City expects to stay on a conservative budget path

Cloquet finance director Nancy Klassen walked the Cloquet City Council through the audit of last year’s finances — which got a “clean” opinion with no errors — then city staff talked about the tentative budget for 2021. It was only a discussion, one that will continue, at least until the council passes its preliminary budget and levy later in September.

“The audit shows you where you’re at, and budget shows you where you are going,” Klassen told the councilors who were meeting via Zoom and telephone Tuesday evening.

Public works director Caleb Peterson also talked about the city’s capital improvement plan for the next five years, explaining the rankings and relative importance of maintaining and improving city streets and other infrastructure such as water and sewer and the different ways to fund different projects.

The remaining sales tax dollars are largely committed over the next three years to the ongoing Prospect Avenue (and nearby streets) project, matching the mountain bike trails grant and the two hockey arena projects that are also ongoing (all three were previously covered in the PKN).

The 14th Street reconstruction project will take more sales tax dollars in 2021-22 as will the matching grant dollars for the proposed redesign of the Highway 33 and Gillette Road/Frontage Road project set for 2022. More funds are committed to extending city water to the Antus Addition in 2023, along with needed repairs to the pedestrian/ATV bridge over the St. Louis River near Spafford Park.

Moving on from sales tax projects, Peterson talked about the 74.62 miles of city-maintained streets.

Of those, 21 miles qualify for state aid and those streets are in relatively good repair, scoring an average of 80/100 on condition. Because the state provides gas tax dollars to help cover the cost of maintaining more major roadways, they aren’t generally an issue, Peterson said.

The big issue for the city is figuring out a way to fund repairs and maintenance to the 54 miles of local streets that the city must fund on its own.

“Local street conditions are not as rosy,” he said, revealing that the average condition score on city streets was 50/100, “in part because of a lack of dedicated funding.”

Ideally, he said, the council would put aside $1 million each year to maintain and improve city streets. Most years they put aside far less than that, and some years there are zero city funds going toward street improvements.

There is a tentative plan, per council direction, he said, that will begin collecting $500,000 in franchise fees starting in 2022, money that would go toward maintaining city streets. That will help, but the overall condition of the streets will still continue to degrade (more slowly) even with those new dollars.

Previously, the city had approved a very aggressive five-year plan to improve streets by borrowing money (bonding) to pay for $7 million worth of work on the city streets, which would have resulted in $500,000 of debt service each year for 20 years.

Instead Peterson, Peterson and Klassen recommended the council doesn’t borrow money — rather they think the city should continue to pay for projects as they go, as it’s done in the past. That will give the city more flexibility to postpone projects in lean years — or when a pandemic strikes — and avoid cutting core services or staff to balance the budget.

“The one thing we have going for us now is we have not gone down the path of digging a hole into using debt yet,” city administrator Tim Peterson said. “We can still utilize cash if we plan well over the next few years. That is the easiest way for us to move forward and be the most flexible.”

“There are too many downsides (to debt) and still no funds set aside for the future,” the public works director said.

But the public works department wants the council to commit to funding infrastructure improvements every year. Slowly increasing taxes to grow the permanent improvement fund — rather than increasing the levy by $500,000 in one year, which would mean a jump of up to 20 percent in property taxes — appeared to be the course both Petersons favored.

“It would make my department’s job a lot easier if we can commit to a vision of where we are going,” Caleb Peterson said. “It’s gotten to the point when a customer calls and asks when we are going to repair their street, I’m hesitant to even share the list anymore because it changes so much year to year.”

The council will continue to discuss budget, levy and capital improvement plans at its next several meetings at least. A preliminary budget and levy must be approved in September, with the final budget and levy passed in December each year.

CAT-7 rebooted

Cloquet city councilors approved an agreement with Pine Knot, LLC Tuesday night to take over running the city’s cable access television channel, CAT-7.

City administrator Tim Peterson said staff had reviewed the city’s options for the station, and determined that they could hire part-time staff to run the station, contract with an outside party to operate the station or cease operations completely.

That would have meant the loss of more than $100,000 a year in franchise fees paid by Mediacom to the city, along with the loss of programming that many residents had grown to depend on for the local news and programming.

The station has struggled in recent years, and was down to one employee before the city dismissed the longtime coordinator on March 5. The station went dark — not for the first time in recent years — until other city staff started posting meetings and church services again more than a month later.

Under the terms of the contract, Pine Knot, LLC will continue those basic services, restart shows such as “Harry’s Gang” and “The Dragon Ladies” again in a new studio, record events like the July Fourth parade, air submitted recordings, shows or movies from the public and keep the station’s information slides up to date.

Pine Knot News publisher Pete Radosevich will step down from his position as cable commission chair to be part of running the station, Peterson said, adding that Radosevich would serve as an ad hoc member the same way that city staff do. The cable commission will still function in the same way, he added.

The council unanimously approved the contract upon recommendation from the city cable commission. The contract is binding for a year, and either side can cancel it with 90 days notice after that.

Editor’s note: For more on CAT-7, read the Harry’s Gang column on Page 6.