• 21°

Mayor Candidate Q&A: Addressing Austin’s budget

Author’s note: This is the second of three features the Herald will run prior to the August primary in which Austin’s 2020 mayoral candidates answer questions on issues that affect Austin residents. For this feature, the candidates were asked questions concerning the City’s budget.

Here are their responses.

  Steve King

1. Which City service(s), if any, have voters told you they want to see reduced or removed from the City’s annual budget?

Heimer: The people whom I’ve had the pleasure of speaking with have for the most part felt that the city has done a good job of providing services. However, there are issues that arise when there are gaps in communication or overlap. A lot of voters have asked why there were so many different layers and so many different departments when it seemed like it could be streamlined a little more.

King: This is an interesting question as it seems it might be obvious to some. However, during my 12- years on the Council I’ve become increasingly aware that this is perhaps one of the most difficult questions to ponder. It’s difficult because voters value different departments and the services these departments provide. Trying to understand and honor the differing values of the community is paramount to delivering good services. That being said, I can honestly say that the voters of Austin have never contacted me with ideas they might have regarding reducing or removing any service provided by the city. This leads me to believe that the voters appreciate the comprehensive services provided by the city for their tax dollar.

Austin: When we (Council) started discussions on the budget back in mid-May, we heard from many citizens and business owners. The main message that was imparted was that they did not want to pay higher taxes; not many solutions or suggestions on what they were willing to see reduced or removed from the budget were received. While this was somewhat disappointing, that is what we as Council members are elected to do—make the tough decisions. Mayor Stiehm then appointed the Budget Committee to take a “deep dive” into the budget and make recommendations to Council. I think the committee did a good job and came up with several solid recommendations for Council. Unfortunately, when your budget is 60-70 percent people costs, reductions ultimately mean less people.

2.  Which City service(s), if any, do you believe should receive more funding? Which, if any, should receive less? Why?

Jeff Austin

Heimer: Parks and Recreation should receive more funding to provide more activities following this whole COVID situation and allow them to maintain our outdoor spaces. Let’s get people back out into their communities and engaging with one another. Personally, I understand that each area or department of City services provides their particular function. Could there be overlap? Yes, I believe so. Do we need to cut back? No, not at all. We should be looking for areas of growth and opportunity, not for cutbacks.

King: The City of Austin is an efficiently run city. Measured against other cities in Minnesota with a population greater than 2,500, Austin ranks 223 out of 233 in net tax levy. This means there are only 10 other cities in Minnesota in which residents have a smaller city portion of their property tax bill than the residents of Austin. This is an important metric when deciding where the funding goes and to which department. Funding city services is a balance. While there is always room to expand services, this comes at a cost. I believe the city is in balance and the departments are funded appropriately. The citizens have made it clear they value all the services provided by the city and they make it clear that they want these services delivered with the least amount of cost. It’s the charge of the Council to maintain services at the most reasonable cost and I believe we continue to do so.

Austin: It would be nice to increase funding for all services! But realistically we cannot do that without increasing our tax base and that takes time. In the meantime, we need to continue to work smart and make our money go as far as we can, prioritizing projects and needs. We are extremely fortunate in Austin to have a very well-run City, with department heads and employees that care about our City. Our Capital Improvement Program, which is a five-year plan for the City, is a perfect example of this. From police squad car replacement to street projects to major projects are planned for over a five-year period with funding accounted for, and if the funding is not available or doesn’t come through(as in the case of a grant), then the project is delayed or other funding sources are sought.

3. With the pandemic affecting the State’s budget surplus and creating uncertainty about the future of Local Government Aid (LGA), what direction would you give to City department heads and the Council to address budgetary needs with the possibility of less revenue?

Brian Heimer

Heimer: Creating opportunity through business development and community partnerships. Again, let us stop with the doom and gloom and take a more proactive, positive outlook and find the opportunities during this time. I’m reminded of a pilot who once told me you might be in the middle of the fog, and it might look like it’s all around you, but all you have to do is rise above the fog and you will see the opportunities around you. Let us rise above and see beyond this fog.

