited to spending less than 10 percent of its revenue fund on donations, which has been a challenge with the township accepting more financial commitments.

Another proposed increase in the revenue fund is $15,000 in an arena fund. This fund would deal with the actual building, owned solely by the township, and not hockey and arena operation. In this new fund, $10,000 would go for debt reduction and $5,000 in escrow for major repairs. The $10,000 would be used to pay back the $121,000 borrowed from the township's road and bridge fund over the next 15 years. This proposal includes paying 2.4 percent interest. The money for repairs is needed because the township is committed, through a Mighty Ducks grant, to operate the ice arena for 40 years.

The other increase in the revenue fund is for police protection, for which the township contracts with the city of Paynesville. The costs for police protection have averaged an increase of $993 per year for the last three years. The suggested levy increase for this is $4,000, bringing the proposed increase in the revenue fund to $39,000.

Other proposed levy increases include $10,000 for snow removal, $5,000 for fire protection, and $5,000 for roads and bridges.

In the snow fund, the township's average, for the past two years, for annual expenditures has been $35,509, while its levy has been $15,000 annually. An increase to $25,000 would come closer to covering these costs.

The suggested $5,000 increase in the fire fund, to $25,000, would come closer to covering fire protection expenditures, which have averaged $28,332 over the past six years.

The projected spending from the road and bridge fund to fix shoulders, reclaim and overlay the asphault surface, and include a separate recreational trail along Crestridge Road, NW Lake Koronis Road, and Breezewood Road during the 2003 construction season is estimated to cost $465,000. The proposed levy increase for road and bridge is $5,000 to $175,000 for 2003.

Though the total proposed levy increase of $59,000 is 17.8 percent, this doesn't mean that the township portion of taxes will go up 17.8 percent, cautioned Wiese. The total township valuation has been increasing each year due to new construction, noted Wiese, while the levy has remained the same for several years.

Wiese will have figures on the projected impact of this proposed levy increase for the board to discuss at their next meeting. The board plans to continue its discussion on a levy increase - and possibly could make a recommendation - at their next meeting on Monday, Dec. 16, at 7 p.m.

The township's 2003 levy needs to be approved at the annual meeting in March.

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