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Perham city council begins budget discussion

On the eve of starting the process of the city's 2012 budget, the Perham Committee of the Whole (COW) heard a presentation from City Manager Kelcey Klemm about last year's budget at last Wednesday's special meeting.

The total operating fund of the 2011 budget was $708,804, with $472,000 of debt.

Between debt service, Klemm said, which makes up 40 percent of the city's budget, and the fire department and library budgets, 50 percent of Perham's budget is already decided for next year.

Klemm presented a breakdown of the city's taxes to give an idea of how much is paid to each of the city's services. A house with a value of $120,000, Klemm said, pays roughly $530 in taxes, with $181 of that going to debt service.

Using police service as an example, Klemm showed how, per month, that specific homeowner would be paying $4 a month for coverage.

"Nobody likes to pay taxes," he said. "But when you put it into relation of services you use like cable or Internet, that's a pretty good deal."

Klemm acknowledged that Perham carries a large debt service, but also pointed to the city's growth as a good sign. Perham saw a 2.78 percent tax capacity increase in 2011, he said.

Local cities such as Wadena or Staples, on the other hand, have seen a decrease in their tax capacity, he said.

Klemm also pointed to enterprise transfers - such as money that comes from the liquor store - as a factor that helps keep taxes low. Perham has a significant level of enterprise transfers, he said.

What many citizens don't realize, he added, is that if you shop at the liquor store, for example, you help to offset your taxes.

Perham's 2011 local government aid (LGA) was finalized after the state created its budget last month. The 2011 and 2012 LGA will be $459,137, which is less than the $622,000 that was certified last year.

The city needs to cut $163,000 from this year's budget to make up for the lower LGA, and Klemm has identified nearly $199,000 worth of capital-related options. The council will discuss possible cuts in more detail at its Monday, Aug. 8 regular meeting.

The council's 2012 budget meetings, scheduled throughout August, began on Tuesday, Aug. 2.