The upcoming Sept. 8th council meeting may have the shortest agenda yet for a regular meeting since I've been on the council. However, it has a particularly important item of business: a resolution setting the maximum tax levy for 2009.

At our last council-manager workshop, we discussed the 2009 budget and the possible levy increase. Staff told us that, under the levy limits set by the legislature and governor earlier this year, Maplewood's maximum possible total levy increase would be 9.2%. From the visitor presentations in our subsequent council meeting, it seems that some residents and commentators thought the staff was proposing a 9.2% increase in the levy. Actually, they were telling us what was the ceiling under the new law, and looking for direction from the council on where to go from there. (I think the council was unified in saying “go lower than 9.2%, please.”)

Be that as it may, you'll notice that this is a much higher number than the 3.9% cap set by the state. The reason is that the new levy limit law sets out various modifiers and exceptions. For example, debt service is outside of the limits, so we need to collect taxes to make payments on the bonds issued in the past two years. For another example, there is a modifier to account for growth in the city's tax base from new construction.

The law says that we must set our maximum levy by September 15th. In December, we will set the final levy, after the Truth in Taxation hearing. The final levy number can be lower than the one we set at our meeting on Monday, but not higher. As we move further along in the budget process, the council will be able to weigh its priorities in terms of spending for 2009 and balancing those needs against taxes and fees.

As you can see from the relevant item in the council packet, the staff took our input at the workshop and came up with a proposed maximum levy of $16,481,820, which in total represents a 6.0% increase over the 2008 levy.

Labels: finance, process

Posted by John Nephew at 9/07/2008 09:41:00 AM | Permalink | Comments

I sure have dropped off in how much I've written in the blog lately. It's been a busy summer, but as I think about it, there has been no shortage of topics that I could have been writing about -- important council issues such as the Gethsemane Senior Housing project (which passed the council 5-0 for its approvals and also for its TIF application), the direction to staff to complete negotiations to buy the remaining 4 acres of Gethsemane Park (3-2 vote there), the dynamic sign ordinance, and the approval of the 2009-2013 capital improvement plan (we amended it to space out some road projects, in order to reduce the future impact of debt service on the city's tax levy; and passed the revised CIP 5-0 this past Thursday).

In meetings this week we received news on a couple of budget-related topics that I think are worth mentioning. One is that while residential property values in Maplewood declined by 6%, the commercial properties increased by 13%, and the net taxable value of the city in total did increase slightly. This is good news for homeowners, since it makes it less likely that one home will see both declining property value and rising taxes. It's not as good news for businesses, whose rising property values will mean that all else being equal, tax burden will shift from homes to commercial properties. Later in the budget process we'll get more detailed information on what this means (e.g., what a change of a given percent in the levy would mean for the median-value Maplewood home's city taxes).

Another important data point came in a side comment this week -- apparently we are anticipating an 18% rise in the cost of the city's health insurance. Let's be clear, this is a frightening number. However, earlier in the year we were told the increase could be over 40%. So while an 18% premium hike isn't much to celebrate in itself, it's a lot easier on the 2009 budget than a potential increase more than twice as high.

Labels: finance

Posted by John Nephew at 8/30/2008 10:02:00 AM | Permalink | Comments

The front page of the Maplewood website has an open letter to residents from Acting City Manager Chuck Ahl, addressing concerns about the city's finances. It will also be printed in the next city newsletter that is mailed to residents each month.

The key message in the letter is to reassure residents that no evidence of misappropriation or wrongdoing has been found. Rather, the underlying problem is that the city's accounting has not been kept up to date. This is understandable, given that the finance department was seriously short-staffed at various times last year. I believe we went from a full complement of eight employees in 2006 down to a low of just two people in the finance department for one portion of 2007. A lack of timely accounting has a ripple effect on planning and budgeting city-wide (remember the erroneous claims from certain elected officials and their supporters that the Community Center was "in the black" last year?), so this is not a situation we want to have going forward. Fortunately, our city staff has made fixing this problem a top priority.

What about an audit? The Pioneer Press called for the State Auditor to get involved with Maplewood's situation, and Councilmember Erik Hjelle has written that he "will be requesting a forensic audit of the city by an outside body."

After last fall's election, I paid a visit to the State Auditor's offices. I happened to stop by on an afternoon when Rebecca Otto had an opening in her schedule, and I was able to learn directly from her about her office's role in relation to local governments like Maplewood. The State Auditor is charged with directly auditing a number of government entities, such as the counties and the three first-class cities (Minneapolis, St. Paul, and Duluth). Normally a city like Maplewood hires a private auditing firm to review its books. However, our city council could request that the State Auditor audit our books as well, and I wondered if this might be a good idea, given the concerns I had about Maplewood's financial management under last year's leadership.

There are a couple of things to keep in mind at this point. One is that our auditors review the books once each year, so they have not yet looked at the 2007 records that are of concern. The second is that requesting the State Auditor to perform our 2007 audit would probably cost us taxpayers more (the city would be paying for the audit either way), since those auditors don't have the familiarity with our books and past practices that our current auditors do.

The State Auditor also is charged with special investigations of local governments -- for example, if someone finds evidence of missing property or funds. As Mr. Ahl's letter indicates, we have found no indication of such misdeeds. If we did, we would be required by law to notify the State Auditor.

After the meeting, my conclusion was that the best course of action was to let the normal auditing process play out. If anything suspicious was uncovered, then we would turn to the State Auditor for investigation and forensic auditing as appropriate. In the meantime, at the January 14th city council meeting, I proposed that the council name a liaison to our auditors, and received that appointment.

Labels: finance, process

Posted by John Nephew at 4/07/2008 11:05:00 PM | Permalink | Comments

This afternoon we will be meeting at City Hall for a "City Council - City Manager Goal Setting Session." One of the topics on the agenda is the city's long-term debt.

