2024.08.29 CC Minutes-Midyear Budget Review

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Minutes for Midyear Budget Review on September 30, 2023 Page 2 of 3 $9,140.036. Totaling all levies, the proposed 2025 levy totaled $11,997,855. Anna talked about fiscal disparities saying Hugo receives more back than it contributes, and the City’s proposed distribution will increase 14.45% equaling $1,015,758 Anna talked about the tax impact of the proposed levy. The median valued homestead of $389,400 after the market value exclusion would see a tax of $1,380 at the proposed 36.522% rate. This would decrease the tax from 2024 by $116. Hugo’s tax rate had always fallen near the middle in comparison to other cities in Washington County, but it was noted that some other cities charged for other services. Hugo does not collect any additional fees. Residents would see a decreased tax bill from Hugo, but other districts collected taxes, so overall taxes may increase. City Engineer Mark Erichson provided information on the 2025 Street CIP. The CIP is evaluated each year by working with the Public Works Department to determine what the condition of the roadways are. The City was waiting for MnDOT to finish their rating on the bridges to see if they qualified for funding. If needed, street projects would be rescheduled to accommodate an upcoming bridge project if necessary. Mark shared costs associated with each project saying some will be state aid eligible for reimbursement. He shared discussions had with Lino Lakes regarding Elmcrest Avenue due to the expected increase in traffic when Otter Lake Road in Lino Lakes is constructed, saying there may be cost sharing with Lino. There were also concerns regarding 165th Street, partly due to the size of the project and lack of development to help pay for it. Council discussed the CIP and were concerned about unfunded road projects, two bridge repair projects, and trail maintenance. No money was budgeted for Elmcrest Avenue or 165th Street, and those roads were anticipated to be highly traveled with the construction of Otter Lake Road. There were questions about the safety of the bridges, specifically Fable Hills Bridge. Erichson responded that the structural integrity was there, it was getting very costly to maintain the decking. Aging trail networks had not been identified for improvements, costs, or funding. There was discussion about reverting back to following the flat tax pate policy and the 39.403% tax rate. It was noted the budget as presented could fund the projects identified on the current CIP until 2029, but they were rough estimates and did not include other anticipated projects. Anna stated that by following policy, $800,000 could be added to the Street Fund. Council members expressed desire to keep the proposed tax rate but were concerned the City would be getting further behind. The normal rate would allow the City to address upcoming unfunded needs and prevent a huge rate increase if they waited. Council members commented on the need for safe, decent roads. The proposed budget would keep the City functioning as usual, but the sacrifice would go to the street fund. There was discussion on amending the assessment policy, which had been in place since 2013. Road projects had increased significantly, and this was part of the equation to add stability to the fund in the future. It was noted that the fund currently had a healthy balance, but at the end of five years, it will have dropped way down. It was generally agreed a workshop was necessary to discuss strategies to budget for it.