How does (city name here) compare in efficiency? Go figure

  • Article by: DAVID PETERSON , Star Tribune
  • Updated: October 25, 2011 - 4:05 PM

Savage's election fuels questions about why it's so hard to know which cities tax or spend more than others.

Scott County cities love to brag about how beautifully they get along. But every single year, Prior Lake throws Savage under the bus.

Residents get a list of financial achievements that leads off with a graphic depicting Savage's tax rates as far higher than those of either of the two other major suburbs in Scott County. "Prior Lake," the city has been known to add, "is being prudent."

But an election campaign this fall in Savage that is stressing the same gap is raising questions about the validity of such comparisons.

For instance, one city might collect more property taxes, but what about fees, "franchise taxes," and other ways of squeezing dollars out? What's the real size of the gap?

The question applies to everyone. Amid self-serving political pressure and eye-glazing talk of "tax capacity-based levies," how on Earth is the average schmo -- or even an officeholder -- supposed to compare?

Prior Lake's mayor cheerfully admits he doesn't feel he can.

"When and where are we able to pat ourselves on the back?" asks Mike Myser. "I honestly have no idea if we are cost-efficient or not -- internally, or compared to others. I know we are doing great work. I sense we will see good results. But I don't know that. I don't have the data."

And those numbers, he adds, are central to the city's work. "It's not that much to ask, and we owe it to our residents."

Transparency of this kind is a rising issue across the south metro and the state.

Both Prior Lake -- whose council is to take up the topic in December -- and Savage are at work on new performance measures. Prior Lake's Myser said the new measures will end up differing "in a big way" from those of the past.

The two suburbs are among a smattering of south metro cities that have agreed to take part in a voluntary statewide effort to compile uniform performance measures, such as police response times.

For the moment, however, even experienced officeholders in cities and counties often confess that they themselves have only the haziest of notions as to how cities and counties compare -- or even how to go about finding out.

Election politics

In the Savage council race, challenger Joe Julius points to data showing that his city's tax rate is much higher than that of any surrounding city.

But after the incumbents pushed back vehemently, saying that the marquee tax rate is far from the full picture, Julius did some more groundwork and emerged from what he called his "education in local government" feeling as though "nothing is really what it seems."

That certainly seems true of the data available to the average person.

Savage's finance chief, Shelly Kolling, and her counterpart in Prior Lake, Jerrilyn Erickson, agree that there are some big differences between the two cities.

"Snapshot comparisons of cities," said Kolling, "are not as cut and dried as they may seem."

Case in point: Prior Lake imposes an "energy franchise tax." Companies like Centerpoint collect it from their customers and pass it on to the city, in a system Savage doesn't have. Bottom-line ka-ching: $350,000. That's the equivalent of about 1,000 people moving into town and paying the average per-person tax.

Savage Mayor Janet Williams says her city tries to avoid that sort of maneuver. "Our citizens tell us they don't want to be nickel-and-dimed that way -- just put it all on the tax statement and be done with it."

In the year Kolling checked, another $360,000 came to Prior Lake from an agreement to cover fires in two nearby townships. Still another $380,000 came from the Shakopee tribe, under a deal that includes police coverage for Mystic Lake Casino.

Using 2009 data, the most recent the state has compiled, Kolling said, "If these three were incorporated into the Prior Lake tax levy, their tax rate would have increased by approximately 3.75 percent."

Indeed, she added, in one key category, current spending per capita, Savage comes in lower than Prior Lake: $405.61, to Prior Lake's $410.19.

But that's not the full picture either. A comparison that Lakeville issues to show how cheap its water and sewer rates are nails Savage as one of the costliest cities in the metro area, with residential rates roughly three times as high -- about $300 per quarter -- as low-end Maple Grove.

The need to use deep groundwater to avoid harming the environmentally sensitive Savage Fen wetland helps account for that, Kolling said, as do the city's water-conservation efforts and its high debt for water infrastructure stemming from rapid growth.

The main reason for Savage's higher rate, though, she acknowledged, is its debt, which stems from growth-related improvements. Standard & Poor's in September described the city as having "a high level of overall debt, equal to $5,439 per capita," with 46 percent of spending consumed by debt payments. The debt is being rapidly paid back, 83 percent within 10 years, but that means high short-term costs.

Amid all the confusion, there is one tool that provides if not total clarity, then a pathway to asking the right questions.

State Auditor Rebecca Otto has on her website a feature that allows anyone to set, say, Prior Lake's taxes and spending alongside those of Savage or any other city. Included is how much is being spent per person on fire, police, libraries, parks or anything else.

It's hardly without flaws. Why, for instance, does Prior Lake show up as doing 10 times as much "total borrowing" per capita as Savage, while Savage ends up with millions more in "debt service?"

A screwup, apparently: "It shows the 2009 total borrowing for Prior Lake as $29,606,783," Kolling said, but a peek at that city's website shows that "actual 2009 borrowing was $2,960,000." Erickson agreed, adding that $1.26 million of that was a refinancing, not new debt.

'Sticking to his guns'

For his part, Savage challenger Julius isn't apologizing for raising the issues.

"I'm sticking to my guns," he said. "I believe that having substantially higher taxes than your neighbors is a question that needs to be addressed. ... It is obvious to me that there is work to be done."

Many city officials agree that everyone from mayors on down would benefit from better information on what's really going on.

Savage and Prior Lake are among the 113 Minnesota cities, or 13 percent of the total, to sign up for the state's Performance Measures Program, which pays out a modest amount of money to those places willing to be guinea pigs in coming up with ways to assess their work.

Thirty-eight counties, just under half, also signed up, including both Scott and Dakota. Other south-metro cities taking part in the state's program include West St. Paul, South St. Paul, Rosemount, New Prague, Lakeville, Elko New Market, Apple Valley, Burnsville and Eagan.

As Prior Lake's council prepares to talk about what its new internal benchmarks should consist of, beyond those of the state, Kolling said Savage is also on two tracks: following the state's lead and coming up with its own.

The idea of truly comparing each city's work could be perceived as threatening to staff members, Myser said, but it shouldn't be.

"The issue is, how effective are we?" he said. "What's our plowing cost per lane mile, both compared to past years and other cities? Management should want to know this.

"It's a lot of what I do in my private business. If it's not working well, I'm not saying 'Get rid of it,' but rather, 'Gee, how can we tweak what isn't working?'"

David Peterson • 952-746-3285

  • COMPARING YOUR TOWN

    To use the state's system of side-by-side looks at taxes and spending of cities and counties, go to www.osa.state.mn.us. Choose "Reports and data," then "Comparison tools."

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