No support for fiscal disparities program in Columbus

Anoka County won’t get city council support

Jennifer Mevissen
Staff Writer

Municipalities within Anoka County were asked to back the fiscal disparities program, but the Columbus City Council refused to take that position.

At a Dec. 28 meeting, council members unanimously passed a resolution saying the city of Columbus does not support the fiscal disparities program in its current form and requests that the Minnesota Legislature either modify it in order to create greater equity among communities or eliminate the program in its entirety.

“It’s a re-distribution of wealth system,” Mayor Dave Povolny said in a later interview, “and everybody on the board was against it.”

In 1971, the state instituted the Charles R. Weaver Metropolitan Revenue Distribution Act. The idea of tax-base sharing is to narrow the gap between communities with a strong and growing commercial-industrial tax base with those communities that are small or stagnant.

To lessen the difference between these “haves” and “have-nots,” the law requires that 40 percent of new commercial-industrial tax base be put back into the metropolitan pool and apportioned back to communities according to their population and overall tax base. Included in the Twin Cities jurisdiction are Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington counties.

The lower the per capita property value compared to the metro average, the higher the distribution.

Columbus contributed $798,066 in 2011 and $464,556 was distributed back.

“We only lost $333,000 and it perked our ears up,” Povolny said.

Joan Flavin, accounting supervisor for Anoka County, explained at a Dec. 14 council meeting that there were several factors that came together in Columbus, including a reduction in value of Running Aces Harness Park as well as property that was taken off the tax roll because it was purchased by the city.

Without fiscal disparities, she said the approximate overall tax increase on a $200,000 residential homestead for 2011 in Columbus would have been $17.

Panel Review

“You have a program which there are basically winners and losers,” said Patricia Nauman, executive director of Metro Cities.

Although there are various opinions and viewpoints on fiscal disparities, she said her organization that represents metropolitan municipalities will continue to support the program until something else is in place.

“We have not determined a policy recommendation past that point,” Nauman added.

A fiscal disparities study is currently being done by the Minnesota Department of Revenue and is due to be reported to the Legislature on Feb. 1, 2012. It is to analyze:

•the extent to which the benefits of economic growth of the region are shared through the region, especially for growth that results from state or regional decisions;

•the program’s impact on the variability of tax rates across jurisdictions of the region;

•the program’s impact on the distribution of homestead property tax burdens across jurisdictions of the region; and

•the relationship between the impacts of the program and overburden on jurisdictions containing properties that provide regional benefits, specifically the costs those properties impose on their host jurisdictions in excess of their tax payments.

The report must also include a description of other property tax, aid, and local development programs that interact with the fiscal disparities program.

“The future of the [fiscal disparities] program is an important conversation,” Nauman said.

Other Communities

Columbus wasn’t the only city within Anoka County to be a contributor to the fiscal disparities program; Fridley saw a net loss of under $2 million.

Nowthen had an estimated population of 4,418 in 2009, compared to Columbus’  4,104. But Nowthen saw a net gain of $379,825, contributing just $174,497.

“The $20 million Anoka County got came from someone’s pocket,” Povolny said.

Hennepin County saw the biggest net loss of more than $58 million, contributing $214,637,899. Washington County saw a net gain of $5,838,491, contributing $25,869,017.

He pointed out that $784,920 was distributed to Linwood Township which contributed a mere $49,706 for taxes payable in 2011.

At a meeting last month, Councilman Bill Krebs joked about the township being at a financial advantage over Columbus.

“Maybe we should annex Linwood,” he said.

They saw no population change or added growth in Linwood Township, noted Povolny.

“They kept it a bedroom community,” he said.

Povolny believes that developing communities are penalized under the present structure of the fiscal disparities program. One example, he said, is the city of Bloomington which contributed nearly $32 million and saw a net loss of $21,615,548.

Cities within Washington County that were “winners” are: Forest Lake contributed almost $2 million, with a net gain of $92,686; Hugo contributed $971,718, net gain of $821,330; Marine on St. Croix contributed $37,682, net gain of $5,589; and Scandia contributed $119,815, net gain of $286,016.

Backlash

Jesse Preiner, a Columbus resident and property owner, spoke out against the fiscal disparities program at the Dec. 14 city council meeting where he explained how it has impacted their business. Freeway Mini Storage experienced a 41 percent increase in their fiscal disparity from $28,512.72 in 2011 to $40,345.03 this year.

“If this was going directly to our community it wouldn’t be so painful,” his sister, Patricia Preiner, a former town board  member said in an interview this week.

They’ve been in Columbus since 1941. Long before the days of Freeway Mini Storage, the family operated a restaurant on that parcel but prior to that the land had been farmed.

The yearly taxes – city, county, school, etc. – for the mini storage, located next to Gander Mountain, will total around $160,000 for 2012. The Preiners have been following the tax ever since 2007. The fiscal disparity has been increasing steadily for Freeway, starting at $21,722.20.

Both Jesse and Patricia say that citizens are being subsidized by businesses which are burdened with the fiscal disparities program. They can’t pass on the increase to customers and continue to be competitive on prices, so the Preiners decided to delay some maintenance at the mini storage and even put off future expansion plans at Freeway.

“We’re as busy as we can be,” Patricia Preiner said.

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