Lately, there has been a lot of noise generated by our mayor and city council rushing to eliminate the Board of Estimate and Taxation. This point was emphasized last month as we observed the Rybak campaign shamelessly advertising on behalf of a candidate who was not endorsed; he was not able to achieve a majority of delegate votes at the DFL city convention. I won’t mention his name, as I do not wish to give him any press, but the question is: why is the existence of this Board so important that the mayor has to find a way to install someone he can influence, at the same time he is supporting the elimination through referendum of the very same Board?
I guess the first place to look at would be to figure out what are the responsibilities of this board? Well, they are responsible for determining the maximum tax levy the City Council can impose on us. At the same time, the State legislature also has set an 8% limit on property tax levies with a number of exceptions that I have written about in previous articles. The Board of Estimate usually uses the Mayor’s budget as a guideline to figure out how much tax revenue is needed. Sure, the Park Board has some input, but at the meetings I attended, Mr. Fine’s attempts to increase funding for the park system always seemed to fall on deaf ears.
This leads us to the Board of Estimate’s next responsibility, otherwise known as the reason why the Park Board is operating in panic mode over the elimination of this government entity. The Board of Estimate is responsible for dividing the city’s property tax levy between the City Council and the Park Board. Without this function, the Park Board would soon be just another City department coming before the council begging for funding.
Without a Board of Estimate, the Park Board cannot make independent decisions. The current plan that has been brought to my attention is that the Park Board is asking the Charter commission to put forward a referendum which would protect a percentage of the property tax levy for the parks in much the same way as is done for the School Board. This action would take this responsibility away from the Board of Estimate, while creating a fully autonomous Park Board.
Since I am already unpopular, I would like to offer another alternative. Since the powers in our city crow over having given our Libraries over to the county, at great expense to the residents of the City of Minneapolis, why not add the Minneapolis parks to the Three Rivers Park system? I have recently been informed that over 40% of the people that use our parks are not Minneapolis residents, so why not let the counties pay to maintain our parkland?
The Park Board is supposed to receive an LGA (local government aid) allotment from the State of Minnesota that is separate from the City’s allotment. That allotment does not come close to covering the added burden of our suburban guests; why not give our neighbors to the west the opportunity to pay for the resource they are using, rather than continue to pressure us poor Minneapolitans?
Our City Parks are prime real estate, and listed on our books as assets. This begs the question: wasn’t the $225,000,000 collection of books a City asset that we simply gifted to Hennepin County? How about the $200,000,000 worth of property that used to be our actual Library buildings? Please remember that we were forced to retain $150,000,000 in general obligation debt to make the deal go.
Let’s see how that worked out. After all, R.T. Rybak claims to be fiscally responsible. We went from a positive $275,000,000 net asset position to a $150,000,000 deficit. Wow, R.T. seems to be a financial genius. Who was the last guy I saw do a deal like that? Um, wasn’t it… Bernie Madoff?
We cannot blame the mayor completely; after all, the City Council passed this almost unanimously in the face of heavy citizen opposition. Complete disclosure: I was one of those opposed to this deal. So now that we have a history of giving away City assets without any consideration, why not give away our Parks?
Let’s face facts; the brain trust on the Park Board can’t even collect revenue from the businesses that they are leasing operating space to. I have read too many articles about financial malfeasance at the Park Board building and on Nicollet Island to think that our Park system is anyway near properly managed.
What other responsibilities does the Board of Estimate have to fulfill? They are responsible for authorizing the bonding or, in other words, borrowing money on behalf of the City. This leads to my next question; why does the City of Minneapolis borrow the money it needs in Belgium rather than here in the United States?
I was told by staff that we got a better rate off shore. Why would that be? Could it be that the auditing requirements are less intrusive in Europe? Perhaps the reserve standards are less stringent? I have some relevant experience; my foreign exchange account was originally in Australia, but the firm that I dealt with was based in London and followed European securities law (my account was recently closed as they are no longer offering service to American citizens. After nine years with the same broker dealer, I was out of business.) So what do my old foreign exchange account and that auditing requirement have to do with Board of Estimate?
The Board of Estimate is responsible for the City’s independent audit. Without an independent audit, our city could suddenly be in the same position as Enron. Wait a minute, since we really haven’t had much of an audit in the last 3 years, who knows what our city’s financial position really is? The Met Council has a budget and an employment base of approximately 5200 FTE’s (full time equivalents) and about $1,400,000,000 per year. This is about the same size as ours, but they have 6 full time auditors, two of which are tasked strictly to examining the books to look for fraud.
In comparison, Minneapolis has one auditor who has been in retirement mode for the last 3 years. He finally did retire this spring. I am unclear about his replacement prospects. But I do know that there has been no audit. I have watched Carol Becker heroically stand up at the BET meetings begging for a program audit to measure the efficiency of our city departments in delivering services, only to see her face resistance from all of the other players on the board, with the exception of Bob Fine, who was educated in the value of playing ball when his endorsement for re-election was denied by the machine for his trouble.
So let’s wrap this up; members of the City Council and the Mayor want to eliminate the Board of Estimate. They say it is necessary to save money, and promote cost efficiencies. Apparently, the City is hard pressed to find the $70 per month it costs to pay the two at-large members, oh, yeah, and the free parking voucher. Let’s see, if you were a part of a corrupt municipal system, you would certainly desire to eliminate as much oversight as you could so yes, absolutely, you would want to terminate the Board of Estimate.
It has become quite clear that the Park Board has no interest in doing anything other than preserving itself. They can not be trusted to protect our public property, nor do they seem to care about transparency or accountability.
I have an alternative to the Board of Estimate that Heather Johnston in the finance department has already unofficially vetoed; put the city under the standards of Sorbanes-Oxley, and then have the city submit quarterly to a full independent audit conducted by a rotating series of outside Certified Public Accounting firms, such as Price Waterhouse. The city must then publish the findings of that most complete audit. If our officials are not willing to submit to that scrutiny, then there must be something that our leaders are trying to hide.
What could it be?
