A deeper look inside Fargo’s proposed 2024 budget, which raises taxes and spending – InForum

FARGO — A tight budget going into 2024 saw Fargo leaders proposing to raise property taxes and utility franchise fees, but the end result is a balanced preliminary budget pending approval by the five-member City Commission.

A

peek into Fargo’s preliminary budget

shows the city is expecting to both spend and raise $120.29 million for its annual general fund, the key fund for day-to-day operations. That is an increase of 7.5% for both revenues and expenditures.

Despite revenue increases, the city’s general fund balance has been dropping for years as expenses outpace revenue, with historic shortfalls in 2021 and 2022.

The general fund is largely funded by taxes at 44.9% while just over 75% of the fund is spent on employee salaries and benefits.

This fund anticipates taking in more money in 2024 largely through property tax and franchise fee increases, which have gone up 18% and 92% respectively.

The special revenue fund and the city’s debt service fund — one that tracks specific revenues that are legally restricted to expenditures for a particular purpose and the other that stockpiles dollars for payments on long-term debts — have also seen declining balances since the Covid-19 pandemic in 2020, according to The Forum’s analysis.

To offset this trend, the city has planned to hold the general fund’s end of year balance steady at $29.7 million for 2023 and 2024. The city strives to maintain a balance in its general fund at the end of each year for a rainy day that equates to 25% of its yearly operating budget. At $29.7 million, Fargo’s rainy day fund sits at 24.7% in 2024.

In order to avoid dropping that percentage lower, the city will need to avoid budget shortfalls — where they bring in less money than they spend — going forward as the cushion in their rainy day account has gotten less soft after two years of shortfalls.

“The Revenue Stabilization Fund is currently $1 million, which represents the minimum reserve required by policy,” the preliminary budget states. “There are no draws upon this fund in the 2024 budget.”

Further, the 2024 budget doesn’t include any unallocated funds. The 2023 budget had $1.6 million unallocated when it was approved

The city has boosted both its 2024 revenue and expenditures by 7.5%. However, how that is allocated to each department varies across the board.

The following departments each received a budget increase in excess of 7.5% for 2024, according to The Forum’s analysis. Some departments have smaller budgets than others, so the percentage increases all equate to different dollar figures. Funding categories have been selected to represent the bulk of the increases, not the totality. For a more in depth look at expenses, readers can visit each department’s budget at

https://city-fargo-nd-budget-book.cleargov.com/11070/introduction/transmittal-letter

The street lighting department saw a 72.82% increase in its budget from 2023 and 2024, largely consisting of increases to the following expense funds: supplies, capital overlay and transfers to other funds. The increased utility franchise fees are intended for this department to become self-sufficient, the budget states.

Legal services through the city’s contracted attorney, Nancy Morris with Serkland Law Firm, have gone up 55.68%. This is because the demand for legal services is growing “substantially,” the budget states, including legal assistance on large city projects.

Meanwhile, the water meters in Fargo saw a 35.27% increase in capital outlay expenses. This is because the Water Meters division is looking to purchase new technology that allows it to read water meters from a central location. They currently read meter data with a mix of manual reads, handheld devices and mobile radio devices, according to the budget.

The city’s storm sewer budget is increasing 24.62$, mostly due to debt service transfers to other funds.

The Planning and Development Department is proposing a 23.40% budget increase to cover salaries, staff benefits and “other services,” according to the budget. No new employees are indicated for this department in 2024.

Fargo’s new water treatment plant team has three new full-time employees. That, paired with increases in the capital outlay expense fund, brings that department to a 19.65% budget increase.

The city’s Communications Department has a 19.05% budget increase largely going toward salary and benefit increases. No new employees are indicated for this department in 2024.

“Supply chain issues” are impacting the city’s water main and hydrant expenses, the budget states, necessitating at 14.65% increase for capital expenditures, energy and salary.

The arrival of the Emerald Ash Borer, an invasive insect that destroys ash trees, has driven the forestry department to seek a 13.89% budget increase, they state. Additionally, city expenses associated with the Residential Brush Chipping Program are outpacing revenue, the budget states.

The finance department has an 11.58% increase, mostly for salaries. No new employees are indicated for this department in 2024.

Fargo Cass Public Health is requesting an 11.37% budget increase largely for employee benefits and supplies.

The facilities management team wants a 10.09% increase for repairs and maintenance and supplies.

Three full time employees were added to the streets department for 2024. They want an 8.75% increase largely for supplies, energy and unidentified miscellaneous expenses.

Likewise, the human resources department is seeking 8.21% more for “other services” and a boost to their advertising and printing budget.

The Fargodome is looking at a 7.78% boost for salaries, benefits, advertising, capital outlay and energy. They are adding one new full-time employee to their team, according to the budget.

Meanwhile, some departments had their budgets reduced for 2024 by more than 7.5%, according to The Forum’s analysis.

The Civic Center at 207 4th St. N. saw a 48.28% budget reduction from salary, benefits and capital outlay. It went from one full-time employee to none.

With multiple needs identified like more administrative staff and capital upgrades, the MATBUS system still saw a 14.64% budget reduction for capital outlay. Declining fares and a shortage of drivers have significantly impacted their revenue, the budget states.

Funds that the city allocates for social services have dipped 11.98% with the ending of federal funding that previously supported some services, the budget states.

Meanwhile, city prosecution expenses have dropped 10.70%. This program, also headed by Morris with Serkland Law Firm, states that they are seeing increased cases about at-large dogs in Fargo and increased time requests from the Fargo Police Department as body cameras produce a larger volume of audio/video to be reviewed and stored.

In total, 2024’s budget would see property tax revenue up 18% and franchise fee revenue up 92%. Without the tax hike and increased utility fees, the city’s 2024 budget is looking at a $6.6 million deficit. The city experienced deficits in excess of $7 million in 2021 and 2022.

On the horizon, the city commission will vote yay or nay on Tuesday, Sept. 5 to decide if the city will hold a special election this December. This election, if the single-ballot measure passes with 60% of the public vote, would approve a quarter-cent hike in sales tax and a 3% jump in the city’s lodging tax to fund $140 million in changes to the Fargodome at 1800 North University Drive.

If approved by voters, it would bring Fargo’s sales taxes from 7.5% to 7.75% —

comparable to nearby municipalities

— and the city’s lodging tax from 3% to 6%, the highest lodging tax in the state.

To get a read on public opinion regarding the proposed 2024 budget, the City Commission is hosting a public hearing during its Sept. 18 meeting to discuss the preliminary budget and the increased costs. The final budget and tax increase are slated to be approved during the Oct. 2 City Commission meeting.