On Jul 7, 2004, at 11:14 AM, Victoria Heller wrote:
www.ci.minneapolis.mn.us/financial-reports/cafr2003/docs/Stats.pdf
Thanks to Vicky for the link.
A fuller story can be found report's explanatory sections at:
http://www.ci.minneapolis.mn.us/financial-reports/cafr2003/docs/MDA.pdf
Some of the commentary on Vicky's chosen stats:
2003 Expenditures were UP by $75.5 million (Table 1)
General Fund spending (the city's operating fund) actually DROPPED from $246 million in '02 to $245 million in '03. So the general budget is NOT the problem.
Pension debt a big driver: about $30 million in new spending to plug holes left by previous councils and legislatures. Better to pay it now than keep waiting.
The other big factor: the new Downtown library. The city issued about $40 million in bonds for it this year. Referendum dollars will pay this off over time. (I believe library spending is folded into the city's statement.)
2003 Revenues were DOWN by $65.6 million (Table 2)
Taxes were actually up $23 million from 2002 to 2003 (page 11). However, intergovernmental revenues (not reflective of Minneapolis's general economic health) were down $105 million (from $269 million in '02 to $164 million in '03).
Can't decipher a full explanation of this - and it's a key item to know. However, the number might reflect transfers to the pension and internal services fund debt (which, by the way, has dropped from $54 million in 2000 to $33 million in 2003 - proof that the current council is paying off past councils' credit cards).
The report does say that LGA from the state dropped $17 million.
2003 Tax capacity lower than 1994, despite
market values more than doubling (Table 6)
As noted (repeatedly) before, the tax capacity "lowering" is strictly a result of legislative action. It rose from $284 million in 1994 to $308 million in 2000 - then Jesse Ventura and the legislature "reformed" how property taxes are calculated.
After the formula change, tax capacity took a one-time hit from $308 million in 2000 to $240 million in 2001. Since then, it has grown steadily to $267 million.
This was a one-time formula change not related to real Mpls economic conditions, and we've since returned to growth.
2003 Per capita general obligation debt more
than doubled (Table 9)
A truly interesting stat. It's over $500 per person now, more than double any year from 1994 to 2002. According to p. 24 of my link, it is pension debt and voter-approved Central library debt. The Central Library debt will fall over time. The pension debt is anyone's guess.
2003 Bank deposits DROPPED $36 BILLION (Table 15)
With such a big revenue drop, you have to take something out of the bank. However, half the deposits are still there.
The bottom line is that certain financial indicators look worse mostly because:
1. We've delayed paying the pension piper and our balance sheet took a big hit when stocks dropped. (Fortunately, that drop seems stalled for now). We're issuing debt to pay for previous councils' and legislative generosity.
2. We decided to buy a new toy: a Central Library.
3. The current council is paying down other past borrowing, such as the Internal Services fund.
4. The state cut LGA.
I would argue that the pension debacle is the only long-term threat to the city's balance sheet. (The Central Library may have been a foolish expenditure, but it will be predictably paid down with voter-approved taxes.)
The current council deserves credit for paying down several credit cards and not only limiting general fund-growth, but reversing it slightly. In effect, they have said NO to spending - though suggestions for further cuts need to be balanced against needs & investments.
I hope someone with even more experience interpreting balance sheets (is it too much to hope for a city official's explanation?) will post here.
David Brauer Kingfield
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