King: There are only a few real options a city or any business for that matter has when faced with a loss of revenue — reduce costs (services, projects or employees) or increase the tax levy for the city or prices for the business. Due to the crisis of the pandemic the city will likely make decisions we normally wouldn’t make. We have already asked our department heads to present a budget with a 2.5 percent, a 5 percent and a 10 percent budget reduction. We continue to have these budget reduction discussions as the Legislature decides the fate of every city’s LGA in the next few months. Because of this timing, the City has been working on planning for the worst case scenario while hoping for the best. Council is committed to a low tax levy increase in 2021 as we know everyone is struggling. Whatever scenario comes to fruition, the City of Austin has had the benefit of great leadership in the finance department for years. This leadership positions us to have more options to deal with a financial hit than our peer cities.

Austin: The message I would give to department heads and Council is to prioritize our needs and work to ensure that we are meeting the needs and wants of the citizens. This pandemic has affected every level of government from cities on up. I would hope that the State Legislature would recognize this and pay LGA in full and on time. However, history has shown us that the Legislature does not always function and operate in a reasonable and expected manner, so we must prepare ourselves for the prospect of LGA being reduced. What this means to the City is that we will have to continue to do more with less. In our case, the “less” is less people. Sixty to seventy percent of our budget is people costs and with reductions in revenues comes less people. We have experienced this before, and while it is not a situation we like to be in, our department heads are very good at prioritizing what needs to be done and our people are very dedicated and loyal to the citizens to get the job done. Hopefully, history repeats itself and the economy recovers quickly from the pandemic and we are only looking at a short-term situation.

4. How would you address concerns from residents and local business owners about potential City tax levy increases?

Heimer: I don’t like them as much as the next person, period. Instead of taking more from the people who are already here, let’s address issues like growth and development so that we can increase the tax base the city draws upon. We are basically punishing those who stay in our community.

King: Please know that I and City Council are aware of the concerns of the citizens as well as our business partners. I have received the most emails and phone calls from residents and business owners during the past four months than I have in the past four years. We know the financial picture is a concern and the Council and I are committed to delivering a low tax levy for 2021. I am committed to making budget adjustments to maximize cost savings while minimizing operational impact. With this commitment in mind, my votes of late have been made with your collective voices resonating in my head asking for a low property tax levy.

Austin: I would say it really goes back to question number 1: If you do not want the tax levy to increase the amount of taxes you pay; what City services are you willing to have less of or do without completely?

5. Anything else you want to add?

Heimer: We are going to come out of this; how we come out of it is up to us. We can come out of this with higher taxes, budget cuts, and reduced staff, or we can come out of this better, stronger, and more able to adapt to future crises. My perspective is better and stronger.

King: As a representative of the City, I appreciate the interaction I’ve had with citizens during this difficult time brought on by COVID-19. The pandemic has affected us all and has caused us to reflect personally and as a community. I am heartened by the response of our community members and our business partners to ensure that those among us who are impacted the most are being taken care of through the generosity of the folks who call this great city home!

Austin: It is often touted that the City of Austin ranks low in tax levy per capita. We were 223rd out of 233 cities in Minnesota with a population of 2,500 or more in 2018. We also get a good “bang for our buck,” ranking 140th of 233 in expenditures per capita. However, ranking low in tax levy per capita does not mean that our taxes are “affordable.” I think the more telling figure is our tax rate of 56.5307 percent. The tax rate is derived by dividing the tax levy by our tax capacity. Tax capacity is determined by taking the total property values times the class rates, which are determined by the State. By looking at the tax rate, we are considering property values and not just the number of people living in the City. As a point of reference, our tax rate is the third lowest among the cities we often compare ourselves to—Albert Lea, Faribault, Owatonna and Winona.