Politics is about avoiding choices. Governing is about confronting those choices. “Financial reform” sounds great when you’re a candidate, but not when it means you can’t do everything you want to do once elected. “Win-win” is one of the most popular phrases in politics. More often than not, however, something has to give, and if you want something, you have to give something up.
I had the honor of serving as U.S. Rep. Martin Olav Sabo’s first legislative intern in 1978. Sabo, who died last month, was a gentleman, and, in the words of Ohio Gov. John Kasich, “as class an act” as there was in Congress. One of his greatest strengths, however, has received too little focus. His integrity extended to a fierce commitment to honesty and transparency in budgets. No games. No deceptions. No end runs around the process.
I experienced Sabo’s commitment to honest budgeting years later when lobbying him, when I was Minneapolis City Council president, to support funding of an Affordable Housing Trust Fund outside of the federal budget process. After the first item on the agenda was addressed (the prospects for the upcoming Twins season), our request for Sabo’s support quickly hit a road bump. “I am not much of a fan of trust funds,” he said.
In 2009, a recently retired Sabo and former state Sen. Bill Kelly met with me while I was chair of the council’s Ways and Means/Budget Committee. Both were strong advocates for fiscal integrity who now lived within the “Common Project” created in 1991 to fund neighborhood revitalization. They objected to the dedication of their property taxes to this “special tax district” that bypassed the city’s annual budget process. Despite their objections, a slim majority of the City Council reauthorized the “Common Project,” keeping these funds out of the annual budget process.
Sabo could not have known then that the city was headed down a slippery financial path straying from many of his core principles. The city’s annual budget process has become a charade. Big fights over $500,000 for an equity office or a few extra police officers. Skirmishes about a bike path. Meanwhile, the really big decisions are protected from the scrutiny and transparency of the budget process.
Here are some of the existing revenue streams that are not a part of the budget process:
The Common Project: Property taxes that otherwise would go to the City Council, the Park Board and the School District for basic services are currently directed in equal amounts to Target Center improvements and the Neighborhood Revitalization Program. Target Center no longer needs these funds, given the use of sales tax revenues to fund its renovation. The City Council could partly decertify the Common Project and invest as much as $10 million in critical city needs during the 2017 budget process.
Sales, entertainment and lodging taxes: The city has the authority to dedicate sales tax revenues in excess of the funds needed for the Convention Center to community development and affordable housing. Most of these revenues (approximately $30 million per year) will be used to fund the Vikings stadium and Target Center. Nonetheless, these revenue streams are increasing, and a conservative estimate of the remaining funds available is $10 million per year. The council should make a commitment now that any funds available for community development needs will be addressed annually during the budget process.
Streetcar Funding District: This district dedicates between $5 million and $10 million annually in property tax revenues from parcels on Nicollet and Hennepin avenues to fund the proposed streetcar line. Decertification of this district would require the streetcar line to go through the city’s capital budget process and compete with other infrastructure needs, including the city’s crumbling streets.
Sabo’s beloved Minneapolis is suffering an epidemic of “choice avoidance.” The latest hijinks over parks funding are another symptom. We are now told that the City Council can write a check to the Park Board for $11 million per year by “repurposing existing revenue streams.”
Huh? The average city resident is left to wonder what that even means. Apparently, it is some stew of Convention Center and sales taxes, enterprise funds, and (this part is really scary) excess pension-fund dollars.
A fierce lobbying campaign is underway to quickly approve this “agreement.” The council’s Ways and Means Committee is likely to review a revised proposal on Monday. Unless wiser heads prevail, the city will go further down an unsustainable path of hidden choices and long-term financial heartache.
The council must put an end to these budgetary shell games and refer the Park Board’s request for funding to the city’s budget process. The council should insist that all revenue sources be incorporated into the annual budget process. Finally, the council should be mindful that its own five-year projections already assume a significant 3.5 percent annual increase in the property tax levy.
The city does not need a referendum to pay for parks and road maintenance. The city does not need a “contract” with the Park Board to fund basic maintenance of the city’s parks.
What is needed is a budget process with integrity — one that would make Congressman Sabo proud.
Paul Ostrow was a member of the Minneapolis City Council from 1998 to 2009, serving as council president from 2002 to 2005.