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Daily Glean: A lot of unallotment

The tumbrels rolled and Gov. Pawlenty manned the guillotine pretty much as promised. The Strib's Pat Lopez delivers that paper's breakdown of the governor's unprecedented unallotment plan, with several well-scripted quotes from irate DFLers. The best, not too surprisingly, comes from Tom Rukavina. Lopez writes, "Rukavina, DFL-Virginia, accused Pawlenty of 'lying through his teeth' about the true effect of his cuts. 'The governor is going after seniors, renters, the poor, disabled and mentally ill to pay for the budget deficit he created when he vetoed the Legislature's balanced budget. It might help protect his national conservative credentials, but it weakens the Minnesota we all value and cherish.'" Yikes. Someone won't be getting invited over for burgers on the deck.

Mary Jane Smetanka leads a team of Stribbers in a piece about the likely affects of the unallotments. With much of the pain for cities pushed into 2010, the Strib gang quotes Gary Carlson of the League of Minnesota Cities saying that "cities now will have to decide whether to raise taxes to make up for lost state aid. They've already seen a rise in property tax delinquencies. That's true for counties, too."

Chen May Yee gets the affect-on-health-care story for the Strib. She notes that "hospitals that serve the poor, such as Hennepin County Medical Center, will be disproportionately affected. HCMC will be hard hit by additional rate cuts for nonprimary care -- which includes emergency room, laboratory and radiology services -- as well as a temporary suspension of additional payments for dental care in Medical Assistance."

Lori Sturdevant delivers the first sense of the Strib's official view of the process, and the governor can't be pleased. Although she takes the perspective that many of the affected feared worse than they got, "More than $1.9 billion of the unallotment package consists of moving spending and tax collections around, not actually reducing spending. And not raising state taxes. That, after all, is the point of the exercise for Pawlenty. It was his unwillingness to swallow even a smidgeon of a state tax increase -- and the DFLers' unwillingness to send him a budget without one -- that set up the conditions that appear to open the door to unallotment. Local property taxes are guaranteed to rise because of Pawlenty's action. But the trigger on those taxes will be pulled by elected officials other than those who work at the Rev. Dr. Martin Luther King Jr. Boulevard in St. Paul."

A team of PiPress reporters has a handy -- hang it off your fridge door -- rundown on "Where the axe falls." On the General Assistance Medical Care issue, the PiPress writes, "GAMC serves the poorest Minnesotans, and its elimination is expected to skyrocket local hospitals' costs for treating uninsured patients. The withheld medical plan payments would eventually be reimbursed. Moving up the elimination of the General Assistance Medical Care program gives the 2010 Legislature less time if it wants to negotiate a rescue deal with the governor."

MPR's Tim Post looks at the likely affects on education and gets this comment from one college administrator, referring to the accounting shift that will delay payments. "[The administrator]  says he'll have to borrow the rest to make his annual operating budget of $30 million, a move the will cost the school $120,000 in interest. '[That amount] would pay for two, three teachers that we could otherwise have in front of our kids. Instead we'll be spending it on financial institutions so that we can meet the obligations that we have.'"

WCCO-TV places far too little value on Pat Kessler's "Reality Check," which has been nearly non-existent for much of the spring. But he was back last night with a piece on tax myths. Kessler notes that in contrast to much of what we hear about "high taxes," it's been quite a while since either income or sales taxes increased much, if at all. However, he reminds viewers, "the biggest tax hike in Minnesota in the last 10 years is the one that hits us where we live. Literally. Local property taxes across the state have gone up more than 60 percent."

Over at City Pages, Emily Kaiser picks up an item that declares Twin Cities drivers the 5th "least courteous" in the country. Not as bad as New York and Dallas, but nothing close to the polite hippies in Portland, Oregon. The survey was based on "who overreact and lose their temper, aggressive drivers, cutting into lanes, tailgating, speeding and horn honking." I suppose that would include ranting at Nervous Nellies who brake for raindrops.

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Comments (20)

Why did property taxes go up 60%, formula change in 2003. How much has city spending went up. We absolutely need to hold local governments responsible for there spending. By bringing the burden of taxation down to local level we can actually hold those people accountable. Give cities the ability to raise income taxes, see Ohio, if property taxes aren't "fair".

More "Reality Check" - Pat says MN is a high tax state them makes a reference to income tax rates going down. As a tax accountant rate is one of the worst indicators of income tax burden. No reference is made to apportionment factor changes, and deduction eliminations. I want to read one person that writes about tax burdens in MN that has actually filed tax returns in multiple states.

Expect massive layoffs in Minneapolis and St. Paul. That means service reductions. Want to get a permit? Counter hours will be cut to zip and don't expect the website to work for online services. Expect much longer response times from Police and Fire. Public Works is already itemizing the cuts to snowplowing, street repairs, etc.

JJ, the 60% increase is a product of basic arithmetic, something magic plan republicans (cut taxes and wait for the magic to happen) appear not to believe in. We saw this during the Reagan years when he cut federal spending and it shifted to the states and counties.

Look, there are four million people in MN, lets say for sake of simplicity they all pay taxes. Now let's say you live in a city with a population of 50,000 and your city gets one million bucks a year from the state LGA, education, whatever. Right now that million bucks costs you 25 cents. ($1,000,000 divided by 4,000,000) Now let's say the state eliminates that million bucks. Well it turns out that the money is being used for services that people don't want to eliminate like education, garbage collection, utilities etc. So the local government is going to cut those services. In order to pay for them, they raise fees and property taxes. One million divided by 50,000 is $20.00. This is how your 25 cent tax cut ends up costing you $20.00. This is simplified, but it illustrates the point. Our tax burden has actually gone up in MN because those costs are now distributed locally amongst smaller populations. If you look at the spread put out by the league of cities you'll see that the small cities and towns are being hit the hardest.

