Ouch! Total Financial Chaos in Brooklyn Park
By Andrew Richter
Hold on to your wallets Brooklyn Park;
Faced with prematurely deteriorating city streets and an estimated $35 million repair bill, members of the Brooklyn Park City Council have voiced support for using utility franchise fees to fund a 14-year street repair plan. The franchise fees, imposed upon utility companies that use city right-of-way areas for their services and passed along to utility users, was a discussion topic at the Aug. 24 city council meeting. No action was taken, but it could come in a matter of weeks, according to Dan Ruiz, city operations and maintenance director. City officials and professors from the University of Minnesota Humphrey School, who are studying the city’s community engagement efforts, conducted two public meetings in July and August on the street repairs and franchise fees, Ruiz said in his presentation to the council. Most of those residents who attended support using the franchise fees under the condition that residents currently paying a street assessment would be rebated the fee.
The city has been working on finding a street funding solution since last fall. The problem is that the asphalt on approximately 75 percent of the city’s streets is prematurely deteriorating, likely because MnDOT changed the recommended specifications in the late 1980s and early 1990s to lower the oil content of the asphalt mix. Because of rapid expansion of the city during that time period, the city has more miles of deteriorating streets than other communities.
Ruiz said the 14-year plan would have 10 to 15 miles of street milled and overlaid with a top new wear course each year. The city’s seven street districts would be gone through twice during the plan. The repair of 205 miles of streets, at a cost of $170,000 per mile, equals about $35 million. In addition, the city has 7 miles of streets in the southwest part of the city that need to be fully reconstructed, at a cost of $2.5 million a mile. The full reconstruction includes new street, curb and gutter, storm sewer and lighting, along with some replacement of the water mains.
The franchise fees discussion includes three options, including a $7 monthly fee per household and a $7 to $100 monthly fee for businesses and organizations, tiered so smaller businesses pay less and larger businesses pay more. This fee would generate enough revenue to fund the overlay portion of the street repairs. The second option is a $14 per month fee for households and a $14 to $200 tiered fee structure for businesses and organizations. This option would generate enough revenue to fund both the overlay and reconstruction work.
$200 a month!
Finally, adding another $1 to the either fee could fund improvements to sidewalks and trails. One of the benefits of instituting the franchise fee is that residents wouldn’t be assessed for street repairs, Ruiz said. Another benefit is that the city wouldn’t have to bond for the repairs.
No sidewalks and trails!
Several council members voiced support for a sunset clause that would end the fees when the streets are fixed. “The long and short of it is that we have to do something,” Councilmember Peter Crema said, voicing support for the $14 option for overlays and reconstruction, and for a planned end to the fees. “I want this to go away as soon as the problem does.” Mayor Jeff Lunde noted that he would prefer collecting the fees until the streets are improved, not for a set number of years. That way, there is no chance that some streets wouldn’t get fixed before time ran out on the fee collection. “The only way we can do this is to guarantee that everybody’s (streets) get done,” he said. The city needs to recognize that the system will not be fair, Councilmember Mike Trepanier said, because some residents have paid assessments and others will just pay the monthly franchise fee. “No matter what we do, it is not going to be 100 percent fair,” Trepanier said.
I caution people to not be fooled by a sunset clause. When does government ever close a revenue stream? They just find another use for the money.
Council members also concern that the fee would put hardship on low- or fixed-income residents.
“This could make the difference between bread, milk or medicine for them,” Terry Parks noted.
Trepanier advocated for finding a way to help those on fixed incomes. Councilmember Bob Mata suggested that those receiving energy assistance wouldn’t have to pay the fee. “If they are getting help to pay their electric and gas bills, they don’t have money to pay this,” he said. Councilmember John Jordan also expressed concern about fixed-income residents and for the financial impact on churches and nonprofits.
