Tag: Preliminary tax levy

Two firsts in Minnetrista last night

Last night’s council meeting was notable in that two “firsts” occurred. One, it was the first time since elected in 2016 that I voted to approve the city’s preliminary tax levy and the reason I did was it would actually result in a net decrease in most resident’s property taxes. Two, it was the first time Mayor Whalen voted for a preliminary tax levy that would result in a tax decrease since she was elected Mayor. I’d like to think it was because she knew it was in the best interests of Minnetrista property owners but something tells me this dichotomy with her past voting record won’t happen again for another four years if she’s re-elected.

I predicted here that this election year would prompt a political change of heart for a mayor facing a challenger in a community less than happy with the steady tax increases she’s supported every year.

One of the budgeting games played by administrative bureaucracies, since they’re always seeking to increase resources, is to under-estimate projected revenue and over-estimate projected expenditures in the budget. Doing so always ends up with a tax increase being the only way to “make ends meet.” We saw that in the council’s budget work sessions where, seeing that permit fee revenue was underestimated, I was successful in getting the city’s 2021 projections for permit fees increased to more accurately reflect a higher number based on past and anticipated growth. As a result we were able to add those dollars to the road budget without increasing anyone’s property taxes.

That’s a win-win. We don’t always need to increase taxes to pay for what we need.

http://www.ShannonBruceForMayor.com

Minnetrista poised to step off ethical cliff

Minnetrista is poised to step off a steep ethical cliff. Minnetrista staff and legal counsel advocated Monday night for using Minnetrista’s $579,000 Coronavirus Relief Fund (CRF) on city payroll even though none of Minnetrista’s personnel have been substantially dedicated to COVID-19 related activities. None.

The city’s Administrator had to sign the form (below) requesting the funds, certifying their use according to guidelines which clearly state that any expenditure included in the city’s budget prior to the pandemic is not allowed.

CRF form

The funds have now been received by the city. But guess what? Despite the intention to spend the funds on payroll that was budgeted before the pandemic (specifically public safety payroll) the $579K of revenue is not reflected in the city’s projected 2020 fund balance that was provided to the council at its work session Monday night and therefore will not reduce the city’s preliminary tax levy.  **See update below re prohibition on federal COVID funds being used to reduce the tax levy.**

Follow along:

  1. City Administrator requests CRF funds of $579K.
  2. City Administrator promises to only use funds for valid COVID-19 related expenses.
  3. Minnetrista receives the funds based on it’s certification to follow the rules.
  4. City staff advocates using the funds for non-COVID-19 related payroll.
  5. City staff omits the $579K revenue from the 2020 fund balance keeping it from reducing the preliminary tax levy.
  6. Minnetrista taxpayers don’t benefit at all.

I attended a League of Minnesota Cities webinar on CRF reporting last week where at approximately 24:40 they talk about how Minnesota Management & Budget (MMB) doesn’t plan to audit reports and that local governments are on the “honor” system.

LMC CRF Reporting webinar

What is even more concerning is that our city attorney from Kennedy & Graven indicated the MMB makes a presumption that all payroll costs reported are substantially due to COVID-19 related activities. He also seemed confident that because other Minnesota cities were using the funds for payroll that Minnetrista could too.

From attending the webinar on CRF fund reporting requirements, it was clear the state does not want to be in a position of advising cities on whether or not their spending qualifies under the guidelines. Making the “presumption” that reported payroll spending is due to COVID-19 is their way of looking the other way.

I had proposed using Minnetrista’s CRF money to address the city’s information technology architecture and it’s ability to support remote operations which has been difficult under our current infrastructure during this pandemic. That could have been a legitimate use of the funds.

It was decided to check with the state auditor to see if Minnetrista could legitimately claim payroll expenses and then to report back to council. My guess is the auditor will just say they presume the city is following the rules.

Unfortunately we have individuals on the council and staff that have no problem promising to follow the rules and then deciding not to. As long as they can get away with it.

Readers can listen to the work session and council meeting where these issues were discussed Monday night.

