We’ve heard ad nauseum that paying property taxes is the price we pay for local government services, and that no one likes to pay taxes. But the larger and more important issue is about value — where and how those tax dollars are spent and the accountability of city officials who spend them.
The Prior Lake City Council voted a maximum 10-percent increase in the property tax levy on Sept. 22. There will be a meeting on Dec. 8 to hear public comment on the proposed levy and the 2015 budget. State statute requires the levy must be certified by Dec. 29. The council can vote to reduce the levy, but it can’t raise it above theproposed amount.
The 2015 budget calls for expenditures of $11.8 million. That’s $90,000 less than the $11.89 million that was budgeted for 2014, but it’s still a 7.4-percent increase over the $11.073 million that was actually spent in 2013.
The city’s year-end financial statement for 2014 isn’t available, but it closed out 2013 with a total fund balance of $20.57 million. $6.01 million was in so-called restricted funds that are held in reserve for bonds and other legal obligations. Another $9.09 million was in assigned funds that the council designated for specific purposes, but could be moved around by the council as needed. Finally, there was another $5.39 million in money in unassigned funds that could be spent for some unspecified need or purpose.
A fund balance of $20.57 million in a year-end balance is a lot of money, and with a national inflation rate of 1.7 percent, it’s difficult to fathom why city management says it needs a levy increase next year, or why the city manager felt it necessary to threaten to close the library and make other draconian cuts in city services if the council didn’t go along with one. It’s even more disturbing that the mayor, who should be looking out for the taxpayers’ wallets, didn’t challenge the need for the increase, but instead called for a 13-percent bump in the levy.
One council member stated an increase is needed to protect the city’s reserves and its bond rating, but what about spending? Consider the $8,000 streetlights, the $67,000 electronic signs or the several million it will have to spend if it goes ahead with plans to close Main Avenue and extend Arcadia Avenue to Pleasant Street.
The city just spent $24,000 for a consultant to study downtown parking and the need for a downtown parking lot or ramp. This study followed a 2012 study by city staff and an earlier 2004 consultant study of the same issue. The city’s request for proposal called out a $25,000 to $35,000 budget for the project — in effect telling the consultant in advance the amount available so it could adjust its price proposal and pick the city’s pockets accordingly. The study is a drop in the bucket. Just wait for the multi-million-dollar proposal that will eventually follow if city officials decide to issue bonds to build a parking ramp.
Then there is the city’s recent quarter-million-dollar purchase of two homes, one at 4577 Colorado St. and the other at 4664 Dakota St. The city paid $114,900 for the Colorado property — a tidy profit for the seller who bought it for $40,100 in 2011. The Dakota property, according to 2014 county tax records, had a market value of $111,800. The city paid $140,500. Question: why did it buy the properties, and where was its due diligence when it negotiated the purchase price?
In its pursuit of growth and development, the city spent hundreds of hours of staff time on the Rolling Oaks project with no commitment from a developer. Worse, it called for up to $800,000 in proposed assessments that would have to be paid by current property owners.
Sometime soon, city staff will likely bring a proposal before the city council to extend Stemmer Ridge Road along with sewer and water service through property that was recently purchased by the Shakopee Mdewakanton Sioux Community (SMSC). Stemmer Ridge residents oppose the project. It would increase traffic and present safety concerns for families with young children. They expressed their opposition to city officials and were largely ignored. A consultant study shows the project could cost up to $4 million, yet there are no current commitments from SMSC or developers to absorb the cost, nor is there any immediate need to do the work. If the city moves ahead, there is a possibility, absent a commitment from SMSC, that the property could be placed in trust, leaving the city and taxpayers with the entire cost. The city of Duluth has a similar problem with its downtown casino.
With this track record, city management is on shaky ground as it tries to justify and defend the need for a 10-percent increase next year’s property tax levy. The current council should reject it, and the new council should set a fresh course of fiscal restraint and accountability that doesn’t mortgage the city’s future for frivolous spending and a phantom promise of future growth and development.