By Fallan Patterson
Staff Writer

The St. Cloud City Council Sept. 9 barely passed a millage rate increase to help fund the proposed budget for the 2010-11 fiscal year, which will be 40 percent less than the previous year’s budget.

The millage rate will increase from 4.0450 to 4.9128 this fiscal year, which would generate more than $6.5 million for the $90 million budget.

Council members Jay Polachek and Jarom Fertic voted against the millage increase, saying that other solutions – such as using the city’s contingency fund – could make up the budget shortfall.

“I don’t think the residents of St. Cloud can stomach a tax increase and in my mind, this is a tax increase,” Polachek said. “More than 70 percent of households have had to dip into their savings this year to stay on budget and I don’t see why we can’t as well.”

Polachek’s main argument against the millage increase was lower property values due to the economy and foreclosure crisis.

“People (will be) paying more on property that is worth less,” he said.

Mayor Donna Hart said the ad valorem taxes collected with the higher millage rate would only account for about 20 percent of the city’s $90 million budget and that the amount levied would be the same as last year, so it is not exactly a tax increase.

“We’re very lucky,” she said. “We’ve got to keep the city solvent for our citizens.”

Fertic proposed not only using the city’s contingency fund to make up the difference in the budget, but establish a smaller budget because there has been extra money in the fund in previous years.

Council member Mickey Hopper and the mayor were against both ideas, saying the extra money could not be counted on and the contingency fund is needed in case of an emergency.

“I don’t believe in using the contingency. It’s like your parachute,” Hopper said. “You just never know and we need to protect the citizens by holding on to that.”

The city maintains an 11.5 percent contingency fund reserve.

The $90 million budget is down 40.4 percent from last year’s budget of $151 million due to the Nolte Road and Budinger Avenue construction project, which was funded by carry-over capital project funding from the 2008-09 fiscal year.

“During this time of economic stress for many residents, we have strived to develop a proposed budget that did not require additional tax revenues,” Tom Hurt, St. Cloud city manager, said. “Moreover, we developed a budget that minimizes any possible service reduction or interruptions to our citizens.”

The single largest expenditure in the budget is personnel costs, at 74 percent. In an effort to keep costs low, 22 positions will remain vacant and will not be filled in the upcoming fiscal year, which begins Oct. 1, saving more than $750,000 in salaries and benefits.

While experts have said the economy is turning around, Hurt remained cautious.

“Positive growth is anticipated for 2010-11 based upon recent data on consumer spending, business investment and the outlay of federal stimulus funding,” Hurt said. “On the other hand, the realities of our current situation are grave. The city’s revenues have experienced significant declines in the past two years and are not expected to reach pre-recession levels for quite awhile.”

The City Council will cast the final vote on the millage increase and budget Sept. 23 at 6:30 p.m. at City Hall, 1300 9th St.