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Serving Northern St. Louis County, Minnesota

Tower City Council defers talk of higher utility rates

Marshall Helmberger
Posted 11/19/20

TOWER— The city has work to do to bring the operations of its water and sewer into compliance with its own ordinances. That was the message from Clerk-Treasurer Victoria Ranua during a special …

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Tower City Council defers talk of higher utility rates

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TOWER— The city has work to do to bring the operations of its water and sewer into compliance with its own ordinances. That was the message from Clerk-Treasurer Victoria Ranua during a special council meeting that included a fully-elected council for the first time in more than 18 months. It came as the city is working to wrap up its 2021 budget, which must be completed by next month.
The city has been running deficits for years in its utilities account and that’s inconsistent with the city’s ordinance, Ranua told the council. “These are supposed to be covered by user fees or some other source of funding,” she said.
The shortfall may actually be greater than previously understood, Ranua noted, because the city had only estimated the wage costs for maintaining the system. “We are now tracking those wages and the amount we are spending on utilities is much greater than had been estimated,” she said. “We have aging infrastructure and it’s requiring more wages to keep it going.”
Ranua said the city should be budgeting based on actuals, rather than estimates, and needs to be following its ordinances, its utilities policies, its charter, and best practices. “The city really hasn’t been structuring it that way,” she said.
While Ranua said she has a firm idea of the city’s expenditures for utilities, the council seemed reluctant to discuss the revenue side, where current water and sewer rates have lagged well behind costs for years. “This has been going on a long time,” said council member Dave Setterberg. “We don’t want to get into the weeds,” he said. “I’ve been talking to Terri [Joki-Martin] and she would like to go through some of our policies and procedures before we delve into the details of what you’re talking about.”
Ranua agreed that any discussion on future utility rates could wait a bit longer. “We also don’t want to shock people with what the numbers might be,” she said. Even so, the city will need to approve its final 2021 budget by next month.
The deficit in the water and sewer account has been a longstanding issue for the city’s auditors, who have made much the same case as Ranua for years. Previous councils have resisted rate increases, however, recognizing the impact to ratepayers. The council, earlier this year, did approve utility rate increases of $10 per quarter in 2020, with an additional five dollars to take effect in 2021 and five more dollars in 2022. That still falls well short of the $53 per quarter increase that the city’s auditors believe would be necessary to fully cover the costs of providing water and sewer to residents.
Ranua also addressed the ambulance budget, which is now going to be tracked as an enterprise fund. Developing final budget numbers for 2021 has been slowed by the lack of a business plan for the ambulance service. That plan is still being finalized with assistance from the Northeast Minnesota Small Business Development Center. The budget contains considerable uncertainty for next year as city officials are weighing potentially significant changes in the paid on-call staffing model as well as whether to accept more transfers. Council members indicated they would like to see revenues from transfers tracked separately so they could better determine whether they are a benefit financially once all the costs are included. Ranua said tracking those revenues separately would require more administrative work, but she said there would be value in having that information for both city officials and the public.
In other action, the council canvassed the final vote tally for the city council races. The final totals determined by the county auditor include:
• Two-year special election seats
(top two seated)
Joe Morin: 171
Sheldon Majerle: 111
Josh Zika: 110
• Four-year regular election seats
(top two seated)
Dave Setterberg: 152
Kevin Norby: 150
Steve Altenburg: 79
Because all four council seats had been filled by appointees, the four elected members all assumed their seats immediately. Ranua swore them all in remotely via GoToMeeting in the wake of stricter guidelines instituted by both Gov. Walz and Mayor Kringstad to address the spike in COVID-19 infections. The council also thanked outgoing council member Mary Shedd for what Kringstad called “her incredible service” to the city. Shedd took the lead on several major issues in her roughly 18 months on the council, including dealing with human resource issues, spearheading the complete redesign of the city’s website, and assuming the job of zoning administrator during one of the most challenging periods in recent city history.
In other business, the council:
• Approved the installation of a computer “kiosk” in city hall’s backroom to allow the public to access the court system. Legal Aid of Minnesota will be paying for the cost of installation and operation of the system, which will include a printer as well. Ranua said she expects the kiosk will see only occasional use, during regular business hours, so the impact to city hall staff should be minimal.
• Approved the nomination of Kringstad to represent the city on the board of directors for the Range Association of Municipalities and Schools.
• Approved a resolution appointing John Burgess to the Gundersen Trust board.
• Noted that the Fireman’s Relief Association will be donating to students at the Tower-Soudan Elementary for holiday presents. They also provided a $1,000 donation to the Wagoner Trails Club for the replacement of lights at the city cross-country ski trails.
• Noted that Randy Johnson had to decline his recent appointment to the city’s board of adjustment and that the council will need to fill the vacancy soon to address a variance request from Dave Rose.

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