Budget Priorities – In Depth

When it comes to establishing a city budget, what do you see as the key priorities and why? 

Rochester Post Bulletin

This post is intended to add some depth to the 90 second video answering the Post Bulletin question above.

My qualifications:

I am particularly interested in budget topics and have been actively involved in trying to bend the curve towards more fiscal sustainability in my time in office. Here is some of my background.

  • I have successfully owned & run a small business for 12 years. My business specializes in providing financial services to churches & non-profits.
  • I hold 2 Masters degrees including an MBA with a focus in Finance from the University of Minnesota, Carlson School of Management. This is a top 25 business school in America. Additionally I have a Masters Degree in Electrical Engineering. I like numbers…
  • I am an Affiliate member of the CFA Institute, at present I have passed all 3 exam levels.
  • I have taught a number of finance and accounting courses at the undergraduate and graduate levels for St. Marys University.
  • I am an expert at financial modeling, and review the City of Rochester budget using a number of analytical tools annually.
  • The City of Rochester has been able to maintain a flat property tax rate since 2012, when the state changed formulas. What this means is that any property tax increases that a property sees is as a result of increasing property values. This also means that the size of government has not grown faster that the community in that time.

Short term budget considerations. 

  • The most immediate goal is to respond to and recover from Covid19. The City of Rochester has been able to balance the 2020 budget without the need for furloughs and layoffs.
  • At our 2021 Budget initiation session I requested that we set guidance to freeze or lower property tax rates in 2021. Within our existing budget we should help small businesses connect to local opportunities. A good example of this was quickly allowing for additional outdoor dining opportunities city wide.
  • It is a personal goal of mine to further diversify away from property taxes in 2021. There are a large number of properties that do not pay property taxes thereby increasing taxes on those that do. This is inequitable and particularly hard on small businesses. The State of Minnesota does not allow cities to use income taxes and greatly restricts sales taxes. There are a number of fees that could be added to replace portions of property taxes. This include a Gas Franchise Fee, Lighting Utility Fee, and Sidewalk Utility Fee. Because of the issues many families and businesses are facing in light of Covid19, my intent would be to use these fees as a 1 to 1 replacement of property taxes.
  • Focus on leveraging non Rochester revenue sources to maximize local impact. While we face immediate challenges there are also opportunities related to the likely availability of stimulus programs and historically low interest rates. We should prioritize capital investments that keep people working, and bring in additional state & federal funds. Projects might include portions of North Broadway, the 2nd Street Rapid Transit Line, and miscellaneous water and wastewater projects. As I have for more than a decade, I will continue to look for ways to continue funding Parks and Libraries.
  • Targeted 2021 Investment should focus on local equity. We must continue to build more accessible mixed income housing to allow rents to come back to a range where all our people can afford a place to live. Gaps in safe pedestrian & bike routes must continue to be made safer. Broadband it the utility of the 21st century and must be made affordable to all families.
  • In 2021 we need to continue to analyze partial or complete “Fare Free” fixed route public transportation. If Mayo Clinic is willing to work with the City of Rochester it is very possible that running a “Fare Free” system may actually cost about the same as charging fares, make the system more efficient, and greatly increase ridership.
  • We must continue to implement the Planning 2 Succeed comprehensive plan. By better controlling our growth patterns we can greatly decrease the amount of new infrastructure we need. Additionally we can slow increases in public safety costs as response times to sprawled out areas continue to drive expansion of personnel and new physical locations.
  • We must fight continued cuts to state programs that equalize funding. While the amount of taxes Rochester sends to the State continues to grow, we are seeing decreased state investment, even including DMC. In today’s dollars Local Government Aid to Rochester was about $200 per person in 2000. In 2021, this will be about $50 per person. This raises everyone’s property taxes.
  • In 2021 we must continue to hold organizations accountable, and be willing to stop funding to organizations who perform poorly, engage in self dealing, or simply don’t address community priorities. Recently we completely rebooted the Convention & Visitors Bureau, rooting out cronyism and self dealing. We have severed financial and non-financial ties to the Greater Rochester Arts & Cultural Trust, which misused public funds and attempted to manipulate a public document for private gain. After years of failed leadership the City has taken a hard line with the Civic Theatre. The result appears to be an organization which is finally removing the sources of failed leadership, financial disarray, and personnel misconduct.
  • We must be opportunistic and look increasing towards mixing public and private uses in new buildings. Though the Library building is only 25 years old, it was built so poorly that it can not grow to meet community need and the building envelop is failing. As potential private partners present themselves we challenge ourselves to find opportunities to address this issue.

Long term budget considerations:

  • Sadly 50 years of uncontrolled sprawl resulted in enormous unfunded infrastructure liabilities. In the past 3 years have used increased city revenues to address the maintenance and replacement of critical infrastructure. While this is necessary it is not fun.
  • As we are getting our infrastructure spending and related organizational growth under control we can begin to shift priorities towards more of what makes a community great and equitable. Revenues from growth must currently fund increasing infrastructure, geographic safety coverage, and business subsidies due to high infill infrastructure costs. My long term vision is to instead invest more into great neighborhoods, parks, green ways, libraries, and the arts. I would like to see the types of improvements at Uptown & Cascade Lake done in more parts of the community.
  • From 1950-2010 sprawl sucked the public wealth from our community. We must not go back to that model. Today Rochester’s fastest growing neighborhoods include Downtown, Uptown and the neighborhoods surrounding St. Marys.
  • We must continue to enable and nurture high value infill projects, examples of these include Discovery Square I, The Berkman, and mixed use facilities near Civic Center Drive and cross from St. Marys. These sites are taking low value properties and replacing them with high tax dynamic developments that have the density to support neighborhood businesses. Best of all, all of these projects have been shaped by meaningful community involvement and the support of neighborhood leadership.
  • At the State level we need a better partner to help small businesses thrive, reward historic preservation, and allow for the creation of mixed income housing.
  • We currently have a model where dense neighborhoods and downtown businesses heavily subsidize more suburban areas. Often these properties will pay far more in taxes and fees which effectively subsidize low density areas. This lack of fairness makes smart growth harder and sprawl easier. One tool that Minnesota Cities are fighting for are Street Utility districts. This tool would allow cities to charge for street maintenance in a more equitable manner, greatly reducing the strain on families and small businesses.
  • In a few years we will get to the point of potentially renewing the city 1/2 cent sales tax. My hope is that the state will stop preempting local decision making on sales taxes. Short of that I hope that we can focus future funding to refilling flood control reserves and building amazing community amenities like parks, green ways, libraries, and arts facilities.

One comment

  1. We haves on top of fees. Stop it!
    Affordable housing is one area hurt by fees.
    Every utility has raised rates with fees.
    Franchising our utilities has cost us. Open competition for customers would help us all.
    Support our secondary education centers. The History Center needs to be adequately funded by local government.

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