City hears audit, views effect of LGA cuts

The Staples City Council last week heard a positive report on the city's finances, approved a taxicab license renewal and discussed the repercussions from the state' budget cutbacks, or unallotments, for the city's taxpayers.

Chuck Mayer, with the Mayer, Porter, Beinhorn & Rowe CPA firm, presented the firm's annual audit of the city's finances for 2008, declaring they were able to give the city an unqualifi ed opinion regarding its financial picture.

Mayer, addressing the council, called attention to the unreserved fund balance in the city's general fund as of Dec. 31, 2008 was $500,977, or 40 percent of the total general fund expenditures for the year, totaling $1,256,830. Mayer said the state auditor recommends cities should maintain between 35 to 50 percent of their general fund in reserve. He termed the city's reserve amount the 'perfect spot' although he noted the figure this year had been reduced by about $112,000, from $613,175.

The general fund balance will likely take another reduction this year as the city has received another cut in state Local Government Aid (LGA). The state's argument is that cities with fund balances can use those funds to pay for services where they had been using annual LGA money.

LGA cuts have been a favorite target the past several years when the state has faced budget deficits. City Administrator Nate Mathews, in an interview after the meeting, said over the next two years the city will be losing 18 percent of the expected LGA funding, including $58,200 cut from their 2009 budget and $134,326 getting chopped from the 2010 expected state payments.

Since 1967, Mathews said, LGA has been a system of the state redistributing sales and income tax funds to local governments. Now the state is saying cities and counties must either cut costs or levy property taxes to make up those funds.

"It's not fiscally responsible to levy up to 18 percent increase in property taxes," Mathews said. He noted the city has no lifeguards at Dower Lake beach this summer, has discontinued paying a $2,400 dispatching fee to Todd County and is taking other steps to cut costs this year.

One of those is attempting to institute an employee wage freeze. The city is still bargaining with its three union groups, with the city's position that wages should remain at the 2008 level for 2009.

The governor's action in unalloting funding is drawing various reactions. Council Member Rob

Schmieg requested the city

prepare a formal resolution "voicing our displeasure"

with the action. In addition, it's likely the unallotment process will be challenged by legal action.

The 2008 audit was accepted on a 6-0 vote from the city council.

In other matters, the city council:

o RENEWED a taxicab license for Friends of Staples, Inc., for them to operate a taxi service. It had been just issued in April, but all such licenses are set to expire on June 30 each year.

o DISCUSSED and acted on the street width and other matters related to the Highway 10 turnback project for Second Avenue and Fourth Street (two blocks), a project slated for construction in 2010. (See the June 25 Staples World article for full details.)

o HEARD City Administrator Mathews report on his activities, which included working on a future Food Shelf location; fire protection contracts with surrounding townships; progress toward instituting a 'Quiet Zone' for the Burlington Northern Santa Fe railway crossings in Staples, meaning the whistles would not be blowing as trains cross; labor union negotiations June 11 with the IBEW and July 9 with the Teamsters; and a Friends of the Library session June 10 to discuss furniture choices in the new library.