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 prediction – wagers anyone?

It’s an election year and strange things happen in election years. Mayor Whalen has voted every year since she was elected to increase the city’s tax levy to the point of increasing your property taxes. Every. Single. Year. But this is an election year and even Whalen understands voters don’t like seeing their taxes go up year after year after year.

I predict this will be the first year Whalen votes in support of a tax levy that doesn’t increase your city property tax. But remember, the best predictor of future behavior is past behavior. Rest assured that will hold true for the next four years.

Past city levy increases have far exceeded Minnetrista’s growth rate. Since elected I have voted against each and every one. The growth we are experiencing, and are told will continue, should generate more than enough revenue to support city services without increasing anyone’s city property taxes. The city also has several “special funds” not reflected in the general fund (where levied revenues and expenditures appear) with hundreds of thousands of dollars sitting idle. Some of these funds should be re-allocated to roads instead of using roads as an excuse to raise taxes every year.

Our council meeting Tuesday night will likely include a vote on the 2021 preliminary tax levy. Anyone willing to wager it will be the lowest since Whalen took office?

http://www.ShannonBruceForMayor.com

Trick or Trees?

If you want to adopt a policy in Minnetrista that creates future city liabilities and know there won’t be money available for those future liabilities what do you do? You do what Mayor Whalen suggested Monday night and that is, when the money runs out you just change the policy and declare the city won’t be responsible anymore.

tree fundWe are talking about the city’s tree fund that has a current balance of over $416,000, dollars contributed by developers that took out more trees than allowed and had to pay into the fund. That money has been sitting idle, not being used (Minnetrista has no shortage of trees) and the balance continues to grow, but once the city is developed the deposits to that fund will stop.

special funds2Knowing this tree fund has been sitting unused for years I’ve suggested we should look at using part of it for road maintenance since that seems to be the most challenging aspect of our finances and is the primary reason given each year for increasing the tax levy. There are other “special” funds with balances of hundreds of thousands of dollars that have been sitting relatively idle for years as well (see highlighted chart).

Interestingly, after these many years, staff recently decided it was time to discuss establishing a “tree replacement policy” to use these funds to replace trees planted in right-of-way areas on private property.

I have no issues with replacing diseased trees along rights-of-ways because our housing development HOAs and other property owners do not cause tree disease. That is a legitimate use of these funds to beautify our boulevards. But private property owners (or HOAs) are responsible for the care and maintenance of all trees and landscaping on private property, not the city. If the city assumes liability for replacing trees caused by neglect or any cause other than disease it is taking on more liability than it should, in my humble opinion.

The council work session discussion ended with staff being given direction to replace all dead trees in rights-of-way areas regardless of the cause. Votes are not taken at work sessions but had there been mine would have been a “No.” It was stated during our work session that we currently are not aware of any diseased trees at this time. I guess you never know when a tree pandemic will hit that requires using up the entire fund. Meanwhile residents are demanding better roads and being told their taxes will need to go up to get them.  www.ShannonBruceForMayor.com

 

View author profile

 

Mayor Whalen’s blog on increasing your taxes

I think some clarification is in order here.

Mayor Whalen states on her new blog “When determining our levy one of the things we look at is growth. The County Assessor estimated that we saw a 2.0% – 2.5% overall new home growth. If you subtract that from the final levy increase (over 2019) of 5.66% it leaves an increase of approximately 3.2%-3.7%”

mayor's blogThat’s assuming, incorrectly, that for every percent in growth the city needs a 1:1 ratio increasing the tax levy. That’s simply not true. First, the 2-2.5% referenced here is the increase in the city’s total market valuation from new homes, not the number of new homes built. That could be a very small number of expensive homes or a lot of inexpensive homes. There is no correlation between market valuation increases and a need for higher taxes.

The tax levy should only be increased because of increased costs (plus inflation) due to growth, not simply because of market valuation increases. Theoretically you could have one home built that accounts for the entire 2% growth…which wouldn’t justify any tax levy increase at all. I’m not implying that is the case, just using an example that makes the point.

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.

 

Minnetrista: $$$ Vote Tuesday!

You wouldn’t buy a car from merely reading the manufacturer’s ads would you? If you live in Minnetrista in either the Mound Westonka or Watertown school district there is a very important vote on Tuesday: $Millions of dollars in school referendums that will impact you and your community for the next decade and beyond. I urge everyone to get information from sources other than the school districts promoting the referendums.  These referendums are intentionally held in non-election years counting on low voter turnouts. Here is where you can vote on Tuesday, November 5:

WhereToVote

Put the brakes on

Watch a representative from Ehlers, the city’s contracted financial advising firm, who gets paid to help cities borrow money, defend Minnetrista’s weak debt profile from Standard & Poors in this video from Monday night’s council meeting, rationalizing that because everyone else does it, it really isn’t a big deal. Well, of course a firm specializing in debt issuance would see it that way.