“Churches are made up of people – they are paying the bills through their donations,” he said, asking Ruiz for a sampling of the fees that five to seven houses of worship would pay under the plan. “That cost is an additional burden on our residents.” Jordan also voiced angst about the fact that MnDOT’s specifications created the problem and that the state hasn’t borne the weight of fixing the problem by bonding for the repairs. “I don’t want to do this,” Jordan said. “This is crisis situation. It wasn’t our fault. It was foisted upon us.” Trepanier advocated for action by the council on an as-soon-as-possible basis, to get the city going on the repair plan.
“I personally don’t want the city to go into another construction season without this,” he said. If city officials decide to pursue the franchise fees, an ordinance change would be required, along with notification to utilities and filing with the State Public Utilities Commission. Ruiz noted that, at the earliest, the franchise fee plans could be implemented in January, with the first potential revenue received in April.
As if that’s not bad enough, check out their budget proposal;
Preliminary estimates of the 2016 city budget for Brooklyn Park have several City Council members concerned about the rising tax burden on citizens. During the Sept. 8 work session meeting, Alan Rolek, city finance director, and Jay Stroebel, city manager, presented information about the 2015 and 2016 budgets. The amended 2015 city budget, the current budget, is $43.7 million with a $34.7 million general fund tax levy, according to their presentation. The original 2016 forecast was for the city budget to be $45.8 million with a $37.1 million general fund levy. As city officials and leaders work through the process, the preliminary budget for 2016 appears that it could be $48.5 million, with a $38.9 million general fund levy.
Oh my God! This is outrageous!
City leaders cannot pass on a $5 million budget increase and also ask residents to pay monthly franchise fees to fix city streets, Councilmember Peter Crema stressed.
“We have to figure this out,” he said, noting that he was proud of the city for not passing on tax increases to about half of the residents over the past six years. “I can’t see that continuing with these scenarios.” The city’s increase in taxes, combined with tax increases from the county and school district, are more than some residents will be able to manage on their budgets, Councilmember Bob Mata said. “We are talking about percentages, they are talking about food on the table, and they are talking about the medicine they need,” he said. Stroebel noted that information he’s received from county officials indicates other cities in Hennepin County are considering 5 to 7 percent increases this year. “Plymouth, Bloomington and Edina, they can afford that kind of increase,” Mata said. “We can’t afford that.”
Like John Fogerty said “All they want is more, more, more!
The council must approve a preliminary levy by the end of September and a final levy by the end of December. The preliminary levy amount can be reduced, but cannot be increased at the final approval. City leaders have followed a pattern, setting the levy at the maximum allowed and then worked on the budget to bring the tax burden and budget down, Councilmember Rich Gates reminded the group.
“I don’t want to handcuff us (to a lower number),” Gates said. “I do want to handcuff us,” Councilmember John Jordan said, adding that he voted for one maximum preliminary levy and it was used against him. He also noted that he trusts Stroebel, the new city manager, to work on the city’s fiscal management. One of the many factors in the budget is how the city uses local government aid from the state, funding that has fluctuated higher and lower, depending on the state’s financial condition. Several of the council members wondered how the city can make changes to not rely on LGA funds, because of that fluctuation and the possibility of the state eliminating the funding.
The only way to do that is to do what you won’t do: cut spending!
Several of the budget scenarios presented by Rolek and Stroebel included using LGA to reduce the tax impact. The city expects to receive about $1.2 million in LGA for next year. If the city leaders wish to not use LGA funds to defer tax dollars, then city officials may need time to make the fiscal reviews and decisions on how that change would happen, Rolek noted. Significant drivers in the increased budget include several factors that the city leadership has already decided, Rolek said. They include approximately $150,000 for filling personnel needs that had been delayed into 2015, $1.37 million for various union wage settlements, $639,000 for cost of living and step increases and about $87,000 because of the increase in the minimum wage.
Cost drivers that the city is considering, but hasn’t yet implemented, include raising wages according to the recent compensation study, at an approximate cost of $192,000, upgrading wages and classifications for some employees, at a cost of $134,000 and additional employees and wage increases at $680,000.
Additional employees?? Additional wages?? Upgrading wages?? Where is the discussion about smaller government???? All Brooklyn park seems to be doing is trying to figure out the best way to sluff costs on to the citizens.