Heller: Not so fast. S & P rated the Enron bonds AAA until six weeks prior to its bankruptcy. The rating agencies will say anything for a large enough fee. Also, the City is claiming $27 billion of "market value" for the purpose of calculating debt capacity. What a joke! If Standard & Poors knew that Minneapolis only collects $250 million in property taxes, and one-third of that goes into TIF districts, the Agency would drop the rating in a New York minute.
Frank: First of all, it specious logic at best to argue that since Enron had AAA bonds and went bankrupt that Minneapolis would too. Are you alleging that fraud is going in Minneapolis? The cities financial statements are audited by the state auditor whom is not known to be real fond of Minneapolis. Are you suggesting that the state auditor is incompetent, turning a blind eye or being duped?
At least one rating agency lowered the MN state bond rating under the current administration of supposedly superior financial minds. This occurred because they refused to take action to address the structural deficits inherent at the state level so clearly the bond houses don't just ignore the facts. Why would Minneapolis be exempt from such consequences?
Heller: You keep saying this, but it's not true. Don't forget that Governor Pawlenty sent $80 million to Minneapolis last year to "help" with the Convention Center debt. That was over and above the nearly $70 million in Local Government Aid. State income taxes collected have NOTHING to do with Minneapolis.
Frank: State income taxes are earned in Miinneapolis if the business is based here or the employee is working here. This is consistent with the way income taxes are apportioned between states and to individuals respectively. I don't see why the rules should somehow change at the municipal level. The fact that the city does not have direct jurisdiction over the spending of those taxes does not negate the significant contribution that income taxes derived in the city make to state. Ignoring this fact would be the equivilent of saying WY's contribution to federal income taxes is no different than CA's.
Nick Frank Elliot Park
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