Create an Account - Increase your productivity, customize your experience, and engage in information you care about.
Show All Answers
The total 2019 preliminary budget is $179,931,375, compared to $142,782,074 in 2018, an increase of $37,149,301 or 26.02%. The majority of this increase is almost entirely due to budgeting previously collected NAWS dollars from sales taxes. The increase to property taxes is from $22.6 million to $26.6 million to cover the City’s financial obligations to finance the local share of NAWS.
The 2019 Preliminary Budget will affect individual property owners differently. Property valuations have reduced for 2019. In 2018, the average home value was $182,000; the projected average for 2019 is $178,000. The median homeowner within the City of Minot with a home valued at $178,000 would see a property tax increase of approximately $161.91 per year or $13.49 per month to their City portion of their property tax bill.
Overall, the total impact to the property owners consolidated tax bill, which comes out in December, will be an increase of about 6%. One third of that bill will go to the City of Minot.
The 2019 Preliminary Budget continues adjustments that must be made to meet current challenges and future needs. The City has committed to several ambitious projects, including construction of two of the largest infrastructure projects in the City’s history: NAWS and flood control. Those two projects combined account for $400 million in new infrastructure over the coming years. Taking modest financial steps now to close revenue gaps will significantly lessen the financial and service level impacts to our citizens in the future. NAWS requires $4M annually in new funding to complete.
2019 is a second year of a major correction in funding for the City. In the past decade, the City lowered its tax rate by nearly 40% due to the record level of sales tax collections. Now that sales taxes have regressed the projects paid for using those funds (which were originally property tax activities) must be shifted back to property taxes. Furthermore, the 2019 budget must accommodate for the reinstatement of the Northwest Area Water Supply project and the added costs of flood protection. NAWS will now take 40% of the second penny of sales tax, money which had previously been used to subsidize property tax activities.
Here is how the increase can be broken down in the 2019 Budget:
A federal court ruling in August 2017 meant this important project could move forward after being delayed in court for many years. As part of the court decision, a water treatment facility, currently in the design phase, must be built near Max to accommodate the biota transfer concerns of Manitoba. That, in addition to rising costs to complete the project, means an additional $50 million in local cost share is now required over the next several years to fund the project. To accomplish this, the City must reallocate its use of the City’s second penny of sales tax, a portion of which had been used to help reduce property taxes. That change resulted in an increase to the mill levy of $4 million or 19.43 mills (roughly 85% of the proposed mill levy increase for 2019).
The Northwest Area Water Supply Project is a regional water source initiative to address long-standing water supply and quality problems experienced by residents of northern North Dakota. The $205-$277 million project has a cost share of 65% State (State Water Commission) and 35% Local (Minot). The NAWS project will be of sufficient size to deliver a maximum daily flow of 27 million gallons per day to nearly 80,000 residents. The water pipeline from Lake Sakakawea to Minot will be 45 miles of 30-inch and 36-inch diameter pipe. This pipeline includes a three-million-gallon water storage reservoir and a booster pump station with pretreatment facilities.
Since 2008, the City of Minot has been providing water from the City’s groundwater wells to the communities of Berthold, Burlington, Kenmare, Glenburn, Sherwood, Mohall, among others and to many future rural water systems. This was to ensure water quality for those regions. This was never intended as a permanent solution because groundwater in the Minot and Sundre aquifers is being withdrawn at levels that exceed sustainable rates. NAWS is designed to take pressure off of the major water sources by supplementing it with water from Lake Sakakawea. The project will also give the City a better treatment facility and a large water capacity to ensure resilience and supply for future growth.
The City had a substantial amount collected before voters decided to suspend collection of NAWS in 2011, but more is still needed. The City has about $30 million for the remainder of the project. However, the City will need an additional $50 million dollars to fully complete the project over the next five to eight years.
