Tax Delinquency Update

I wanted to share a few bits of financial information. I have mentioned previously I am working on the Isanti City budget. We are all well aware we are in for tough financial times with the mortgage crisis and its offshoots of tax and utility payment delinquency and the recessionary trend we are on with the latest downward turn in durable goods orders, high fuel cost and on and on.

As we progress in the budget process we are gathering more and more information as it becomes available. This latest piece is the tax delinquency trend.

2004 $43,958
2005 $67,667
2006 $92,158
2007 $209,655

These are real dollars not being paid in taxes. They will be paid eventually but that could be 2 months or 2 years. If it is a foreclosed home or a bankruptcy situation it can be years before a new buyer has to pay the back taxes. Another piece of information I want to share is that 4 of the top 10 tax payers are not paying their taxes for this year. That equates to $261,000 just in these four alone. These are developers and individual businesses.

A levy point is roughly equivalent in the past budget to $33,000. To cover the lost revenue from these four alone would equal an 8% property tax hike. This is just the impact of these four there are unfortunately many others that have not paid either. Now some will pay in the next few months but many if not most will not. This leaves us to balance a budget without knowing when significant payments to the City will be made.

This is another statement proving that my years long fight against rapid residential development and its terrible impact on our City was justified. Some will take this information and say we need to raise taxes to keep the same amount of revenue flowing into the City. This is of course nonsense. Why should we punish those that actually pay their taxes because others do not or can not pay their taxes? That’s like punching your friend in the face because someone else punched you. I will be presenting a budget that keeps spending in line with our tax base, the same way I did last year. We need and will live within our means as a City.

Our battle last year to pass a budget that for the first time in modern Isanti history actually cut spending from the previous year's spending. This passed on a razor thin 3-2 vote. If it had not we would be faced with an even higher mountain to climb. The budgets we prepare for the next two years will be extremely difficult and I am sure there will be many disappointed people as we will once again be saying no too many request. We however must treat ever tax dollar that the City receives as a sacred trust. We must maintain the highest possible level of service at a cost we can afford.

We have developed a number of new financial tools to continue our strong commercial tax base expansion. These will be coming before the Council in the next two months and I hope they will pass so we can turn our numerous commercial lots into tax paying properties. A quick example is an undeveloped commercial lot paying $1000 that has a commercial structure of average cost will pay $25,000 if it is a hotel that will range $60,000 to $100,000. We need to continue to be aggressive in building our commercial tax base.

We must not react and hike taxes and further the harm already done to families that are on the edge of keeping their homes. We must maintain the excellent business climate we have created in the last year and build upon our success in the years to come to diversify our tax base. We must pass a sensible budget that maintains long term goals and immediate services. We must and we can and we will continue to move our City into a brighter tomorrow no matter how dark the future looks.