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Commentary: With taxes come expectations

Commentary: With taxes come expectations
Posted in the Prior Lake American: Thursday, October 15, 2015 3:00 pm
By John Diers

“A riddle wrapped in a mystery inside an enigma,” that’s the Prior Lake city budget. It could be much simpler and straightforward, if city officials wanted it that way.

Obfuscation is a handy tool when you’re trying to persuade taxpayers that the city has a revenue problem and an 11.5-percent tax increase is needed, when, in fact, it’s really about more city spending and where and how that money gets spent.

Keep in mind the city doesn’t have “a” single budget. Rather, it has 10 separate pots of money (funds) where it collects and then disburses revenue for specific projects. There was a time when there were only three or four funds. Monies went into a fund and stayed there until spent. Now there are 10 funds, and the money doesn’t stay put. Instead, it’s transferred back and forth among the funds at essentially the discretion of city staff, making it difficult, if not impossible, to track fiscal performance with any credibility. It looks like an old-fashioned shell game, with Prior Lake taxpayers as the “marks.”

Let’s look at the bottom line. The city’s approved budget for this year shows total spending from all city funds at $31.6 million. Five years ago the total, excluding the transit fund, which no longer exists, was $18.14 million. That’s an increase of $13.46 million or 40.6 percent over five years when the total inflation was only 7.85 percent and the city’s population grew by roughly 5 percent.

City officials tell us they’ve held spending flat, and Mr. Lloyd Erbaugh, chairman of the city’s Economic Development Advisory Committee, has gone so far to claim that the city has made major personnel cuts. He’d like a 16-percent tax levy increase. Yet, if Mr. Erbaugh looked at city spending, he’d see that city personnel costs (salaries, wages and benefits) in the general fund increased 20 percent over the past five years. That doesn’t sound like a cut to me. Which begs the question, with total city spending up by $13.46 million between 2010 and 2015, where did all the money go? That $13.46 million can buy a lot of temporary help.

The answer is in how you spin the numbers. If you only talk about the general fund, as Mr. Erbaugh does, it’s easy to see the spending hidden elsewhere. While spending in the general fund was reported as being relatively flat, spending in other funds has grown exponentially. Consider sewer and water. In 2010, the city spent $4.97 million compared to $9.1 million budgeted this year. That’s an 83.6-percent increase in just five years — 10 times the rate of inflation.

And what about revenues? While City Hall and Mr. Erbaugh claim that property taxes have been relatively flat, it’s important to know that other fees billed directly to taxpayers have skyrocketed. In 2010, residents and businesses paid the city $4.62 million for sewer and water services. Five years later, with about 5 percent more customers, the bill has grown to $6.85 million, an increase of 48 percent. That increase isn’t on the property tax levy, but it’s still an increase in what you and I pay for city services.

Taxes are the price we pay for a strong community and the quality of life that all of us enjoy in Prior Lake. But with these taxes comes an expectation of accountability, value and competent management. The city is hosting a community meeting at City Hall on Monday, Oct. 19 to present, discuss and answer questions about the 2016 budget and the proposed 11.5-percent tax levy increase.

Let’s hope the city gives a full presentation on city spending and the need for additional revenues and comes prepared to answer questions and provide justification for city projects and doesn’t treat the meeting as a marketing opportunity to sell a levy increase. Most of us are all too familiar with city-sponsored “feel good” visioning workshops that are long on civic boosterism but are, otherwise, short on substance.


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.)