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Red Wing wrangles with budget issues

RED WING — The 2012 budget outlook in Red Wing was bleak entering Monday's meeting. Then things got even murkier.

Already staring at a preliminary budget gap of $1.8 million, the city council first rejected a gas and electric franchise fee that would have raised about $310,000, after a public outcry. It failed for a second straight year by a 4-3 vote after extensive debate.

However, city council members — particularly those who voted against imposing franchise fees — appeared stunned to learn they wouldn't simply be able to raise the tax levy to a level that would essentially cover those funds.

The agenda listed a preliminary levy increase of 4 percent, which Red Wing finance director Marshall Hallock said would need to be increased to 6.72 percent to make up for the "missing" revenue from franchise fees. Mayor Dennis Egan was quick to add that he would veto such a high number, thereby putting the council in a bind mere moments after it had decided on the franchise fees.

The preliminary levy figures must be given to Goodhue County by Thursday. A veto by Egan would have made that impossible.


Council members Dean Hove and Lisa Bayley were visibly upset by Egan's stance, which prompted council president Ralph Rauterkus to call a five-minute recess. Rauterkus, Hove and council member Mike Schultz spent virtually all of the break huddled with Egan.

Upon reconvening, Hove made a motion for a 5 percent levy increase before looking to Egan for feedback.

The mayor, who won a special election last winter after John Howe vacated office to become a state senator, said that was "agreeable" — if the council promised to make a concerted effort to reduce that number over the next three months. The council agreed, noting they set a preliminary levy increase of 2 percent last year, but later reduced it to zero.

Egan also advocated "structural changes" within the city by "putting things on the table that have never been talked about." The city budget has cut $2.1 million since 2008.

"It's going to be big-picture issues now," Schultz said. "We've taken all the little items out already. The mayor is right: we have to put them on the table and dialogue about them, whether we like it or not."

The preliminary levy increase would bring revenue from property taxes up to $13,353,813, which is $635,000 more than this year.

"I'm looking forward to December when this is resolved," Rauterkus said.


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