Updated at: 11/19/2009 11:41 PM
By: Laura Kennedy
lkennedy@wdio.com

Duluth Budget Debate

For the past 10 years, the City of Duluth has been writing a $3.8 million check to the state.

"When the Public Employees Retirement Association took over the underfunded police and fire pensions, the City of Duluth had to make up that shortfall," said city councilor Todd Fedora.

The last payment was made to PERA this year, giving the city a $3.2 million relief in 2010.

The intent was to put that money back into the general fund. But Mayor Don Ness says the governor's cuts to local government aid is actually cutting more than that relief is bringing back.

"We have a net expenditure decrease of $3.2 million and then we have a direct unallotment of $3.5 million dollars in our revenue, so they kind of balance out," Ness said.

Although that money helps soften the blow from LGA cuts, Ness says a 2.5% property tax increase is still needed to cover other revenue shortfalls and reductions. But Fedora says there's another reason taxes are going up.

"What's happening between this year and next year is the City of Duluth is hiring staff and spending $1.3 million more on salaries and wages," said Fedora.

Ness says some of the hiring increases are a result of replacing temporary and seasonal employees following recent city layoffs.

"Instead we brought in full time employees to fill those positions and work in our maintenance division," said Ness. "The transition with the zoo was also a part of that."

Ness says the rest of the new positions are related to the street improvement program, but Fedora says most of those positions were already hired and recognized this year.

This debate will play out over the next month as city councilors will vote on the budget and tax levy in December.