October 5, 2011

City to hold hearing on $6 million budget

By Kate Ruggles
Farmer Staff Writer

Last year the Watford City City Council approved a $1.5 million deficit budget in order to keep certain line items and projects, knowing the funding wouldn’t come in from authorized mill levies.
The 2011 budget for the City of Watford City was $3,657,772, and it included money for projects the city didn’t expect to be able to fund.
“There were certain items the city budgeted for that we really weren’t able to do,” states Brent Sanford, Watford City mayor.
Those items included extending a walking path, installing new “Welcome to Watford City” signs, and double paying on Watford City’s Main Street Bonds.
“It would be like double paying on your mortgage and remodeling your house, when you’ve had a medical emergency,” Sanford relates.
And he makes a good point. 2011 was a record year in terms of oil, roads, weather and emergencies.
This year, according to City Auditor-Designate Laura Anderson, the city is proposing a budget of $6,078,746, but when you remove water, sewer and garbage, which are self-funded line items, the proposed budget for 2012 is $3,894,385, $236,000 more than last year. And, this time, the City Council expects to receive most, if not all, of the funding.
How can the city expect to receive even more money than last year, when last year’s budget included a deficit?
“One main reason is an expected increase in Gross Production Tax (GPT),” states Anderson.
Gross Production Tax is the revenue cities receive from oil and gas production, and the city expects an increase in revenues to the tune of $1.3 million.
Sanford states that, until this year, the state only allowed cities to receive $750/resident from the GPT.
“This year, the North Dakota Legislature passed a bill removing that cap,” reports Sanford. “That means we will get in a lot more gas and oil money than in previous years.”
According to both Sanford and Anderson, this is huge, because it will allow the city to do things it otherwise wouldn’t be able to.
“Were Watford City running on only what it was able to collect from taxpayers, we would struggle to function at the level we need to during this boom,” shares Sanford.
In fact, the bulk of the proposed budget increases for 2012 are designed to address needs that have arisen due to the oil industry.
One main proposed line item is $135,000 for the hiring of three new police officers for the Watford City Police Department, and, $105,000 toward the replacement of three new police vehicles. The city has also set aside $350,000 toward street maintenance. And the council hopes to hire a public works operator to handle water and street issues.
Though the bulk of the proposed budget is expected to be funded by monies from the state and revenues from oil and gas, that doesn’t mean some funding won’t fall on taxpayers.
Anderson reports a 36 percent increase in taxable valuations from last year, meaning that residents could have a 36 percent increase in their property taxes from last year to this year. Most likely, however, they won’t.
“When you subtract the proposed expenditures from the expected revenues, the difference is $293,817, only $78,000 more than we received in tax revenues from last year,” Anderson states.
Then why raise property tax valuations? According to Sanford, the state requires it.
“If we don’t raise the property tax valuations to show how much properties have increased and reflect what they are currently selling for, the state will come in and do it anyway,” states Sanford, “and that would be much worse than what we did.”
Just because taxable valuations have gone up, doesn’t mean property taxes will, but it definitely means they could.
The City Council plans to hold a public hearing on the proposed budget and property tax increase on Thursday, Oct. 6 at 5:30 p.m. at the Watford City City Hall.