2017 Budget concerns

I anticipate a very frustrating budget process which may leave me unable to support the proposed budget. Right now as I review the budget, the tax levy increase is at about 9% which is about the same as the valuation increase of the city. This means that if your property value is flat your taxes will probably be pretty flat. If you saw a tax increase it is probably because This masks some serious underlying issues. I still have many questions so if my analysis is incorrect. I have many more thoughts, but these are some highlights.

As always I have an open ended question, if you want to see cuts let me know what you have in mind…

Problems:

  1. We continue to ignore actual maintenance costs. Streets which are the most serious issues require $22.9M in annual maintenance. It looks like we are putting in maybe $5 million. Worse yet I believe a fair amount of the funding is coming from one time moneys. This will catch up with us. To fix the current situation with taxes would require an enormous tax increase. Further this is only streets, we also have similar issues with sewer, buildings, parks, and other municipal entities. In short, we have more infrastructure to maintain than we have resources to maintain it. Not only are we not properly funding maintenance, we don’t even have a plan to phase this in!
  2. While the proposed reduction in the levy is nice we are failing to fund a few priorities that I see as key. In particular, public safety both in terms is law enforcement and safe infrastructure lacks the improvements I would like to see. Further many of the issues resulting from a lack of focus on sustainability will not be addressed if we have no staff to focus on that sustainability.
  3. The lack of action from the PASC has left us with a huge hole in the planning department 2017. The group seldom meets and has taken no action to address the serious issues raised in the Stantec Report. As a city, we need a fully staffed planning department, but the responsibility for that staffing currently lies in the county. We currently have a significantly understaffed department lacking key skills like urban design & architecture. We also lack the necessary communications between planning, building inspections, and public works. The pay scale in the department also appears to be unrealistic in attracting top talent. We are lucky to have devoted experienced employees that help mask the issues. As of a completely worthless meeting last week, there was still no decisions made. Rochester pays 76% of Olmsted County taxes. Olmsted County benefits greatly from planning in Rochester, but wants the city to fund the needed positions. The system is completely broken and the PASC has neither the desire or drive to address these issues. In the budget we need to know if we need to create a city planning department. We do not have the information we need to make an informed decision.
  4. Basically this budget does not consider broadband or the steps to get there. Rochester lacks the technology to remain competitive and a lack of competition results in high rates and poor service. Our kids that could most benefit from broadband often can’t afford it. We already have an independently verified business case showing that municipal broadband is viable in Rochester. The next step will be to do a market study to make sure the utility could sustain itself without taxpayer subsidy (just like Longmont Co.). However this budget doesn’t seem to realize this as a priority despite overwhelming support.

Solutions:

There are solutions, but an unwillingness by some council members to make the changes that are necessary to put us on solid financial footing. Here are a few, some that are being done already in Rochester.

  1. Utility basis budgeting – RPU already is pursuing this with both the water & electric utility. What this basically means is that for every asset the utility owns we make annual payments to ensure we always have the funds to maintain or replace major assets. If this seems like common sense, it is…
  2. Financial analysis – I believe that we should not accept any new infrastructure as a public asset unless taxes / value available for maintenance exceeds the cost of maintenance. In other words, stop building money losing infrastructure. Now this infrastructure may still be built, but it should then be privately owned and maintained. This is not intended to affect public amenities like parks, library, arts, etc. If this seems like common sense, it is…
  3. Foolish subsidies – We have to stop this. We charge a substantial fee (sewer customer charge) to every single household in Rochester to subsidize new development. We seriously charge people barely making it in Rochester extra so we can subsidize million dollar homes. This is madness, but it continues year after year. We need to end these types of subsidies. If this seems like common sense, it is…
  4. 5 year finance plan – We need stop kicking the can down the road year after year. We need to seriously address the structural failings of our current finances. And yet every year we meet and take no meaningful action. A longer term horizon would force us to stop gaming the system, exhausting one time monies, and failing to properly prepare to deliver services. We have made progress in planning for staff, and then subsequently ignore that plan in order to push needed staff into the next year. We need a longer term plan that the community can proactively weigh in on. If this seems like common sense, it is…

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