FAIRMONT– The Fairmont City Council held a special workshop on Wednesday evening to discuss the preliminary 2024 budget. One of the main areas of conversation was street improvements.

Finance Director Paul Hoye explained that per statute, the preliminary budget needs to be certified by Sept. 30. The council will discuss the budget again during its regular meeting on Sept. 11 and depending on how conversation goes, it can also hold another work session on Sept. 25 to discuss it further if need be.

He went over some documents that department heads prepared for the council to review, including Capital Improvement Projects. However, Hoye said that he and the other department heads, who were present, wanted to hear feedback from the council on the budget thus far.

On the revenue side, Hoye said there is some good news as they saw a significant increase in Local Government Aid (LGA), about $450,000, from the state of Minnesota. He said they’re also seeing an increase in their interest earnings and he anticipates they’ll see it continue to improve.

As it stands, the city is looking at a $400,000, or 6.2 percent levy increase.

Hoye said that some of the things driving the levy increase for 2024 is expenses from wages and benefits.

“In 2024, there is a 3.25 percent (Cost of Living Adjustment) COLA increase and then with the new pay plan that was developed, the majority of employees… will also experience a step increase of 2.65 percent,” Hoye said.

That totals $590,000 in 2024. Along with that, there are some inflationary costs, including increases in utilities in the form of fuel which equals $23,000. Hoye said they’re also seeing larger legal bills, which is up $30,000 in 2024.

“We also have money in there for Emerald Ash Borer, which is something new we haven’t had to deal with in the past. We have $7,000 in the budget for that,” Hoye said.

He also spoke about the Community Development Coordinator position, which was budgeted for in both 2023 and 2024. However, as the HRA has decided to hire its own employee, and not share with the city, the city will be taking on the full cost, which is $45,000.

Along with increasing the levy, Hoye said they also increased the debt service levy by $55,000 in order to increase the amount in the street improvement program.

“We had historically been doing about $1.5 million in street improvements every year and issuing bonds every other year. We are working toward funding $2 million of streets every year, so an additional $500,000 every year, and we’re looking at bonding every three years,” Hoye said.

He said the less amount they issue in bonds, the more that they’re able to save in bond issuance costs.

Public Works Director Matthew York then talked about the street improvement program. He said they have decided to increase the program for a one-time only addition of $7.5 million, which brings it from a $6 million over three year bonding to $7.5 million for projects in 2024, 2025 and 2026.

“As we developed this road project, it’s a little bit science, a little bit of art and a lot of good fortune,” York said.

He pointed out that a lot of roads are in need of repairs and while the next three years don’t show a lot of works getting done, a lot of the main roads including Park Street, Blue Earth Avenue and Lake Avenue are slated to be redone.

“These three projects will allow us to spend over $12 million instead of just the $7.5 million when you add in the $2.9 million in state aid and also $2.2 million in utility infrastructure coming to these projects as well,” York said.

The second group in the three year period will see funding being reduced back to $6 million and includes roads that are part of the street improvement program today. York said they will continue to keep an eye on those roads but have the ability to pivot if need be.

After Hoye and York finished sharing their information, the council was able to provide comments and ask questions.

Council Member Randy Lubenow asked why Blue Earth Avenue was slated for 2025 and Lake Avenue was planned for 2026 as he believed they should be swapped. York said that they have received grant funding for Blue Earth Avenue but have not yet received grant funding, which they are anticipating, for work on Lake Avenue.

“We can’t do everything that we want to be done. We only have so much money. We don’t have $6 million to spend on Lake Avenue to start with so we’re going to start with Blue Earth Avenue,” York said.

Council Member Jay Maynard said that he believed spending $2 million a year for streets, along with a $55,000 tax impact, would be supported by the community.

“The one thing we hear about more than anything else is streets,” Maynard said.

York noted that it’s not spending $2 million a year point-blank, but rather they’re using the $6 million over three years to pick and choose from and do the best they can with the funds available.

Along with discussing the street improvement projects, some questions were asked about the fire and police facilities.

Lubenow told Fire Chief Bryan Kastning, who was present, that he was concerned about the facility expansion. He asked whether they should move that up ahead of the ladder truck replacement.

Kastning said the life on a ladder truck is usually 20 years and that Fairmont’s is currently at 23 years. He said they’re currently working on a feasibility study for the fire department.

“I think we’re kind of at a stand-still right now until we get a city administrator, is what I understand,” Kastning said.

York said that the fire station expansion/rebuild is still in the works as they’re looking at a number of options.

Council Member Britney Kawecki then spoke about the need for both the fire and police facilities, as well as city hall to be updated.

“It’s been suggested by basically people in all the departments that a Capital Improvement Plan of a new facility housing all three would be possibly something in the best interest of the city,” Kawecki said.

York responded by saying that while it’s been a conversation, the issue with that suggestion is finding a location that can fit a facility to house all three entities.

Council Member Michele Miller said she thinks there are more benefits for the police department to be with the sheriff’s office because they’re using a lot of the same equipment.

“It’s really a fire project right now. I’m just listening to see what the best way for the city to work through this will be. We’re at a point where we’re just talking about it,” York said.

During the budget workshop the council further discussed the possibility of sharing spaces and also discussed some timelines for replacing equipment.

“I guess the best thing I took out of tonight is talking about putting the fire department and city offices together,” said Lubenow. “I think putting $3 or $4 million in the SMEC (Southern Minnesota Educational Campus) building is just a waste of money. If we’re going to spend that money anyway, I’d like it combined in one space.”