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Letter: Fee to trust is tip of iceberg

Posted in the Prior Lake American: Friday, February 26, 2016 3:10 pm

Taxpayers, beware. Short-term decisions have long-term fiscal consequences. The demand for infrastructure improvements from all levels of government and our schools is growing, yet the tax base that funds them is shrinking. Your share of the tax bill is about to get bigger.

On Feb. 8, the Bureau of Indian Affairs (BIA) notified Prior Lake that the Shakopee Mdewakanton Sioux Community (SMSC) had applied to transfer 218 acres of SMSC owned land north of Stemmer Ridge Estates, into tax-free trust. In a Dec. 22, 2014 staff report, City Manager Frank Boyles forecast the future tax revenue loss for the city on 165 of the 218 acres at $334,000 per year. Given the ratio of city/school tax and that the $334,000 estimate did not include all 218 acres, the projected loss to the school district will exceed $500,000 annually.

This scenario is the tip of the iceberg. According to Scott County land records, last year the SMSC owned about 2,400 acres of land in addition to what’s already in tax-free trust. SMSC leaders have made their intention clear to move all of it into trust and take it off the tax rolls. Assuming Boyles’ forecast of tax revenue loss of $334,000 on 165 acres is reasonable, the eventual loss of tax revenue on 2,400 acres of property is staggering. Applying a simple ratio of 2,400/165 acres to the $334,000 suggests a future revenue loss of $4.8 million per year for the city and $7.3 million for the district – and a fiscal disaster for those who pay taxes.

Fifteen years ago, national, state, county and local elected officials understood the implications of large tracts of land being removed from our tax base. They stood united in verbal and written opposition to the transfer of more land into tax-free trust, and the BIA listened. But today our elected officials are mostly silent. Why?

On March 7, our school board will make a final decision on a proposed $163 million school referendum to address the need for more classroom space for a growing student population. We agree with the need for more classrooms but hope a responsible board will use a hatchet instead of a penknife, to scale it down to a fiscally responsible proposal. We also believe, as elected stewards of taxpayer dollars, that the board has a responsibility to publicly voice objection to more land going into tax-free trust. To ask millions more from taxpayers, but remain silent while a wealthy sovereign nation erases its tax obligation, is unconscionable.

Our city council also has a responsibility to respond to this latest trust application. It’s our hope that their response will be more taxpayer friendly than it was on the last application. On Nov. 23 of last year, the council reviewed a letter from the city attorney, addressed to the BIA, objecting to an SMSC application to transfer 250 acres into tax-free-trust. The letter included a specific statement that “The city objects to the transfer of this property into trust.” By Dec. 14, at the urging of the city manager and mayor, the sentence was removed and a letter of “objection” became, simply, a letter of “concern” which assures expedited approval. Again, we ask, “Why?”

Lastly, let’s not blame the SMSC. Any one of us would put our land into tax-free trust if our elected officials supported it by offering no objection.

Wes Mader

Prior Lake

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