By Barry Brown, Citizen Advocate
At some point, you may have found yourself in a conversation that you had no idea what the other person was talking about because of acronyms and spurious code words. This could likely be said about technology companies, the stock market, manufacturing, the list goes on. City finances and budgets are no exception. At the end of the day we try to understand how the city’s finances operate, but in the absence of clarity, we move to mistrust and believe the information is purposely confusing. That’s government: What isn’t confusing about government?
So, I met with Shorewood’s new Finance Director, Jeanne Schmuck to clarify some financial concerns I’ve been hearing from residents. Jeanne is a seasoned pro with nearly 30 years’ experience with government financing and budgets. I got an education and answers to most questions. Here goes:
1. General Reserve Fund: The city starts the new year with no new incoming operating cash, so they operate off of reserves until June/July when they receive property tax receipts from Hennepin County. Hennepin County provides 70% of your first half property tax receipts in June and 30% in July. Then in December, another 100% is received from your 2nd half property taxes.
Shorewood city council has decided (not a rule, law or ordinance) to hold a 60% reserve balance or $4.25MM to pay the bills during the first 6 months of the year. Most cities operated between 35% and 50% reserve. However, at year end 2024 Shorewood held more than 80% reserve balance or $2.1MM more than needed.
2. Enterprise Funds are strictly designated for water, sewer, storm water service and sanitary services. By law, the city must maintain 50% reserves in these funds, since water and sewer bills are due and paid quarterly. This fund also requires 100% capital improvement money.
3. Lease Revenues: Shorewood has lease agreements with two cellular companies, Cingular Wireless and T-Mobile, and takes in $202,000 per year revenue. The various lease agreements are good through 2031-2051. The cell towers are located at the water tower on Old Market Road and the water tower at Minnewashta Elementary School.
4. Debt: Shorewood’s current bond debt for both streets and water projects as of 12-31-2023 was $23,275,000 and is up more than $18MM since 2019. Taxpayers will pay $988,262 in 2024 and $1,095,957 in 2025 for bond debt. These bonds were largely due to street reconstruction improvements to Strawberry Lane, Birch Bluff, Glenn Road/Amlee and the non-street project: Smithtown Ponds.
5. Purchasing Discretion: Department Heads have the authority to purchase limited items up to $10,000 for Public Works, and up to $5,000 for all other departments. These purchases must specifically be within the department budget by state law. If not within the department budget, it must be presented to the city council for approval. There are statutory parameters within the Uniform Municipal Contracting Law to ensure that competitive bidding is exercised in procurement of larger items.
2025 BUDGET UPDATE
At the August 12th city council work session, staff presented an initial budget to council members for 2025 representing a 13.6% increase or $883k over 2024. Among the usual increases to compensation, insurances and retirement accounts there were sizable increases to public safety and parks and recreation. A majority of the 2025 budget increases will be funded through the RESERVE FUND at $550k, and that means an increase to city taxes is currently estimated at 4.1%.
Moving forward, Shorewood must submit its preliminary tax levy certification to Hennepin County by 09-30-2024. After this time the city’s budget can only decrease and cannot increase.
You can provide input to our city leaders by contacting them below:
1. Best Option: attend and speak up at City Council meetings
2. Contact City Council Members
Dustin Maddy (612) 293-6727 dmaddy@ci.shorewood.mn.us
Jennifer Labadie (952) 836-8719 jlabadie@ci.shorewood.mn.us
Scott Zerby (952) 905-4444 szerby@ci.shorewood.mn.us
Guy Sanschagrin (952) 217-1289 gsanschagrin@ci.shorewood.mn.us
Paula Callies (763) 546-8020 pcallies@ci.shorewood.mn.us
3. Contact City Administrator
Marc Nevinski (952) 960-7905 mnevinski@ci.shorewood.mn.us
