North Saint Paul projects $934,000 2025 surplus; staff recommends $500,000 one-time transfer to capital

Dan Wennec, the department director responsible for the city’s finances, told the council the City of North Saint Paul is projecting a $934,000 surplus for 2025 and recommended the council consider transferring about $500,000 of that one-time money into capital projects to reduce levy impact.

Wennec said the general fund started the year balanced, recorded revenues close to projections (about $51,000 below a $10.5 million budget) and produced the surplus largely through lower-than-budgeted expenditures. "We are right now with actuals, we should have a $934,000 surplus," Wennec said. He told the council those savings come largely from under-spending in administration and contractual services and specific department variances: building inspections were roughly $328,000 under budget (with corresponding lower inspection revenue), the police department was approximately $225,000 under budget due in part to mid-year vacancies, and street maintenance saved about $162,000.

Wennec also reviewed enterprise fund performance: the water fund outperformed projections by about $120,000 (with roughly $280,000 of investment income helping offset lower usage), wastewater was about $200,000 better than budget, and the electric fund was roughly $1.3 million under budget in expenditures and benefited from significant investment income. On the electric fund he noted staff will examine a fuel-adjustment clause that can shift summer costs to customers if adjusted above a set threshold.

On rate planning, Wennec said the better-than-expected performance could allow the city to reduce previously penciled-in increases: for example, he said a water increase projected near 6.25% in 2027 could be reduced to about 5.75%, wastewater from 6.75% to about 6%, and surface water from about 6% to 4%; he said the electric fund may avoid a rate increase for two years if current trends hold.

Wennec previewed three budget amendments that will appear on the council consent agenda: an adjustment tied to fire relief to reflect increased state aid (which must be transferred to the relief association), an adjustment to solid waste reflecting higher tipping charges, and a small adjustment to the city mechanic fund; he said these amendments mainly clean up accounting and will be presented for formal action at the council consent calendar.

A council member asked whether the anticipated water increases were driven by a new water tower; Wennec confirmed the planned water tower (he estimated a $5,000,000 price) and street reconstruction projects are major capital drivers that translate into operational and rate impacts.

The council did not take a final vote on transfers during the workshop; Wennec said staff will bring formal budget documents to the upcoming council meeting for further decisions.