Cities aren't spending more, they're trying to maintain basic services for the most part. These are details people should have been paying attention to back when they were refusing to elect anyone who didn't promise not to raise taxes.

St. Paul is out 11m of its 200m bi annual budget and that is per the worst possible source Chris Coleman so you know it won't be that bad. Nothing will change. If anything they will raise property taxes on you know those people that actually use the services of the city. We need to eliminate LGA period for cities over say 10,000. Put accountability on city officials.

Mr. Johnson, imagine you charge your clients the exact same fee, but only now you file just their federal tax returns and make someone else charge for filing their state return. Would you still say "we absolutely need to hold state tax preparers responsible for the fees they charge?"

Pat warns: "Expect much longer response times from Police and Fire. Public Works is already itemizing the cuts to snowplowing, street repairs, etc."

You're probably right, Pat.

But if you live in St. Paul, and you have a human rights complaint you will still have the opportunity to visit any one of the three redundant (city, county and state) HR offices within a three block radius...take your choice, or complain to all three.

Oh, and don’t forget that you can also count on the continued services of the city’s bicycle advisory board to make your cycling experience one to remember!

See, it's all about setting priorities; and in Minnesota’s two largest cities, the focus is dictated by the leftist special interest group du jour as opposed to maintaining the services that any rational adult would identify as being critical.

So stock up on fire extinguishers, get yourself into a gun shop for the latest in home protection and stock up on shock absorbers; Big Brother will take care of the rest.

Tom, the city of Minneapolis spends $121 million on cops, $50 million on fire and $40 million on public works.

It spends $2.5 million on civil rights.

The governor's 2010 LGA cut for the city will be $21 million.

You're going to have to work a bit harder to convince folks the city's priorities are out of whack, and that Gov. Pawlenty's cuts can be made up with conservative-defined "frills."

Michael - I would say we need to hold the state tax preparers responsible because my fees would be reduced for only preparing the federal return. In the market I would not be able to charge the same rate for less service. I would hope the client would go out to bid if my rates were uncompetitive. Unlike government we actually have to be responsible for the work we preform or there will be consequences. LGA to the largest cities is the exact opposite of this...a formula driven welfare system designed to allocate away from the suburbs and into the cities, with income tax derived from non residents or city service users.

DBra - where does the 7.5m for the new Target Center green roof and the 2m for the Shubert restoration come in.

JoJo - city is contractually obligated to maintain Target Center. (This was something the state foisted on the city when Marv-n-Harv threatened to move. State still reaps big bucks in sales/income taxes while paying in virtually nothing.)

Place needs a new roof - after 20 years -- and there's a decent argument the green version has a real payback over time.

Agree completely on Shubert restoration, but two points: Gov. signed bonding bill with over $10 mil in state funding for same project, and money for this capital project isn't available for police, fire, public works. LGA cuts hit general operating budget, not capital or enterprise funds. Point often lost in debate.

While a city can still wipe its nose on $2.5 million, I’d say they’re going to have to work harder to convince folks they’re broke.

BTW, I was referring specifically to Saint Paul, but since you bring up Minneapolis, how much is that nifty “green roof” program costing?

"A life-cycle cost analysis found that the green roof is slightly cheaper once it hits 20 years. But the basketball lease expires in 2025, about when the arena reaches the average age when pro arenas are demolished, according to one report."

*Slightly* cheaper....after 20 years.

Maybe when they tear down the Target, they can recoup a few bucks by selling the roof to a sod farm, right David?

Tom, it's a very fair point.

But if nothing else, it indicates the true marginal cost of the green roof is much lower than critics intimate.

DBra - You have to be kidding me the life of a steel roof = 20 years. The original should still be under warranty. Talk to me in 2039 about the need to replace.

JoJo - accountant, roofer - is there no end to your expertise?

I don't know the details, but I'm betting you don't either.

Remember, the city didn't build the building, the private sector did. If you think the city chose to replace the roof prematurely, I hope you can provide evidence.

Looking through Mr. Kessler's report I couldn't find anything about a 60% property tax increase in the last ten years. Looking at my own, I've enjoyed a 47% increase over the last ten years. Of course, our home has increased in value over 100% during that same time period. 47% in ten years must be around 4.7% per year, so what is it really in "inflation adjusted" dollars? If I recall correctly, MN ranks fairly low on our percentage of local taxes paid compared to the rest of the country.

DBra - I roofed in high school and I've used the google. Good asphalt shingles will get you 25-30 years, avoid the 3 tab their trash, and steel should get you at least double that amount.

Jojo - I detasseled corn in high school but I'm not a farmer. No one, not even conservatives, have alleged chicanery over whether a new roof is needed.

As the discussion shows, the marginal cost of the roof replacement (actually one big roof plus 29 smaller ones) is far less than critics tout. It's a legitimate, but overblown, criticism. Still, it makes a good sound bite.

Maplewood, Bloomington, Eagan, Woodbury and Minnetonka to name just a few that are an example of metro cities that have gotten by without one dime of LGA in recent years.

These are examples of local government that have done a good job of managing and not relying on LGA.

Why do local governments feel entitled to LGA state tax money?

I think as you see over time, that when people that receive state funding (LGA) at times when it is being reduced. There is an over reliance and they tend to raise taxes instead of making reductions.