**UPDATE 8/8/2020 – Learned from a state legislator today who read the post that using federal COVID funds to reduce the city’s tax levy is explicitly prohibited. Likely the reason federal CRF rules say a city cannot spend the money on previously levied categories budgeted prior to the pandemic, as Minnetrista is contemplating.

www.ShannonBruceForMayor.com

First levy increase since 2012?! I don’t think so

Laker Dec 21 ArticleI blogged about the misuse of statistics back in October and how omitting information, leaving out something significant that, if known, would lead the reader/listener to a different conclusion from what was presented, could manipulate residents. Well, today our favorite local newspaper, The Laker, has been manipulated. But don’t blame the reporter. She was only reporting what she had read on the city’s slide presented at the December 2 public hearing on the 2020 levy increase which said:

“General Fund levy has not been increased since 2012 and had decreased from 2010 before that”

Somehow the reporter got the idea, from the statement above, that the tax levy in Minnetrista hadn’t gone up in eight years. Hmm, I wonder if residents in Minnetrista think the same thing. Anyone familiar with Minnetrista’s tax levy history knows there has been a tax levy increase almost every year since 2012 and we got another whopper 5.66% increase this year.

The byline in the December 21 story on page 18 states “Final levy close to that submitted in September, first increase since 2012” (Emphasis added). Oops, someone actually printed what they were told, and in a very public way. It’s always been okay to mislead people as long as it was done quietly, but headlines advertising the deception are another matter. The reporter was quickly contacted by the city and told to correct the online story and reminded that she should have run the story by the city.

How would a regular citizen interpret this slide?General Fun levy has not increased

Note also how the slide says “Staff is proposing an option reducing the net preliminary tax levy increase….” instead of the reality of staff proposing a 5.66% increase, which, by the way, was adopted on a 4-1 vote (Bruce dissenting).

So what was missing from this slide and why did the reporter need to correct the story? First, there are several funds, other than the “general fund,” included in the tax levy. There is a debt fund, a road maintenance fund, and a CIP levy that, in addition to the general fund levy, comprise the taxable levy. Most people don’t know that and the only reason this statement was on this slide is to take advantage of the fact that most people don’t know that.

Bottom line is the city of Minnetrista wants more of your money but they want you to hand it over without complaining. To do that requires manipulation of the facts and they are very good at that.

 

5.66% Increase in Minnetrista’s final tax levy for 2020

Minnetrista’s city council passed the final 2020 tax levy Monday night, increasing the levy 5.66% from the previous year, on a 4-1 vote. At our work session prior to the meeting I asked the council to consider using the unanticipated higher revenue from the city’s building permits to off-set the levy increase but the answer was a unanimous no. Despite a 43% general fund reserve (healthy by any standard) the council chose to apply the savings to the general fund reserve increasing it to 47%. I was the dissenting vote on the motion to pass the levy increase.

There are other reasons I dissented. Minnetrista has a backwards budgeting process where staff essentially submits a budget to the council and the council usually approves it without much modification. Generally we are given two or three budget options with varying increases (I’ve never seen an option without an increase that is far above our growth rate even considering inflation) and the council chooses one of the options as the preliminary tax levy in September and then adopts the final levy in December, which may vary slightly when year end projections are more certain.

In the private sector, as in many cities throughout the country, the budgeting process is different and begins with submitting the prior year’s budget and then justifying the increases, line by line, before adoption. That has not been the process in Minnetrista and there has been considerable resistance to the idea that it should be. How else can the council responsibly vote to support a tax levy if it doesn’t know what the justifications are behind all the increases? I’d like to see a budget committee comprised of two council members established to do this.

The budgeting process in Minnetrista needs to start out assuming every line-item increase, which isn’t just inflationary, needs justification. Until that happens I will be voting no, as I have in the past, on the city’s tax levy.

 

Preliminary tax levy increased 5.87% and 2040 Comp Plan to come back for study

Monday was a long night for the city council with a full and challenging agenda. Unfortunately for Minnetrista taxpayers the council chose to adopt (4 to 1) the highest increase (5.87%) presented by staff for the 2020 preliminary tax levy, despite having hundreds of thousands of dollars that have been sitting in unused special funds for years with no foreseeable liabilities against them. We continue to raise taxes and debt special fundswhile cannibalizing our fund reserves, all the while having access to these public funds which, in my opinion, belong in our general fund reserves to give an accurate view of the city’s balance sheet. If the city needs to buy trees we can budget for them. If the city needs to purchase additional emergency sirens we can budget for them. Setting up “special funds” keeps this money out of the public’s view and, more importantly, out of the general fund and gives a distorted view of the city’s finances, which is used to justify tax increases year after year.

