Burnsville examining which projects to put on hold

From public safety to youth recreation, Burnsville is delaying major projects and bracing to cut 12 to 15 city positions this year and next as the city struggles with a budget shortfall that officials predict could hit $3.5 million if 2010 taxes aren't raised.

So the City Council has begun mulling delays in many projects, including:

• A $500,000 expansion of the Garage, a maintenance facility that serves as a teen gathering place.

• A $261,000 reconstruction of the City Hall parking lot.

• And a $600,000 project to build a roundabout and resurface roads on Burnhaven Drive at W. 150th Street.

Spending for street projects and other transportation needs would be reduced by $782,000, which represents 36 percent of total cuts, under proposals from the city's finance department.

The city's police and fire departments are slated for $488,000 in cuts, or 22 percent of the total reductions. Recommendations include not filling two open police positions, eliminating a fire inspector's position and delaying a project that would have provided storage space for fire-fighting equipment.

The city is beginning its budget work months earlier than usual because of the weakening economy and financial markets. In addition, Gov. Tim Pawlenty cancelled December aid payments to 91 Minnesota cities, including Burnsville and is now proposing to permanently reduce that revenue, which brought nearly $1 million each year to Burnsville.

The city also faces lower investment returns and more delinquent property taxes as consumers struggle. For this year alone, the city expects a loss of $200,000 in tax delinquencies and $300,000 less in interest on investments, said City Manager Craig Ebeling.

If the city were to slightly raise taxes for 2010, not as many cuts would be needed, he said.

But Tuesday night, the City Council rejected the staff proposal to raise the tax levy next year by 3.5 to 4 percent.

Council Member Charlie Crichton called for no increase, and other council members said they'd approve increases of only 1 or 2 percent, at most. Mayor Elizabeth Kautz did not voice her position.

Before Tuesday night's meeting, the city's finance department had developed recommendations for $2.2 million in cuts this year and next, and was scouring for another $300,000 to cut from the $26 million general fund.

To arrive at that $2.5 million figure, the finance staff assumed the City Council would approve a tax levy increase of 3.5 to 4 percent for 2010. (This year, the levy increase was 3.7 percent.) Each percentage point brings the city about $260,000 a year in tax revenue.

With no tax increase for 2010, another $1 million would have to be cut, on top of the other $2.5 million previously proposed for reductions, Ebeling said.

Some positions will be eliminated through attrition but layoffs are possible, officials said.

The city is asking employees to reopen their contracts and agree to salary freezes for this year and next at 2008 levels, rolling back their 2009-10 contract. The city reached those contract agreements in December.

Another option would let workers permanently reduce the number of hours they work. The city has the equivalent of 300 full-time positions.

"We need to ask everybody to be part of this," Kautz said.

Also Tuesday, the council knocked down a recommendation that the Burnsville Convention and Visitors Bureau, which now operates as an independent entity, be moved "in-house" as a city function, which could save about $145,000 a year.

But council members Mary Sherry and Dan Kealey said they worried the bureau could become politicized.

It's run with a 3 percent lodging tax, but those revenues continue to shrink. In 2006, the room tax brought Burnsville $310,000, but this year's receipts are expected to total $265,000.