S&P Debt RatingMinnetrista’s debt service is 18.6% of total government fund expenditures and that is high, according to Standard & Poors which isn’t a firm specializing in debt issuance. They specialize in evaluating the credit worthiness of organizations. Perhaps we should heed the assessment from S&P rather than go along with the don’t worry be happy advice from our debt issuance firm.

debt growthBecause a city can just take the money out of constituents’ pockets it carries an obligation to make sure it manages debt responsibly. Even the Ehlers rep estimated Minnetrista would need to almost cut its debt service in half (reduce it to 10%) to change the S&P rating. Minnetrista needs to put the brakes on. Apparently so do a lot of other Minnesota cities.

Monday night’s discussion centered around refinancing some G.O. bonds and the city’s ratings relative to receiving favorable bids. Having a AA++ rating is a good thing and the city’s finances are strong partly because our residents are relatively affluent which translates into what they call a “high tax capacity” (there is plenty more to take) and there are funds stashed away in “special” funds that aren’t being used. But bond ratings are not the point here. Saddling future generations with debt that keeps growing is the point.

The eight page Standard & Poors rating wasn’t in our council packet or available to the public prior to the meeting.  I had to request a copy of the rating assessment to review prior to the meeting and asked that it be provided to the council. They had planned to hand it out during the council meeting. If residents would like a copy they can call city hall.

 

Misuse of statistics manipulate Minnetrista

“There are three types of lies – lies, damn lies, and statistics.” – Benjamin Disrael

Local governments want more of your money but they want you to hand it over without a fight so they pull out statistics to convince taxpayers to open their wallets. Here are just a few things to look for to see if you’re being manipulated by the numbers.

dwarf_PNG76Omissions: Leaving out something significant that, if known, would lead the reader to a different conclusion from the data presented:

  1. When a city, in an attempt to waylay fears of a tax increase, says their tax rate has stayed the same or is lower than it was before but neglects to reveal that your property valuation has increased substantially and, therefore, the amount you pay is going up.
  2. When the city tells you residents are willing to accept a property tax increase for road maintenance without telling you that 64% of Minnetrista residents indicated they opposed any property tax increase for roads in the community survey (see below).

Using percentages from a small sample size: When a survey uses an insignificant sample size, percentages will always be misleading:

Minnetrista’s community survey asks respondents if they would favor or oppose an increase in property taxes for city street repair/maintenance and 64% said they’d oppose an increase. A very small number (128 people out of 7,000 city residents) indicated they’d favor an increase. That subset of respondents (128 people) was questioned to see how much more they’d be willing to pay. When they indicated various amounts ($5-$30/mo) it was then repeated over and over again that, according to the community survey, the majority of people (which was actually just 118 people: 92% of the 128) are willing to accept an increase in their city property taxes for roads, when, in fact, 64% surveyed said they were opposed. Starting to get the picture of how this works?

Faulty polling: How questions are phrased can influence responses dramatically. A deceptive polling strategy is to precede a question with a narrative designed to prejudice the response or to omit (see above) important data qualifiers. The examples below use a combination of both omission and faulty polling strategies:

  1. Minnetrista’s community survey precedes a question (#49) about whether or not the city should build a gun range saying “there is an unfinished gun range” and “if finished” it would be used by residents. Communicating something as “unfinished” implies that it has been started (which it has not) but not completed and influences a positive response since people generally are averse to leaving things “unfinished”. The truth of the matter is there is empty space with nothing in it that could be built out as a gun range. This survey question also omitted the fact there would be significant, ongoing annual operational and maintenance costs that will increase residents’ taxes over and above the build out costs. Had that been revealed and the phrasing less biased, the responses would likely have been much different. Even so there was little support to use tax dollars to fund the build out, and one would assume no support for tax dollars to fund the maintenance (if they had been aware of it).
  2. This one is my favorite: This survey question precedes another (74) regarding the approval rating of the Mayor and Council with a question that reveals the majority of respondents know “very little” to “nothing at all” about the work of the Mayor and Council but then goes on to ask if they approve or disapprove of the job the Mayor and Council are doing. Remember that next time you hear about the council’s 80% approval rating. Apparently ignorance is bliss.

Community surveys are merely vehicles designed to justify tax increases and reelect incumbents that support them.

Additional $375 annual check to Watertown Schools? VOTE Nov. 5

That’s how much more someone with a $500K market valuation will pay annually if the revenue referendums proposed by Watertown School District pass in November:

watertown bond referendum

Westonka Schools also have a revenue referendum increasing school spending coming up for a vote November 5 as well. A $500K property would see an annual increase of approximately $121 in that district if it passes.

Both referendums provide for annual inflationary increases for the next ten years.

Watertown School District Voting:watertown voting

Westonka School District Voting:

westonka voting

More information on both school districts’ referendums:

Watertown School District’s referendums

Westonka School District referendum