DMC budgets fall by $1 million in 2017
Destination Medical Center funding in 2017 was slimmed by about $1 million from this year as the city of Rochester sought to protect project funding from its sales tax revenue.
The DMC Corp. Board of Directors formed a subcommittee to review the 2017 budgets. After four meetings, the group had cut back the budget of the DMC Corp by more than half and dialed back spending by the corporation's staff arm, the DMC Economic Development Agency.
The DMC Corp. budget fell from just under $1 million this year to a budget of $455,500 next year. The largest cut came from what is by far the corporation's largest expense: professional services, which had a $943,000 budget this year. Through September, the organization has spent only $88,550 of that amount.
The corporation has four categories under professional services: audit services, legal consultants, accounting consultants and "other expert and professional services."
That last category had a budget of $538,000 this year. Next year, its budget will be reduced to $50,000.
The Economic Development Agency, budgeted separately from the DMC Corp., has a budget of $3.9 million this year. Its budget will be shaved to about $3.5 million next year. Mayo Clinic will fund about $934,000 of that, with about $674,000 of Mayo's contribution going to staff benefits.
The EDA fits its budget to its yearly work plan, said Lisa Clarke, EDA executive director. In the second year that the agency budgeted for a full staff, it shifted a significant portion of its staff benefit costs.
The changing nature of the agency's work is apparent in its budget change. While the overall budget is shrinking, its costs for economic development work are poised to jump up sharply, from about $25,000 this year to $435,000 next year.
Clarke said she was unsure if next year's overall reduced costs would reappear on future budgets.
"As we start to evolve in the next six months, I don't know if they'll come back but the costs will change and be driven by different line items," she said.
The city of Rochester's DMC-related costs will fall by about $180,000, according to Jim Bier, DMC Corp. treasurer and Olmsted County Board of Commissioners member. The total budgets of the corporation, economic development agency and city will fall by about $1 million next year, he said.
Mark Hickey, who represents the Rochester City Council on the corporation board, said the savings should allow Rochester to direct its sales tax funding to other projects.
"This time of year, the city council of Rochester is looking at our budget and asking our departments to make meaningful cuts," Hickey said. "The city council made the same ask of the EDA staff — looking for some meaningful cuts.
"Their work plan is ambitious and outlines a lot of important work, but the funding stream the city uses is primarily the quarter-cent sales tax; we're looking to make sure we have enough of that going forward for projects. That combined budget effort of a $1 million reduction is really going to go a long way to keeping that funding stream moving and maximizing it."