This is a topic of particular interest to me. In preparation for our conversation, I put together a simple spreadsheet comparing the road projects I am aware of from 2007 and the ones we have approved or are considering for 2008. Consider this spreadsheet a work-in-progress -- for the 2007 projects I note which meeting minutes I got the numbers from, but in general those numbers were from around the time of the public hearing or feasibility study, and the final numbers for each project may have changed along the way. Likewise, for this year I have included the most recent numbers I'm aware of (many of them from the council packet for tonight's regular council meeting); in the case of the Upper Afton Road project, we will be discussing its feasibility study tonight. We have yet to see how close the engineers' estimates are to the actual bids we will receive. I also omitted projects that were fully assessed (e.g., new streets that a developer paid for in their entirety).

As the spreadsheet makes clear, we have a wide range of financing sources for our road projects. Most of the money comes from dedicated sources -- Municipal State Aid funds, the Sewer fund, special assessments to property owners who benefit from the improvements, etc. As a steward of the city's finances, the number that concerns me most is the "General Tax Levy" column -- this represents borrowings that will be repaid out of the general operating budget of the city. Unlike the various dedicated funds (which must be spent on road construction or stormwater management or what have you), these monies could otherwise be spent on just about any of the services that the city provides. Too much of this kind of debt limits the future financial flexibility of the city.

The good news is that, even as Maplewood continues to do more road construction than usual (taking advantage of the weak construction market and lower costs while we can -- we may as well spend the dedicated funds now when we can get 20% more road for our money, rather than next year when the new gas tax revenues start increasing the demand for road construction all over the state), we are on track to assume far less general levy debt in 2008 than we did in 2007 -- almost 80% less.

Labels: finance

Posted by John Nephew at 3/24/2008 09:40:00 AM | Permalink | Comments

The Star Tribune has an interesting article today about a proposed ballot referendum in Eagan. That city has been embroiled in a lawsuit with a developer who wants to turn a former golf course into a housing development. The city had rejected their plans, which resulted in a lawsuit, that still grinds on in its fourth year. The referendum seems to be offering residents a third possible outcome, in addition to the previous options of giving in to the developer's wishes or rolling the dice in court.

Labels: environment, finance

Posted by John Nephew at 3/20/2008 10:21:00 AM | Permalink | Comments

[This is an e-mail I sent yesterday to a mailing list of commissioners, activists, and other interested citizens. Councilmember Hjelle had previously sent a message laden with inaccuracies to this list, and several of the recipients had forwarded it to me. I thought it would be good to post my message here as well, for anyone interested to see.]

Folks,

Apparently some false information is being spread around by Councilmember Hjelle.

Among other tall tales, Mr. Hjelle wrote, “The sad reality is that our new council majority has no interest in addressing the concerns of the Moratorium and the area impacted by the COPAR development. That is why the issue is efectively [sic] dead, and why the moratorium is being allowed to simply end.”

The moratorium is ending because the city council lacks legal authority to extend it further. I brought this up at the January 28th council meeting, specifically because I was concerned about development occurring between the expiration of the moratorium and the adoption of any action based on the study findings.

In case anyone needs proof, I went back to the DVD of this meeting, excerpted the relevant portion of the discussion, and put it on YouTube:


You can see me ask, and Mr. Ahl and Mr. Kantrud answer quite clearly that we have extended the moratorium as far as the law allows. You can also see on the video that Mr. Hjelle was present to receive the same information. You'd have to ask him why he would lie to you all about this.

In terms of my interest in addressing the concerns of the moratorium area, I hope it's obvious that Mr. Hjelle does not speak for me and fails to accurately depict my views.

As I learned about the issues in the moratorium study area, I became interested in ways to preserve ecologically sensitive land there, and I came to appreciate how highly valued the land is in the eyes of the members of the original open space task force as well as south leg neighbors. I also am aware of the issues of property rights, ongoing litigation, and the complexities of land use planning. Finally, I worry that the solution some favor – of keeping 2-acre minimum lots – is no solution at all for the long term, even if it is something the city could maintain. Do we really want all those septic systems uphill from Fish Creek?

The only way to really preserve the ecological value of the land around Fish Creek is public ownership. This is not something the city could pay for out of petty cash, especially with the financial situation we've inherited. The original open space referendum money, of course, was long ago spent on other land. This means that the city would have to issue bonds. A referendum would be required and a majority of voters would have to support the borrowing.

I am asking city staff for information on the process by which such a referendum could be accomplished. In the meantime, interested folks can get a start by reading a section of the Handbook for Minnesota Cities, Chapter 24: Debt and Borrowing (look at “Voter Approval” on pages 7-8 of this document).

If certain members of the council are interested in actually doing something for Fish Creek, rather than just trying to exploit it as a political wedge as they did last year, then we might get the votes in the council necessary to authorize a bond question on the ballot.

Then it's up to the citizens. The League of Minnesota Cities warns, “City officials should be careful not to endorse or campaign in favor of the bond election. Any published materials should be confined to factual statements about the project to be financed. Campaigning should be left to citizen’s groups.” (This comes from an Attorney General's opinion.) Fortunately, we may already have such a citizen's group in the form of the Fish Creek Initiative.

While bonding to buy more open space may be a tough sell with the electorate, especially in this economic downturn, we do live in a community that puts a very high value on our environment, our parks, and our neighborhood preserves. A ballot question would give citizens and activists who want to protect Fish Creek and its environs the chance to take their case directly to the voters, to persuade them that this is an investment that is worth making for Maplewood's future.

Sincerely,

John Nephew, Councilmember

Labels: environment, finance, process, video

Posted by John Nephew at 3/02/2008 11:00:00 AM | Permalink | Comments