Editorial: Spend wisely
Red Wing City Council indicated Monday night that the local property tax levy will climb steeply — again — this year.
The preliminary 2015 levy that must be set this month is $17 million. That is up from $13 million for 2012. As distressing as a 30 percent increase over three years sounds, the long-term numbers look worse: The levy has climbed by 70 percent from $10.5 million in less than a decade.
What gives? Why aren’t taxpayers screaming? Because most residential taxes are steady; the Prairie Island nuclear plant is bearing the load due to major improvements that include two new steam generators for Unit 2. People also are pleased to see roads repaired and buildings maintained.
The city is raising taxes to “capture” the spike in Xcel Energy’s property-tax generating capacity. We agreed with the council’s approach in December 2012 to add $1.1 million to the annual levy, provided the money went to repairing an overextended and neglected infrastructure. At that time Xcel’s share was projected to increase 16 percent. A five-year repair and improvement plan began.
As reported on page 1 Wednesday, officials have learned that Xcel’s investments will pay bigger dividends than anticipated for the city. The city promptly raised its preliminary levy $17,193,315, up from the $16.46 million discussed just last week. That’s a difference of more than $700,000.
The Goodhue County Board, which discussed a 4 percent levy hike, may consider doing the same.
The school district can’t tap Xcel for more money, but it could use the tax shift as an incentive in presenting a referendum next year.
But there’s a danger in milking the Xcel cash cow. Taxpayers and public servants may become complacent. They may forget or ignore that the money won’t be there forever.
Red Wing faced few budgeting woes in the first 20 years of the nuclear plant’s operation. But then the Minnesota Department of Revenue reclassified utilities in the mid-1990s and suddenly the city — which had enjoyed among the lowest property taxes in the state — and Goodhue County had to raise taxes or slash services. A mix of both occurred. Infrastructure fell into disrepair.
We hope the pain is still fresh in people’s minds as they consider the next windfall.
By all means capture the revenue and restore the fund balance, but then dedicate it to streets, sewers, existing buildings and essential services. Find ways to help downtown’s tax-paying businesses during highway construction. Don’t reopen city coffers to non-profits. Weaning them off public subsidies caused enough strife the first time.
And before spending one additional dime on any new effort, the City Council and County Board must ask: How will this position our communities for the day the money is gone?