Commentary: Doubling debt is wrong direction
Posted in the Prior Lake American: Thursday, October 31, 2015
By John Diers
Some forty people came to an October 19 meeting at city hall to learn more and ask questions about the 2016 budget
and its proposed 11.5 percent property tax increase. This was a notable first, and the city council and city staff should
be thanked for reaching out to the community. More of this is needed if the city is to have trust and credibility with
residents and businesses.
City Finance Director Don Uram gave a good presentation with city staff and City Manager Frank Boyles in attendance.
Missing, unfortunately, were the city policymakers, Mayor Hedberg and the council. They are the ones who will make a final determination on the budget. Missing, as well, were hard numbers and an explanation and justification for city spending and the need for the levy increase. The meeting, regrettably, was, all about process, not substance.
Let’s take a look at what wasn’t discussed at the meeting, specifically the city’s burgeoning debt.
Prior Lake is carrying some $36 million in debt obligations—bonds issued to pay for previous capital projects. The new city hall, library, police headquarters, and fire station are included among them. It costs the city about $5 million per year to service that debt, making less money available for police and fire protection, parks and recreation and other city services—as every homeowner knows, the bigger the mortgage or debt, the less money available to pay for
everything else.
Part of next years 11.5% proposed tax increase is there to cover new debt added this year, but what about future
years? The answer is in the city’s Capital Improvement Plan, recently approved by the council on a 3-2 vote and included
in the 2016 budget.
The numbers are shocking. Over the next four years, the plan proposes increasing city debt obligations from $36 million
to almost $65 million, an 80 percent increase. If a $5 million debt service payment complicates the budget today and drives up the tax levy, it’s not difficult to foresee what’s ahead. Last year’s 10 percent increase was promoted as a one time catch-up. This year the proposed tab is another 11.5 percent. If we continue down this path, there’s no reason to expect anything different in future years, It’s suggested that population growth will take care of the problem, except the city’s debt and population data shows an increase in the ratio of debt to population by 67 percent in just four years.
Consider a business or an individual doing the same. Only they can’t, because they don’t have access to other people’s
money.
Where will the money go?
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John Diers is a Prior Lake resident who spent 40 years working in the transit industry and author of “Twin Cities by
Trolley: The Streetcar Era in Minneapolis and St. Paul” and “St. Paul Union Depot.” To submit questions or topics for
community columnists, email editor@plamerican.com. (Editor’s note: Diers is a community columnist and not employed by,
or paid by, the newspaper.)