Posted: 12/11/02

Atmosphere at tax hearings may alter

Each year at this time, those of us who qualify as an inkstained wretch dutifully march off to Truth and Taxation hearings. In most years it is a small crowd and the mayor or school board chairman will even thank the reporter for showing up.

This could be way out in left field, but donít be surprised if these tax and budget hearings take on some more importance in a year or two. People usually donít get too excited about meetings of the like unless some un-Godly tax increase is attached to your property tax bill.

That is exactly what may happen in cities, township, counties and school districts in the very near future.

The reason: a forecasted two-year state budget shortfall of $4.56 billion. Yes, that is billion.

Our state legislators are being placed in a tight box on this one. What will they do? What can they do?

Gov.-elect Tim Pawlenty had made it clear he will not propose any kind of tax increase. He ran on that pledge and his Republican cohorts are walking the same line. And from the results of the election and its strong Republican swing, it is also clear that state residents, at least for now, are saying they want no more new taxes.

The question is for how long?

With a no-tax pledge resting on the table, the state legislature will have no choice but to make drastic cuts in state spending by eliminating programs and getting rid of some state employees. That will take place in a variety of fashions.

There is always the chance (and it is a good chance) the legislature will do what it does best: pass the buck.

When the state budget woes were on the table last session, it was a series of aid shifts and accounting gimmicks that were put in place to help the state deal with its shortfall. Almost all state dollars locked up in reserve funds were unlocked and gobbled up to help deal with the plight.

In passing the buck, it is almost a certainty the state will drastically slash local government aid to municipalities and counties. If the aid reduction steps take place in 2003, which they likely must, local budgets that are now being put in place will be faced with huge dollar holes.

The city of Forest Lake for one is preparing a budget for 2003 that has contingencies in place should the state back away for its scheduled forms of revenue sharing. The harm may not be felt in Forest Lake in 2003, but look out for years beyond.

Like the state, the city will face two options if its revenue sources are reduced: Cut city services or turn to local taxpayers to pick up the slack.

What does that tell you in light of the recent voter mandate on Nov. 5th?

Schools are also sitting in fear wondering what will happen to their funding. The budget situation for public schools is even more precarious because schools operate on a budget year that begins July 1.

School districts are just now approving tax levies and budgets for a school year that wonít begin for six months. This system is so out of whack that even school officials canít explain why it is so.

Gov.-elect Pawlenty has added to the apprehension for school funding. He has vowed to protect school funding, but in light of last weekís $4.56 billion revelation, he softened that vow, seemingly leaving the door open to some form of aid adjustment to schools.

Schools may be lucky if they receive aid levels that are not decreased.

Some will argue that schools are getting way too much aid now. The shift in school aid away from local property taxes to state funding did bring some tax relief. But the buy down in property tax relief didnít result in new money to run public schools.

That fact has been demonstrated by hundreds of districts going out for excess operating levy dollars, Forest Lake included. ISD 831 was fortunate that its citizens voted excess operating levy approval in 2001.

But as the state teeters on steps that could take away many forms of local aid, local governments will face an interesting future.

Right now the mandate is clear regarding taxes.

But what will the mandate be a year from now if schools are forced to cram more kids into classrooms, cut staff and programs, and charge higher fees for programs?

What will the mandate be if cities reduce such essential services like road plowing and maintenance, park projects and say no to equipment purchases that may be essential but not possible.

Leaders could take the hard row, however, and opt for more local taxes where possible to avoid such cuts in services. Schools have already been forced to seek additional revenue.

Should this happen, it is a good bet those tax hearings that roll around each year might attract some more interest.

There is another strong possibility.

City council and school board meetings might see hot constituents, too, when the public realizes services they have been accustomed to enjoying no longer exist or the after-school program that provided an outlet for their kids has fallen to the budget axe.

Residents of our good state of Minnesota must face the ultimate decision. What services do we want and what are we willing to pay in form of taxes?

Right now the message, at least in the eyes of Republicans is loud and clear. How loud that message will ring in a year or two is something only time will tell.

Top of Page