Dundee leaders weigh levy, utility fee and partner contributions to cover $325,000 budget shortfall

City Administrator Steve (last name not provided) told the Dundee City Council at a work session that the city currently faces roughly a $325,000 shortfall in its general fund and presented four broad options — renew a voter-approved levy, ask the rural fire district for added support, add a public-safety fee on utility bills, or cut personnel — to address the gap.

The potential shortfall matters because it affects the city’s ability to retain recently hired firefighters funded by a multi-year grant that ends after the next fiscal year. Steve said the grant covers the added position only through the current grant period and warned, "we're gonna have to figure out ... how make up that $325,000." The council emphasized tonight’s work session was for direction and information, not final decisions.

City staff provided ballpark revenue estimates and trade-offs. A renewed property levy at 65¢ per $1,000 of assessed value was projected in staff material to raise about $230,000 in the coming fiscal year for Dundee alone; combined with a concurrent levy from the rural fire district in past scenarios it could generate roughly $510,000, depending on exact rates and the district’s participation. Staff also noted a 5% prepared-food tax could yield an estimated $100,000–$105,000 in a first year but would likely take several years to mature. A public-safety utility fee of $12 per month was estimated in discussion to raise roughly $220,000 annually, depending on how commercial accounts are treated and the final rate structure. The council heard that the rural fire district holds equipment funds (cited at roughly $125,000 for vehicle/equipment needs) but those funds are typically reserved for capital purchases, not operations.

Councilors repeatedly said they do not want to reduce the fire department’s current staffing level. Several council members said cutting two firefighter positions would be undesirable after recent recruitment and training efforts; others proposed smaller combinations of measures to soften the impact on residents — for example, a partial levy together with a modest monthly utility fee and ongoing negotiations with the rural fire district to share costs.

City Attorney Ashley (last name not provided) advised that public-safety fees can be adopted by ordinance and appear on utility bills, while taxes such as a prepared-food tax typically require voter approval. She noted voters may have options to refer taxes, and recommended staff confirm legal procedures and statutory timelines before placing measures on the calendar.

Council discussion also covered related items staff will include in the budget package: a request for a 5% general-fund spending reduction exercise, scenarios that mix a lower levy rate with a utility fee, and looking for a targeted contribution from the rural fire district (the council suggested $60,000 as a starting negotiation figure in the discussion). Staff will return proposed budget documents at the council’s scheduled budget meetings for further review; the council asked staff to model combinations so members can compare the household-level impacts of different approaches (annual property-tax change vs. monthly utility-bill change).

Administratively, councilors asked staff to: (1) produce budget scenarios that show the revenue from a range of levy rates and the effects of $5 and $10 public-safety fees on utility bills; (2) show 5% general-fund spending-cut scenarios (excluding the fire department where possible); (3) document the timing required to place a levy or fee into effect so notice and billing schedules can reflect any changes; and (4) send representatives to meet with the rural fire district and report back on the likelihood of short-term operational contributions.

The council did not take a formal vote at the work session. Members directed staff to present a set of modeled options at the next budget meeting so the council can weigh residents’ potential financial impacts against operational needs. The council also asked staff to prepare public-facing materials (mailers and web content) that would accompany any proposed fee or rate change.

Looking ahead, staff said the last year of a three-year state/local grant that funded an extra firefighter will be the city’s final grant-supported year; if the council chooses not to replace that grant funding, the city will have to find recurring local revenue to keep the position. City staff and council members also noted that 30% of certain tourism-derived transient lodging revenues are dedicated by statute and are not available to offset the general-fund shortfall.

The council scheduled further budget work and asked staff to return with clear, side-by-side scenarios at the next meeting so members can decide whether to place a levy or fee before statutory deadlines and before the coming fiscal year.