Commentary: Speak up about tax shell game
By John Diers
It’s election time, and, locally, it’s no surprise that we’re hearing plenty of rhetoric about tax increases. It’s true that taxes have gone up, but are they the real issue, or are we confusing cause with affect, the symptoms with the disease? Taxes cover only part of what we pay for city services. Don’t forget sewer and water fees and permits, and special assessments for major projects like street repaving and renewal, and then there’s borrowing—what I call mortgaging our future. Taken together, bottom line, what we’re really talking about is the cost of city government— spending.
Some argue that we’re getting good value from our city government and use 2010 as a base year when talking about tax increases. The claim is made that out of pocket taxes—what we really pay—haven’t gone up that much in recent years. This, of course, ignores sewer and water billings and other fees, but more important it completely ignores city spending. Let’s take a look at the trend in city spending and compare 2010 and 2016 using city hall’s numbers.
The 2010 budget shows total spending of $19.285 million including $1.144 million for city operated transit services. Since we’re trying to do an apples-to-apples comparison, lets subtract the cost of transit service because Minnesota Valley Transit (MVTA) has taken over bus services. The budget also shows a transfer of $1.680 from the general fund for debt service. That leaves $16.461 million for city operations. Again, keep in mind these are unaudited city numbers.
The 2016 city budget calls for total spending of $29.522 million. Again, take out debt service of $5.110 million, and we have total city spending of $24.412 million programmed for 2016. That’s $7.951 million more than 2010. Consider for a moment that in six years city spending has increased 48 percent, while in those same six years the city’s population is estimated to have increased by 10 percent, and total, cumulative inflation, as reported by the US Labor Department, has gone up 10.33 percent.
The conclusion? Assuming the city’s financial records and documents are correct, city spending has been increasing at more than twice the rate of combined inflation and population growth. Would it surprise anyone to learn that debt is also increasing? Most residents with a mortgage are making fixed payments as their mortgage balance declines. In the city’s case, the debt payments have been increasing and so has the debt balance—a reverse mortgage of sorts but not the kind we’d want in our personal portfolio.
Ask yourself, and city hall, why?
Now let’s take a look at the revenue side and make the same comparisons between 2010 and 2016. Keep in mind, a crucial fact that gets lost in the tax debate, and one that I haven’t heard discussed by incumbent candidates, is that for every dollar collected from residents in property taxes, the city collects another dollar on average from residents and businesses for sewer and water service, special assessments, and a variety of other fees. And that list is growing, especially when the mayor and council voted recently to shift the cost of road and street resurfacing from the general budget to neighboring property owners. I’ve heard officials try to market the change as a “cost saving.” I think of it, more, as a shell game.
Nor will you hear city officials saying much about water and sewer bills, which have skyrocketed over the past six years. The city’s billing rate for water and sewer has gone from $4.15 per 1000 gallons in 2010 to $6.92 per thousand gallons today. That’s an increase of 67 percent. In addition to the charge for water usage, your sewer and water bill also includes charges collected by the city for capital improvements and storm water management, and a charge from the Met Council for sewage treatment. Since the water in the ground is free, this increase essentially involves labor and overhead cost to get water from the ground for delivery to our homes and businesses—unless, of course, the revenue gets moved to other pockets and ends up offsetting spending, elsewhere. Fortunately the Met Council hasn’t been nearly as aggressive as our city government in raising the rate.
The city will hold its truth in taxation hearing on November 28 and a final vote on the budget and tax levy on December 12. Both dates are after the election. Given these numbers, the outcome of the election could be cause for self-reflection on the part of some elected officials.
Please read more from the Prior Lake American:
http://www.swnewsmedia.com/prior_lake_american/news/opinion/columnists/commentary-speak-up-about-tax-shell-game/article_29a72667-c9a8-5003-8766-ef6d2a90eea6.html
John Diers is a Prior Lake resident who spent 40 years working in the transit industry and author of “Twin Cities by Trolley: The Streetcar Era in Minneapolis and St. Paul” and “St. Paul Union Depot.” To submit questions or topics for community columnists, email editor@plamerican.com. (Editor’s note: Diers is a community columnist and not employed by, or paid by, the newspaper.)