DULUTH - Duluth's proposed FY2009 budget, which is based on the same millage rate as last year, totals $38,570,741, nearly $7 million less than the current budget.
City Administrator Phil McLemore presented a summary of the proposed budget during a public hearing conducted by the Duluth Council on Monday. The proposed budget includes operating expenses of $16,868,730, debt service of $4,190,620 and capital expenditures of $17,511,391.
While many local governments around the county and nation are facing financial challenges, McLemore said, commercial real estate development and business activities continue to expand in Duluth despite the national slowdown.
However, since 2002, the city has added more than $50 million in infrastructure while revenue growth has been relatively modest, averaging 5 percent per year, he said. "This has occurred at a time when our population and thus demands for service have increased more than 3 percent annually."
To improve the city's revenue prospects, he said, the proposed budget includes restructuring of the fees for new construction and subdivision plan reviews, occupational taxes and alcohol beverage taxes. "Collectively, these fee adjustments and other revenue initiates will increase our revenues by approximately $500,000," McLemore said.
The city's operating expenses account for 44 percent of the proposed budget, according to McLemore. Broken down, he said, the city's operating expenses include 41 percent for administrative and general government functions, 10 percent for municipal court, 32 percent for public safety, 5 percent for public works, 6 percent for planning and 6 percent for parks. Forty-five percent of the budget is spent on capital items and 11 percent on debt service.
The budget would be funded by $34,821,277 in revenues, grants and special purpose local option sales tax monies, $2,666,589 in FY2008 prior year reserves and $1,082,875 in prior year carry forward reserves.
The city's revenue would be derived 50 percent from taxes, 25 percent from police fines, and 25 percent from inspection fees, interest income, parks, rental income, intergovernmental and miscellaneous sources, McLemore said.
The tentative FY2009 budget is less than the amended FY2008 budget of $45 million that included the new City Hall.
Public hearings on the proposed 5.191 millage rate, which has remained the same since 2001, are planned for 8:30 a.m. June 26 and 27 and 7 p.m. June 30. The new budget and millage rate are scheduled to be adopted June 30.
"Duluth is maturing as a city and is seeing the rapid growth of the '90s slowing and in its place a stronger focus on maintaining what has been built along with a desire to seek more involvement from its citizens in shaping the future," McLemore said. "The future for Duluth, reflected in decisions made in this budget, is one that continues to strengthen the sense of community and the values it holds dear. The commitment to a bright future is reflected in the proposed budget."