[Mpls] Republican views of Minneapolis

[David Brauer]

MJ writes:

> But I was really, truly stunned at how bad Minneapolis city government can
> be. I'm still surprised on a regular basis as I learn more about  how this
city
> has spent itself into virtual bankruptcy--and how they constantly  blame
the
> state, the feds, and anyone at hand in order to pass the  buck.

MJ, there's been a lot of attention on the city's difficulties lately, but
they mask the fundamental reality.

Three things to note amid the bad news:

1. The city retains a triple-A rating, the highest investment grade. The
bond houses don't give that to bankrupt cities.

2. The city is a NET PAYER into the region's fiscal disparities pool. That's
where cities with healthy tax bases support cities whose tax bases aren't
growing very fast. (St. Paul, by the way, is THE SINGLE HUGE recipient of
fiscal disparities money.)

3. City residents and businesses pay more to the state than they get back in
spending. (See:
http://www.swjournal.com/articles/2003/04/17/news/export5777.txt - the data
is a year old but I'm confident our support from the state hasn't gone up
<grin>.)

The city obviously has huge challenges. Here are the ones I believe
Minneapolis made:

1. Our internal services fund deficit. Basically, money that previous
administrations put on the credit card. The current council deserves praise
for paying this off - it's responsible for about half your city tax
increase.

2. Pension problems. This is a problem THREE generations in the making, as
the story I posted last week indicates. Previous administrations have
foolishly allowed an unacceptable taxpayer risk-reward ratio: pensioners
benefit during short-lived stock market gains, but taxpayers are on the hook
for losses. Again, the current administration is working to change this -
and the fault also belongs to DFL legislators who fear labor's retribution. 

Still, even though I disagree with Phyllis Kahn on some of the details, I do
think there are mechanisms to work through the current tough times - which
seem especially acute because of the 2001-03 stock market drop, which may be
working itself out.

Certainly, the bond houses that rate our debt have known about the pension
problems, and have figured that into their ratings. (I should also mention
the teacher's fund problem is not as bad for city taxpayers, but that will
come out when the Journal does its story.)

Long-term pension debt absolutely stinks - and city leaders deserve their
share of the blame. But no one in the financial community has said this will
turn Minneapolis into Detroit.

3. Foolish tax-increment deals. Again, something not done by the current
crop of leaders, unless you want to argue over the Sears complex. Many of
these so-called TIF districts feed NRP - which, by the way, is not just the
city's creation...it was created by the city, county, schools, parks and the
state legislature. If anyone wants to undo it, they can - but even
Republican Tax Chair Phil Krinkie says he doesn't want to. 

And whatever you think of NRP, it will release its hold on TIF dollars in
2009 - and a big chunk of change will flow back to the city budget that
year. That's one reason the long-term is not as bad as what we're
experiencing now.

So in short, the city was dumb to spend too recklessly in the go-go '90s,
but that was a full administration ago and the current crop has made
rational five-year projections to plan through the current difficulties.
(Unlike the state, they acknowledge and plan for cost inflation.) The Strib
mentioned that property taxes would have to triple by 2010 to provide
current services - by the way, not a fait accompli. Services are already
being pared, for example. I think with the NRP money kicking back there's
little change of such a tripling.

But with these and other sins, you can't let the state off the hook. Local
government aid - meant to compensate cities who deal with populations and
problems the rest of the state chooses to shun - has been slashed more than
30 percent in the last couple years. The state agreed to pick up more of
local education spending statewide - then froze per-pupil aid for three
years despite costlier heat and health care - problems not of Minneapolis's
making - and actually cut per-pupil aid for immigrant learners. Tax "reform"
did make homeowners pay a bigger share and owners of low-value homes pay the
"most more" - at the same time an office-occupancy drop (nation- and
region-wide, also not of Minneapolis's making) lowered commercial property
values and taxes more.

So while it's wrong to let the city off the hook, it's equally wrong to let
others off the hook, too. 

I think four years ago, the more civically aware people woke up to a couple
decades of fiscal laziness and punished many city incumbents. I think what's
happened since then is very different - a group trying earnestly to remedy
past misdeeds while combating a post-9/11 economy and higher levels of
governments that find the easiest budget gimmick is to force problems
downward.

I know you're in Jordan and I know they've withstood the worst of the crime
problems for years, and especially this year. I don't trust the more cops =
less crime equation, but it's a major challenge the current leadership must
figure out how to meet.

That said, I think there's plenty of good here, I believe in this place and
its people and (on good days) its leaders - but mostly I believe that the
people, armed with accurate information (not Pollyanna, or the eerily grim
glee of the doomsayers) can work together to get through this.

This is one of the best places I've ever lived for people working together -
and even the sparks-flying way some might "work it out" on the list is, to
me, mostly a sign of hope.

I wallow in this stuff all day long for work, and believe me, I would move
NOW if I thought bankruptcy, moral or financial, was the order of the day.
It's not. The problems are tough, but Minneapolis remains one of the finest,
most vibrant cities in the U.S. - in many ways, getting finer and more
vibrant - which is important to remember, too.

David Brauer
Kingfield