The City relies on a two percent sales tax to generate revenue to help pay for two large and important regional projects: NAWS and Flood Control. The City has committed half a percent of sales tax to flood control. Up until 2011, the City collected over $30 million for NAWS using a full percent of sales tax. Voters decided to suspend collecting for NAWS and use the 1% for Community Facilities (now Flood Control), Tax Relief, and Infrastructure because the project was delayed for litigation. Due to the shift of the NAWS collection the City must work to reduce the amount of sales tax allocations for Flood Control, Tax Relief, and Infrastructure to finish paying for the NAWS project, that reduction equals $4 million dollars.
Few people know the tax rate for the City of Minot dropped by 30% from 2011 to 2017 resulting in a property tax savings of over $56 million for property owners. Meanwhile, the historic growth of the City caused the value of a property owner’s investment to double. The average price of a home in Minot went from $96,800 in 2006 to $190,000 in 2016 (an increase of over 96%). Due to an increase in the value of the property owner’s investment, the reductions in property tax rate was slightly offset with the rise in property values. Because the rate of the rise in value was greater than the reduction in the tax rate, several property owners still saw a very modest increase in dollars paid as taxes. The impact of the city’s reduction in tax rate was only on one third of tax bills.
The City was able to accomplish this reduction in property tax rates by using historic sales tax collections to subsidize property taxes. Currently, the City has more than 50% of direct and indirect property tax relief subsidized by sales taxes. As sales tax collections dropped off, the ability to apply tax relief was reduced, causing a reduction in the dollar amount of tax relief.
The property tax levy proposed for 2019 is 129.26 mills, compared to 106.46 in 2018, for an increase of 22.80 mills. (About $4 million)
The 2019 preliminary budget is based on the value of the 2018 mill, as there is a one-year lag in the mill value. The value of one mill in 2019 is estimated at $205,920 compared to $212,053 in 2018, which means more mills must be allocated to raise the same amount of money.
A mill is the rate in which property taxes are calculated. A mill’s value is .1% of the total City property valuations. This number will change based on the value of commercial and residential property in the City of Minot.
Property taxes account for only 14.79% of the overall City budget. In the 2019 Proposed City Budget for 2019, the average household property tax allocation to the City would be $1,035.37. Here’s how that will be distributed:
It has increased by $290,218 from 2018. When capital expenditures and grant receipts are removed from the budget, the operating budget has decreased by $4.6 million from FY18 to FY19. The City has implemented five-year budget modeling to provide long-term projections for revenues. For 2019, all Department Heads were instructed to develop minimalistic budgets while preserving the service levels the citizens of Minot have come to expect.
The City has incorporated numerous budget efficiencies and cost avoidance strategies that saved $78 million over the past four years alone. Those savings came from the City deferring capital improvement projects, extending the life of vehicles and equipment, reducing the workforce, negotiating better contract terms, and auctioning unnecessary equipment.
After eliminating 20 positions in 2018, the 2019 budget includes a request for 3 FT positions and changing one position from part time to full time. City staffing levels continue to be thin. The national average for local government FTEs per capita is 145.3 per 10,000 of population, while the North Dakota average is 142 FTEs per 10,000 of population. The City of Minot is running a per capita ratio of 84.8 per 10,000 of population.
There are no changes to the sanitation, cemetery, water, or transit bus rates. Monthly flat rates for sewer rose from $6.52 to $7.04, while sewer usage rates rose from $2.77 to $2.99 per 100 cubic feet. The average residential customer would see an increase of $3.16 per month in their sewer bill.
City Manager Tom Barry presented the 2019 Preliminary Budget to the City Council on August 6th. The members of the Committee of the Whole, which is also the entire City Council, will hold a Budget Questions and Answers session on August 28th at 4:15 p.m. in Room 201 of the Auditorium. City Council President Mark Jantzer will present his budget message on September 4th. The City Council will hold a special public hearing at 6:30 p.m. in Council chambers on September 18th for the budget’s first reading. Another special Council meeting will be held September 25th at 6:30 p.m. in Council chambers to approve the 2019 Budget on second reading. All meetings are open to the public.