Thursday, December 4, 2008

EPTA Calls for City Spending Freeze, State Legislator calls for a State Freeze

Read the Eden Prairie Taxpayer's Alliance Nov 13th Commentary on Freezing City Spending.

At the sparsely-attended Truth in Taxation meeting at City Hall on Monday Night, a handout was provided that showed Eden Prairie home values have only gone down by .9% in the last year. Anybody who owns a home here knows that is incorrect. The evaluation at Zillow shows a 5.9% decrease in home values which certainly seems more in line with the prices homes are fetching on this part of town. We have homes sitting on the market in our neighborhood for 6+ months going through several price reductions before they're sold. Go to Edina Reality- look at the Property tax amounts on homes- and what they're selling for- you can see that many have been severely over-taxed based on what they're now able to fetch on the market.

Also at the Truth in Taxation meeting- there was a new business owner that had bought a commercial property in Eden Prairie- the previous property tax (before they purchased) was approximately $4,500- their new bill this year was almost $9,000 higher! City staff tried to say- perhaps the property has been improved, etc. It hadn't. The taxpayer just shook her head and walked away from the podium dejected. Why would ANYBODY want to start a business in Eden Prairie with stories like these?

Regardless of the property values, we're experiencing a severe economic downturn with some of America's largest businesses contemplating bankruptcy. Things are very uncertain. Companies are laying off employees or not providing raises or bonuses. People are are out work for long periods of time. The plumb mid-level management jobs are drying up. Why exactly is it that government employees should be the only ones immune to these realities? Freezing salaries (at least for management level and above) should be an absolute no-brainer. I'd take it a step further and look to combine more job responsibilities among staff and cut positions. Freezing new projects that we don't need (the Arts Center) should also be highly considered. It's a time for complete fiscal responsibility.

It's important to note that 25% of property taxes (from a median home) go to the City of Eden Prairie, while 33% go to the School District here and 34% go to Hennepin County. School board elections are this year with three seats to fill- we need fiscally conservtive citizens to run for these seats. And Hennepin County? That's a whole other animal- someone needs to run against lame Republican Randy Johnson who's been in office since Disco was king. The man quotes "Governing Magazine" in his bio!

At the state level, Republican Legislator Paul Kohls of Victoria is calling for a spending freeze in St. Paul. Here's his website- sign the petition!

Doesn't it seem sometimes, that human nature is to wait until things "hit bottom" until a change is made? It shouldn't be this way, not for mature, reasonable adults. We need to be pro-active about reducing the size of government and trimming budgets, not wait until we have a revenue crisis.

This all makes perfect sense to me. Republicans are in the minority at the state and national levels. The public is going to be looking for promises to be kept on lower taxes (city level) and less spending (state and national level). If we don't lead the way- Democrats will. They'll cut away at the basics (defense, public safety) in order to keep their programs (welfare, cultural/arts). Please make your voices heard at all levels of our government to ensure that this doesn't happen and that our elected officials understand that you don't NEED to increase spending, it can be frozen- or heaven forbid- CUT.


phil said...

Assessments in Eden Prairie aren't perfect. But, they are a little better than your introduction infers.

The first thing city staff did on Tuesday was update the entire council on the business owner whose assessed value more than doubled last year. What she didn't say Monday night was that she purchased the property as a residential home and had it rezoned into apartments to be used as an assisted living facility. This put her property into a higher tax classification, which is an issue which state law controls, not the City. A 4000 sq. ft. commercial building pays MUCH higher taxes than a 4000 sq. ft. home. Moreover, City records confirm that she was told at the time of her rezoning that her assessment would rise substantially if she changed the zoning on her home.

Generally speaking, assessments tend to lag the market by over a year, both as the market increases and as it decreases. Rather than explain why that happens, the more important point to remember is that it is not ABSOLUTE property value which determines whether your taxes rise or fall, it is RELATIVE property value. So, when the market increases and everyone's property is assessed at 5-10% below true market it doesn't matter from a tax point of view because even if everyone's home was assessed at market they would pay the exact same amount of property tax. You do not pay more taxes just because your home value goes up; you will pay more taxes if local government spends more or if your property increases in value at a greater rate than average for your community.

Jim said...

No worries, we just look at our state's $5 billion budget mismatch and say, "hey, Federal government, since you create money out of nothing, bail us out like you bail everything else out; think of the stimulus that will cause" and then continue with the ridiculous spending as usual.

(Yes, I'm well aware of the long-term damage that causes in terms of moral hazards, punishing savings, dollar devaluation, etc., but the idiots in Washington will do it anyway because the "quick fix" is always more appealing to the short-sighted.)

Just like MN is a donor state to the Federal government (where we get only 72 cents back, with strings attached and other conditions on how we must spend it, for each dollar MN citizens are taxed by the Feds), isn't Eden Prairie a donor (sucker) city to Hennepin County? I'm sure they'll give us a nice property tax increase to help with their own budget problems (largely due to rapidly growing HHS handouts to Minneapolis).

It's such a racket.

The school budget shouldn't be a sacred cow, either. "It's for our children" shouldn't be an invitation to throw money at an unsolvable problem in a wasteful way. Countless examples show that some of the "gaps" will always be there, no matter how much money you blow on "special" classes. EP won't solve it any better than hundreds of schools across the country who have been dealing with the issue for decades have solved it.

And yes, these all these government spending issues were out of hand two years ago, ten years ago, and before that, too. In good times and bad, it's out of control. The problems are easy to anticipate given the unsustainable spending patterns. It's just hard to know the exact timing of when the proverbial feces hits the fan. Of course, for the naive, ignorant, and short-sighted, "no one could predict" such problems. At least "no one predicted it would happen while I was still in office."

phil said...

Eden Prairie is a "donor" city in several ways. First, because our taxpayers pay far more in taxes to Hennepin County than they receive back in services. Second, because MN's "fiscal disparities" law requires that a portion of the annual increase in our commercial/industrial tax base be "redistributed" to stagnant cities such as St. Paul. This law costs the taxpayers of Eden Prairie in the low seven figures every year.

Jim said...

Good info, thanks, Phil.