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Council creates pre-bond fund, maintains $500,000 target in fund 211 and adopts 'no-change' penny policy
Summary
Forest Lake created fund 322 to track pre-bond public works expenditures, approved maintaining a $500,000 target in fund 211 while postponing Forest Road construction, and voted to adopt a 'no-change' utility billing policy; council also received an update on a proposed local sales tax bill moving through the legislature.
The Forest Lake City Council took several finance and billing actions on March 26 intended to protect the city’s capital planning and reduce cash-handling risk.
Staff presented the creation of fund 322 as a pre-bond account to separately track expenditures in 2025 and 2026 that could be reimbursed if the city later issues a bond to fund a public works facility. The council unanimously approved establishing the account and directing staff to move eligible expenditures into it.
On fund 211 (the capital project account discussed in prior workshops), staff recommended keeping an ending balance target of approximately $500,000. Accounting work showed a possible 2026 ending balance of roughly $346,000 if all planned expenditures occur; staff recommended delaying the Forest Road project design or construction to 2028 (or later) because of alignment uncertainty around the County Road 50/Highway 61 interchange and funding timing. After discussion, the council approved maintaining the $500,000 target balance and postponing Forest Road work, voting unanimously.
In a separate agenda item addressing a national shortage of pennies, city staff presented two operational options for utility billing: (1) adopt a 'no-change' policy that credits small cash overages to a customer’s utility account (and issues a check if the customer has no further utility charges) or (2) adopt a rounding policy that rounds bills to the nearest five cents. Staff recommended the 'no-change' option to reduce cash on premises and to preserve clearer accounting; the council adopted that recommendation by unanimous vote.
Council also received an update from staff on a legislative step for a possible local sales tax to fund the public works facility. Staff reported that House/Senate companion bills (listed in the meeting record as bill 4352) were introduced, that the senate taxing committee approved the bill without questions, and that staff expects further committee steps before a local referendum would be required. A University of Minnesota study presented to the city estimated a local sales tax would generate roughly 46.6% of revenue from residents and 54% from nonresidents; staff emphasized this is an early stage of a longer legislative and local referendum process.
