Item E1 on the tonight's (June 22) workshop agenda:

1. Receipt and Presentation of Comprehensive Annual Financial Report (CAFR) for 2008 and Report by Auditor HLB Tautges, Redpath, LTD

I think it's worth comparing the timing for the 2008 report versus 2007. Last year we acknowledged receipt of the CAFR and report on August 11th, and formally accepted it at the August 28th continuation of the August 25th council meeting. As our auditors dryly explained in their "communication with those charged with governance," the 2007 audit "was completed later than anticipated due to a variety of factors, including an increased level of testing in response to identified risks, assistance provided with reconciling various accounts and delays in receiving the trial balance and other audit documentation."

The audit being completed a good seven weeks earlier is one measure of how the city's operations have been recovering from the damage suffered under the previous regime.

Labels: finance

Posted by John Nephew on 6/22/2009 09:59:00 AM Email to a Friend | Permalink | Comments
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The governor has announced his "unallotment" cuts, taking back money from cities and other state budget areas in order to balance the spending bills he signed (while not signing the revenue bills the legislature also passed). The League of Minnesota Cities reports on the basics: "The 2009 cut will be computed as 3.31 percent of each city’s levy plus aid. For 2010, the percentage reduction will be increased to 7.64 percent."

According to the city-by-city information put together by the League, Maplewood will lose all of its $514,877 in expected 2009 Market Value Homestead Credit. We have no LGA to lose. For 2010, his plan is to take away all of our MVHC again, which otherwise was expected to be $566,817.

I guess the silver lining of how little aid/credits Maplewood has been getting from the state is that the governor can't take it away from us now. If you look at it on a per capita basis, the governor is taking away $14.04 per Maplewood resident this year, and $15.46 in 2010. In comparison, some our neighbors who get considerably more state aid (and whose MVHC isn't being touched because they have LGA for the governor to go after) are seeing numbers like:

North St Paul: $14.36 per capita in 2009, $33.14 in 2010
Oakdale: $11.71 in 2009, $19.54 in 2010
White Bear Lake: $8.81 in 2009, $20.34 in 2010
Saint Paul: $17.49 in 2009, $40.35 in 2010

Were I an official in some of these cities, I'd be nervous. The governor's plan cuts Oakdale's MVHC to zero, like ours, in 2010. But even with these cuts, North St Paul has another $1.7 million in Local Government Aid coming to it in 2010 ($145.75 per resident!), and their MVHC is as yet untouched. White Bear Lake will still be due more than $1.5 million in LGA ($61.81 per resident). What's to stop the state from raiding those funds if there are further declines in the state's revenue projections?

(Here's an interesting comparison, while I'm crunching these various numbers: The current per capita property tax in Maplewood averages out to $433.03, excluding MVHC. In North Saint Paul, it's $254.64. If North Saint Paul had to overnight hike its property tax to replace all of its LGA and MVHC, they would need to levy $444.64 per capita. I understand they are also a net recipient of fiscal disparities, whereas Maplewood is a net payer -- of $53.65 per resident, according to what we projected in the 2009 budget.)

Labels: finance

Posted by John Nephew on 6/16/2009 04:02:00 PM Email to a Friend | Permalink | Comments
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I'm fascinated by the ongoing events in Iran. There's a lot of coverage of it in the blogosphere (and a lot more of it if you speak Farsi, which I don't), but one place that I've found that seems to be doing an especially good job of linking the diverse if limited windows into what's going on (from Twitter updates by Mousavi supporters, to BBC stories, to YouTube clips uploaded by on-the-scene observers with cell phone cameras in Tehran or Isfahan) is Andrew Sullivan at the Daily Dish.

Update: Another top-notch blog to look at for more meaty analysis is Juan Cole's Informed Comment.

Posted by John Nephew on 6/14/2009 01:04:00 PM Email to a Friend | Permalink | Comments
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It looks like the governor and legislature failed to reach any agreement on the budget last night. The governor has said he will not call a special session, but will use vetoes to block tax increases and then line item vetoes and unallotment to balance the budget unilaterally. As with the unallotment that happened at the end of last year, this will have an impact on Maplewood as the state will not deliver the previously budgeted Market Value Homestead Credit. At this point the details of MVHC unallotment are not know. I would not be surprised if, like in December, we lose it all.

The silver lining of this cloud for Maplewood is that, compared to many other cities, we get relatively little money from the state. We don't have any LGA (local government aid) to lose, for example. Still, losing MVHC is going to have a significant impact.

Labels: finance

Posted by John Nephew on 5/19/2009 08:19:00 AM Email to a Friend | Permalink | Comments
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Last year, the governor and legislature passed levy limits on Minnesota cities. In simple terms, the law stated that cities could increase their tax levies by a maximum of 3.9% or the implicit price deflator (a measure of inflation for state and local governments), whichever is less. (There are other complications allowing a certain amount for population growth, exceptions for debt levies, etc.)

Last year the IPD was 6.1%, driven by factors like skyrocketing prices on petroleum, so cities were limited to 3.9% levy increases, less than the rate of inflation. But this year, the IPD has been calculated as only 0.76%, this time reflecting the falling prices of commodities and services in the global economic slowdown.

Cities could see this coming last year; inflation numbers come out every month, so it was obvious in the fall that the upcoming IPD calculation was going to be much lower than it was a year before. This set up a perverse incentive for cities -- knowing that they were not going to be allowed to keep up with inflation in their 2009 levies (to say nothing of how they knew state aid and credits would be cut as the state faced its own budgetary woes), and then that the decline in the IPD would mean even lower levy limits for the 2010 levy, the rational course of action for cities across Minnesota was to raise their levies right to the limit as a way to hedge against the future limits, especially if they didn't need to. Thus, in some cities the levy limit law may have delivered the exact opposite of its intended result -- it encouraged cities to focus on maximizing their levy increases, rather than minimizing them.

Labels: finance

Posted by John Nephew on 5/14/2009 11:44:00 AM Email to a Friend | Permalink | Comments
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