The preliminary levy increase may be lowered before the final levy adoption in December but it cannot increase any higher. December 2, 2019 was the date set last night for public comment on the 2020 final levy adoption. You’ll hear some council members defend their votes citing that the preliminary increase was reduced last year before the final levy was adopted. What you won’t be told is that it was done without cutting a single penny of spending and irresponsibly dipping into our general fund reserves.

The city’s 2040 Comprehensive Plan was on the agenda for final approval Monday night. I had some serious concerns about it noted here having to do with private wells, GreenStep Cities, inaccurate numbers projecting future water demand, and making commitments to revise or adopt future ordinances without the council having access to the wording of these ordinances. Council agreed to bring the plan back to a work session in October for discussion.

 

MN is 6th worst state in the nation for per capita state and local income taxes

Percapita state and local taxesWe all know Minnesota is a high taxed state. You’ll hear from city officials trying to pass their preliminary tax levy increases that your taxes paid to the city are just a small fraction of what goes to the county and school district. To that I say “So what?” They are ALL going up, ALL the time, EVERY year and those increases never go away. The compounded effect is driving people out of Minnesota to lower taxed states.

Remember this when the city of Minnetrista passes a 5.87% preliminary tax levy increase at the next council meeting on September 3.

Taxes or Tree Fund?

tree fundI’m going to go out on a limb here and assume the city’s *preliminary tax levy is not the most riveting topic of conversation at your dinner table. But what if you knew that you and your fellow Minnetrista taxpayers had socked away hundreds of thousands of dollars in an account, money that has been sitting there for years without any liabilities against it and none foreseeable, that could lower your city property taxes? Would that get your attention? It got mine.

Every year we’re given options from staff to increase the city’s budget. We are a growing city and that’s fine but increasing the city’s budget doesn’t necessarily have to translate into raising YOUR taxes. Growth should be providing the necessary dollars to keep city services humming along. This year the preliminary tax levy options from staff are a 5.87% increase or a 4.22% increase. The growth in the city’s market valuation from new construction this past year has only been 2.5%

So why, one may ask, if we’ve only grown by 2.5%, do we need to increase the city’s budget by more than that? At our Work session Monday night all council members except one indicated support for the higher 5.87% increase.

If you ask why they’ll say roads are the reason. Keep in mind we increased our roads budget 36% last year and 40% the year before. If we adopt the higher preliminary tax levy it would increase the road budget another 26% in 2020. These are extraordinary increases when our growth is in the lower single digits.

Anyone that doesn’t go along with the highest increase is accused of “kicking the can down the road” and doesn’t care about Minnetrista’s infrastructure. That’s an interesting statement given the fact our own city engineer’s report, rating Minnetrista’s roads, shows the vast majority of them are in “good-excellent” condition.

I argued we could choose the lower, 4.2% increase, which would still increase our road fund by 10.5% and add another $75K to the road fund by taking $75,000 out of the “Tree Fund,” (referenced above) which has a balance of over $367K in it, to achieve the same results to our Road Fund as the higher levy increase without placing the burden on the taxpayer. The answer was a resounding No.

Council is poised to adopt the 5.87% increase at our September 3 council meeting.

*Preliminary tax levy is set by September 30 and taxpayers are sent notices estimating next year’s taxes based on this. The actual tax levy adopted for 2020 may be lower but cannot exceed the preliminary tax levy.

August 8, 2018

PRELIMINARY STAFF PROPOSAL ON THE 2019 TAX LEVY Monday night offered two options, a 6.72% increase over 2018 or a 5% increase. Both are too high, as they always are on the first go-round. Minnetrista has seen growth this past year in new residences and obviously needs to provide city services to those additional residents and will, of course, require a budget increase to do so. But most of the city’s market valuation growth has been from the rise in property values on previously existing properties. Total market valuation growth this past year has been approximately 7.5% (approx. 2.5% from new and 5% from existing properties).

I suggested Monday night that a levy increase of 4.5% should more than adequately provide services for both existing and new residents in Minnetrista (2.5% increase for growth plus 2% inflationary increase). I also identified some items in the proposed budget that need to be evaluated. A tax levy increase does not, necessarily, translate to higher taxes paid if the levy increase stays in line and tracks closely with population growth. Residents are encouraged to attend upcoming public hearings on the 2019 tax levy. Watch for those dates here and on the City of Minnetrista’s website.