MANKATO — The local tax base is still growing — but not as much as Mankato city officials were counting on.
The result is a plan to trim planned spending for 2020 with cuts to a new small-business loan fund, a smaller contingency fund, and minor reductions in parks and streets.
The city has for nearly a decade maintained a stable tax rate but has seen tax collections grow nonetheless because of a steadily expanding tax base. For 2020, the expectation was an additional $800,000 in property taxes would be generated by tax-base growth.
“When it doesn’t grow as much as we thought, here we are cutting $124,000 from the budget,” Deputy City Manager Alison Zelms said.
Mankato’s net tax capacity for 2020 is now projected to be $46.17 million, still substantially more than previous years. The figure was $41.1 million in 2017, $32.7 million in 2013. But the new estimate is less than the $46.45 million expected when the 2020 proposed budget was crafted this summer and fall — requiring spending cuts if the city is going to maintain the current property tax rate.
The biggest hit — $54,000 — will be to the city’s contingency fund, which is typically about $150,000. The fund provides some leeway to deal with an excessively harsh winter, unexpected price jumps in supplies needed by the city or extra salary costs if there’s a major crime or other event that requires overtime pay, said City Manager Pat Hentges.
“That just gives us a little bit of room for snowplowing, a little bit of overtime if we have some kind of public safety event,” Hentges said.
Another $50,000 will be trimmed from the Economic Development Authority budget. Two options exist — renegotiating the city’s payment to Greater Mankato Growth for various services aimed at promoting economic development or reconsidering a proposed new revolving loan fund targeted at small-business owners.
The loan fund was to be created next year to provide low-interest financing for physical improvements to qualifying commercial properties. The low-interest loan fund, which included grants for certain types of exterior upgrades, will probably survive in a more limited form, Zelms said. Options include making it a one-time pilot project or reducing the dollar amount available to applicants.
Other cuts will be $10,000 to the commodities portion of the parks budget, meaning staff will have less grass seed, shrubbery and chemicals available next year. The streets’ budget will see the same cut in gravel, asphalt and bituminous oil for street sealing.
While the proposed budget adjustments won’t have a noticeable impact on most residents in 2020, more drastic changes would be required if tax base growth stalls for multiple years, according to Hentges and Zelms.
Options for longer-term budget adjustments include reducing the amount the city pays for employee medical plans, staff reductions and boosting the charitable gambling taxes collected by the city.