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Prior Lake's tax hike erased, but divisions live on

  • Article by: DAVID PETERSON
  • Star Tribune
  • December 26, 2012 - 11:02 AM

The 10-percent tax increase that hung over Prior Lake throughout the autumn has melted away.

The proposed hike in the city's levy would have been two to three times as great as any other sizeable suburb in Scott and Dakota counties.

The threat drew a procession of angry residents to the microphone in City Hall during a public hearing in late November. Said one speaker, "You call it management. I call it insanity!"

In the end, a unanimous City Council shaved back the proposed jump to zero, enabling a group of elected officials that had been closely divided on tax and spending issues for years to vote 5-0 for once.

But the two most outspoken fiscal conservatives in the group, including departing Mayor Mike Myser, said they remain uneasy about how the city has handled its finances.

The mayor, accustomed to budgets from a day job in the corporate world, said he discovered while in office that the city has developed a habit of being over-conservative in projecting future revenue, then sweeping its arm across the poker table to gather in the extra chips at the end of the year.

"I'm a strong believer in coming closer to the number you budget," he said. "Over the last four to five years, there's been a difference of anywhere between half a million to close to a million dollars."

Not unrelated, he said that the city winds up "over-reserved" -- that is, with more money in the bank than it needs. That helps position it to swoop in at times and make big purchases, such as the $350,000 spent for some park property this year.

Some members of the council say the consistent surpluses are a sign of careful management.

"Kudos to staff," said Vanessa Soukup. "It's a unique opportunity to have a surplus. There are numerous reasons why, but staff does a good job of finding ways to save taxpayer dollars. Then, running a surplus, we're in a unique situation to do something with those funds."

City finance chief Jerrilyn Erickson said that a predicted surplus of just over $500,000 jumped to $770,000 owing to several factors, including a 99-percent rate of collection of taxes, "which is very high and good news. In past years it has run at 95, 96 percent." That alone added $150,000.

Other factors, she said, included more building permits than expected and a workers-compensation dividend the city hadn't budgeted for.

Myser, though, said it seemed obvious to him at the time that some revenues were trending higher than the city was officially predicting.

Myser's fiscal ally on the council, Richard Keeney, is not thrilled, either. He continues to be concerned that the city engages in types of spending that aren't always reflected in the levy that draws media scrutiny.

Although he supported the purchase of parkland, for instance, that's the kind of deal that can tend to get lost in a blizzard of confusing municipal financial reporting.

Erickson said the city has sought to address such transparency concerns by changing the way it handles its financial reporting.

"We have been budgeting for more funds so that people can understand the level of spending," she reminded council members.

Last year, Myser managed to convince a majority of the council to give back to voters much of its surplus, amid warnings that a snapback that was bound to follow would create anger among the citizenry.

"I remember him making the comment many times, 'People will understand that and won't question going back to normal,'" departing council member Warren Erickson said, "but that's what happened.

"People questioned an increase that was going back to normal."

Incoming Mayor Ken Hedberg said the bottom line is that "our levy per household will be lower than 2011 or 2010 or 2009, and only a little ahead of 2008. We've added a lot of homes since then, of course.

"Despite all the rhetoric you might hear about how taxes are up and all that, city taxes are down on an average home this year and went down the year before."

David Peterson • 952-746-3285

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