Jill Schramm/MDN Tom Warsocki addresses the Minot City Council Monday regarding budget spending on staff costs.

Minot property owners would get a break under a plan adopted by the Minot City Monday to return some of the city’s excess funds as tax relief.

The Minot City Council on Monday approved the proposal of council member Mike Blessum to return $3.6 million of reserve cash to property owners in the form of a lower tax levy.

Blessum noted the city had $42 million in reserves at the end of 2023. The annual audit found the city out of compliance with state law in having on hand about $7.2 million more than legally allowed, he said.

“We’ve got revenue over the last six years in a row that’s come in higher than expected,” he said. “We consistently for six years in a row had spent less than we expected.

“Governments exist to provide services at a break even point. Folks, we’re not doing that. We’re not breaking even as a city and we haven’t for more than six years,” Blessum said. “What this does over time is it adds up to a big pile of dollars sitting in the general fund, available for other uses.”

Rather than find items to spend the money on, Blessum proposed returning the money to the people.

The $3.6 million could lower the mill levy by more than 14.5 mills, reducing the property tax on a $300,000 home by nearly $200, he explained.

“This has nothing to do with staff being hurt by a wage decrease, benefits or anything like that, has nothing to do with less service to the public. It has nothing to do with anything that anybody will notice, other than dollars in their pocket,” Blessum said. “Our auditors told us we overtaxed, and we need to return that to the people.”

City Manager Harold Stewart said he also sees the reserve amount as excessive.

“I would probably recommend that we invest those into projects that benefit the community as a whole maybe, rather than necessarily lowering the levy. However, with that being said, the council does have a unique opportunity to provide some relief now that most communities probably couldn’t do,” Stewart said.

Finance Director David Lakefield said some of the excess reserves have been spent in 2024. He also cited projects that don’t have a funding source and could benefit from reserve funds. Those items include rehabilitation of the legacy City Hall used by law enforcement, potential flood control uses and unfunded pension liability.

“While I want to have our taxes as low as possible for our residents, I also know that we need to be the stewards for our community,” council member Lisa Olson said.

“This money is the people’s money,” council member Rob Fuller said. “Let’s give it back to them. There’s no point in sitting here determining if we need to spend it on something else. It’s their money.”

Blessum said the city could spend more than $3.6 million and still have healthy reserves, but that isn’t his proposal because of the projects and expenses the city has looming.

“I think this is the right approach to try to give the people some relief,” he said. “I think it’s time to do that because we have the ability to do it.”

The council voted 7-0 for the tax relief.

Earlier in the meeting, during the public hearing on the budget, Minot resident Travis Zablotney questioned the city’s accumulation of surplus revenue.

“My concern with that is what the city does with it, because what I’ve witnessed over and over again is that money is no problem or no object when a special spending project comes up,” he said. “Now it is just a slush fund to do whatever it is this body decides to do.”

During the hearing, Minot resident Tom Warsocki questioned the intentions of the city regarding employee salaries and benefits. The council acted on that topic in adopting a hybrid pay plan.

The original budget included $2.3 million in additional dollars to cover salary changes needed to keep up with market rates and provide a 2.5% step increase. The hybrid plan allows employees either the market rate increase or a step increase, but not both. Department heads’ raises would be limited to no more than the equivalent of two step increases.

The original plan had resulted in a 7% pay increase, while the hybrid plan reduces the increase to about 5%.

“The fact that we’re able even with the hybrid plan to give 5%, I feel very good about,” Blessum said.

Fuller voiced concern about cutting more than $1.1 million from employee compensation rather than from other areas of the budget.

“I’ve looked at budgets for 20 years, and you can always find places to cut that don’t cost employees,” he said. He offered the option of a 2.5% raise for higher paid employees and the 7% wage increase for lower paid employees while also making cuts in other areas.

The council opted for the hybrid plan 5-2, with Fuller and Paul Pitner voting against.

Pitner stressed the need to be competitive in pay.

“We’ve done this before where we neglected employees with wages and benefits, and we saw a mass exodus that cost the city millions of dollars. I’m not willing to repeat that mistake,” he said. “I’m not interested in saving a couple bucks or a couple pennies on the backs of our employees.”

The council also agreed to move the police and fire employees from an existing pension to the Public Employees Retirement System at a cost of $250,000.

The council rejected a proposal to allocate $100,000 for a retention and recruitment plan for the police department. The proposal failed 2-5 after concerns were raised about appropriating the money before a plan is developed.

The police department previously received about $102,000 from the state’s Back the Blue program. Of that amount, $38,000 was spent on retention, and recent new hires are authorized for another $15,000 in recruitment bonuses, leaving about $49,000 remaining.

The council also voted to increase the monthly recycling fee by 10 cents a month to $2.60. Blessum, who proposed the change, said it makes sense to increase the recycling fee when other sanitation fees are going up.

The council voted to remove a hybrid bus from the budget. Bus Superintendent Brian Horinka said keeping a bus in the budget is important to replace the fleet as it ages, but the council declined to add back a diesel bus at Monday’s meeting. It could be reconsidered at a future meeting.

Blessum said the city should consider smaller 15-passenger vehicles to address the issue of buses operating with only a few passengers. However, Horinka said the smaller buses would not accommodate the numbers of passengers during peak periods.

The council approved the budget as amended 7-0 on first reading.

Zablotney congratulated the council on its work.

“I’m going to take five seconds and congratulate this body in starting the journey of making Minot a better place – a better place for its citizens and taxpayers. I think you did wonderful work tonight,” he said.

Second reading of the budget is expected at the Oct. 7 meeting.