Isanti's Fiscal Future Part 2

I was contemplating changing this work to discuss the damaging effects of the 21% reduction in Local Government Aid (LGA) we were notified of last week. I decided to stick with my original topic for this piece. In part three of Isanti’s Fiscal Future I will tie the complete financial picture together and layout my budget changes that will keep us on the path to a 55% levy rate in three years. Isanti is currently at a 65% levy rate and as of 2006 was the 15th highest taxed locality in greater Minnesota.

The great myth of rapid residential growth is that it pays for itself or eventually pays for itself. The numbers speak for themselves in cities across this state and country. As I have stated numerous times in the past, current residents are heavily subsidizing residential growth. The outcome has been higher taxes and a higher proportion of the city’s budget coming from property taxes. In 2001 Isanti’s tax payers paid for 45% of the overall budget. 2002, the first year experiencing the effects of the rapid growth, the percent from taxpayers shot up to 73% of the total budget. 2001 to 2008 follows:

2001---45%

2002---73%

2003---72%

2004---72%

2005---69%

2006---64%

2007---68%

2007---71%

2007 is an estimate based off of year to date and the 2008 number is the current proposed budget.

The revised current proposed budget has a 5% tax increase. I cannot support such a budget. All evidence points to the fact that Isanti is already heavily taxed and for added measure our sewer and water rates are also quite high. I have identified budget cuts equaling a 6% reduction in the proposed budget. This however is only a 1% actual cut in property taxes. This again is the result of LGA cuts. Based on the current funding and formula Isanti may expect a further LGA cut next year. Therefore we must continue cut cost.

I will be indentifying more cuts in the next month to reduce the proposed budget by 10% resulting in an effective 5% levy reduction. This levy reduction will take us to an effective rate of 60%, leaving two more years to reach my goal of 55%. Please take note that the greatest cuts are in the first year of my plan. I am always amused by budget or deficit reduction plans that show the greatest cuts at the end of a plan and usually occur when the person proposing such a plan is no longer in office.

"There is nothing so useless as doing efficiently that which should not be done at all." Peter Drucker

This quote states better than I ever could the next difficult decision we need to make. Isanti has been funding a few organizations in just the last couple years. We have also been approached by several others. The word is out that the City is open to funding charities and non/not for profits.

These are noble pursuits but in many cases simply not what city taxpayer money is for. In some cases the county is or should be funding these groups. This sets up the unfortunate circumstance that city taxpayers are paying twice. The magic formula for many of these groups is a dollar person or roughly $5,000 per group.

Here is a partial list of organizations the city has help fund or has received request to fund.

Isanti County Historical society
Community Involvement Team
Friends of the Library
Family Pathways
Refuge Network
Redbirds
Rum River BMX
Jubilee Days

Please also note that the funding has only started in the last couple years. Even though it has been a few short years the vested interest makes it sound as though we have been doing it for a millennium and they are entitled to your taxes. Again these are all great groups. The question is, should the city give charitable donations of taxpayer money? It is tough to say no.

Some groups like the Redbirds and Rum River BMX bring in people from the region to Isanti and provide activities far cheaper than the city could. I have addressed this in the Park and Recreation budget by providing an initial amount to help such groups but make it part of the budget process so tradeoffs can be made. I have also proposed to cut this amount in half as we face tougher budget numbers due to LGA cuts this year.

To be sure we must understand each dollar the city gives is one more dollar in taxes that must be raised. Is charity a government service or an individual decision? No one likes to say no and be labeled a scrooge but we must remember what our mandate is as a city and protect our taxpayers’ money like a sacred trust.

I proposed the elimination of a building inspector earlier this year and will be asking that we eliminate other proposed staff increases and other cost. All budget items must be on the table for reduction.

Now we have discussed the general situation and the overall tax and cost reductions. The specific cuts will be laid out in part three. The other side of the equation is commercial growth. Commercial growth is important for three main reasons. Providing much needed tax base, job opportunities and products/service our residents need and want.

Commercial property pays 50% more in taxes than residential and uses less city services; ergo cost less to the taxpayers. Isanti is far behind in commercial growth. I have made expanding business opportunity my number one priority. Only through growing our industrial and commercial districts will Isanti have a solid base of revenue to fund the services our citizens want and need.

We have had a number of important ground breakings this year and I look forward to many more. The industrial and commercial business base we are currently developing will provide the tax base, jobs and products/services Isanti needs.

I have been visiting Isanti businesses with the Isanti Area Chamber President to learn what works and does not work and extending my help so they may thrive and expand. I have also been working hard to bring in new industrial and commercial businesses. The fruit of these efforts is also ripening, bringing a brighter future for our great city.

Together we can accomplish anything. Only together can we make the hard decisions that will take us forward. There may be a hard fight in the near future over this budget. Hopefully we can come to an agreement. I ask that each citizen and taxpayer consider carefully the decisions that have to be made. The budget we create for 2008 will either put us on the right path to the future or damn us to continue the mistakes of the past.