Cloquet balances rising insurance costs with lower bills for 2017 budget

The good news for Cloquet residents is there weren't many surprises in the city's budget process this year. However, residents are still looking at a proposed tax levy increase above 5 percent.

The good news for Cloquet residents is there weren’t many surprises in the city’s budget process this year. However, residents are still looking at a  proposed tax levy increase above 5 percent.

The Cloquet City Council passed the proposed preliminary budget unanimously and without discussion at Cloquet City Hall Tuesday night during its regular meeting. A Minnesota state statute requires that the preliminary budget and levy be set by the end of September every year.

They also approved the preliminary 2017 property tax levy and a preliminary five-year Capital Improvement Plan for 2017-2021.

The date to adopt both the final city budget and property tax levy is set for Dec. 6.

The biggest surprise when they were putting together the budget was the increased amount of insurance costs for city employees, according to Nancy Klassen, city finance officer.


The increase for 2017 is a whopping 27.4 percent. The preliminary budget did factor in the full amount but Klassen estimated about 25 percent of the city employees will opt out of the health insurance. While they did vote to pass the 2017 non-union health insurance renewal, they also agreed to add an alternative group health plan beginning in 2017.

The city is proposing total spending of $21,267,720 with revenues of $24,594,300 for 2017. That means an increase in outgoing money of 18.21 percent. One third of the spending will go toward water services, including sewer and stormwater systems.

The general fund is responsible for paying most of the city services and has an estimated $5,442,350 in bills for 2017 and incoming revenues of $5,355,750. Klassen said the difference is coming out of city reserves. However, the city is seeing a 3.1 percent decrease in bills partly due to the lower cost of fuel.

The proposed property tax levy increase is 5.69 percent, due in part to the city’s parks department requested increase from $300,000 to $350,000 to help with the costs incurred after adding an additional employee and some of the recent capital improvements.

“Our last increase of a similar size was in 2012 when the property tax levy increased by 7.63 percent,” City Administrator Brian Fritsinger said. “The city has historically worked to keep its levy increases less than 3 percent, absent some specific service level changes or reductions in revenue.”

There were no tax levy increases in 2013-2014 and smallish ones of 2.98 percent in 2015 and 2.97 percent in 2016. The sharp jump in the health insurance cost helped increase the levy for 2017. The proposed property tax levies for 2018 and 2019 should drop to 3.87 percent and 3.89 percent, Klassen estimated. A large jump is forecasted for 2020 of 8.58 percent.

“In looking at many of the other proposed levies around the state, it appears that many cities are on average having slightly higher than normal proposed levy increases this year,” Fritsinger said.

Smaller changes slated for the 2017 budget include a part-time library position that will be made into a full-time position, an additional summer seasonal employee in the Parks Department and a possible school liaison police officer position. The liaison officer first appeared in the Cloquet School District in the 1990s and the cost was split between the police department and the school 75/25 with the help of a federal grant. That position was eliminated when the grant funding ran out.


The city will continue to employ Alyson Leno of the Cloquet Area Chamber of Commerce and Tourism Bureau as a part-time events coordinator for $8,000. She helps organize the winter holiday’s festivities and July Fourth celebrations.

Something new added to the 2017 budget is $1,000 for the National Night Out event as well as $2,500 for Christmas decorations to help keep Cloquet festive during the holiday season.

A few other bills for the 2017 budget target maintenance of buildings. The roof at City Hall needs to be replaced at an estimated $130,000 cost, and there are a few smaller projects at the public works building.

The library will be getting a new air conditioner compressor for $7,000 next year also.

A pavement management study will be done in 2017 for $50,000 and a utility rate study for $30,000 is on next year’s schedule.

The pavement study will help figure out which streets are a priority to fix next year and why.

There are several park projects planned for 2017. That money comes from the city sales tax.

The largest project is planned for Dunlap Island for $2,700,000. Other places being beautified next year include landscaping on the Highway 33 hillside just south of Skyline Boulevard for $50,000, and Athletic Park, where the price for the new skate park is budgeted at $300,000 and new fencing at $50,000.


Another subject of much debate at city council meetings is whether or not to put another temporary warming house at Pinehurst Park after the last was vandalized to the extent that it was finally taken down and turned into an open shelter.

The Broadway Street project overlay is one of the largest streetscapes planned for 2017 and is projected to cost about $1 million.

“The riverfront plan identified the critical need to address aesthetic and safety issues along this corridor that enhance the visibility of the riverfront area and connection to the rest of the community,” Fritsinger said. “There will also be other improvements considered which may include lighting, signage, new sidewalks and other amenities all the way back to Highway 33.”

Fritsinger added that the design work for the project has not started yet.

Other park projects are Riverfront North at $150,000 and landscaping at Spafford Park and Dunlap Island for $228,000.

The total projected cost for the parks is $4,578,000.

The sales tax balance as of Jan. 1, 2017 will be $510,000 and will have an additional $1,000,000 for a total of $1,510,000.

The city plans to issue bonds in February 2017 (to be paid back from tax dollars) for $8,400,000, so the with total available sales tax dollars will be $9,910,000.

After the parks expenses are taken out there should be a balance of $5,332,000 as of Dec. 31, 2017.

“Specifically to the budget the city has planned for significant investment into our existing infrastructure and parks in 2017 which derives the vast majority of our expenditure increases in most of our funds,” Fritsinger said. “The need to continually reinvest in those facilities is important for the long term viability and quality of life in the community. Most of these are projects that the community itself participated in prioritizing through various committees and commissions so they are projects the community has verbalized its interest and support.”

In other city council business:

  • The council voted to authorize the sale of 2016 Public Works surplus including older vehicles, equipment and other miscellaneous items. There is also a list of equipment that is not needed any more by CAT-7 available for sale.

  • Northeastern Hotel and Saloon owner Bert Whittington spoke to the council for a few minutes explaining why the alley platted in the city’s Dunlap Addition in 1882 between two of his properties should be vacated. The original plan to build the area had never been realized. The council adopted the resolution approving the vacation of east/west alley lying between Broadway Street and Main Street, north of St. Louis Avenue.

  • The council voted to accept the proposal from Summit Envirosolutions for consulting services related to possible municipal well exploration and development. There has been a search for other water sources since two of Cloquet’s wells were found to have high amounts of manganese, a mineral which occurs naturally in the environment. A Filter Plant Pilot Study presentation was presented during the work session before the regular council meeting. The plant would cost about $7.01 million to build and would remove the manganese from the well water. That would cause a resident’s water bill to rise an estimated $1.80 a month. Well 8 is the highest producing well but is not being used because it also has the highest amounts of manganese. “But if there is a fire and we are low on water, we are flipping that switch,” said City Engineer Caleb Peterson.
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