Sent to Minneapolis Charter Commission
June 23rd, 2009
Dear Chair Bernstein and Charter Commission Members:
I wanted the opportunity to provide a background for my proposal that is before the Charter Commission on July 1st.
The Board of Estimate and Taxation has existed for over 130 years. It
was created initially as a forum where the major taxing entities within
the City had to sit down and coordinate their financial plans instead
of each jurisdiction acting independently. Currently, it is the only
structure where the City Council, Mayor and Park Board have to sit down
and talk about their mutual issues. In fact, the City Council,
Mayor and Park Board rarely ever sit down together formally to talk
about their mutual issues outside of the Board of Estimate.
The Board of Estimate (up until two years ago) had an important
balance. There were three people from the City (the Mayor, the
Council President and the Chair of the Ways and Means Committee), two
from the independent boards (one from the Park Board and one from the
Library Board) and two independently elected individuals. This meant
that no one side could do anything without getting the agreement from
an individual from another side. The City couldn’t impose
its will on the independent boards without at least one vote from the
independent members. The independent boards couldn’t do
something that the City didn’t want unless it could get the votes
of both of the independent members. The Mayor could get the
votes of non-city members to put move forward proposals that were
opposed by the City Council. This created an important balance of
power among the various groups, a balance that forced coordination and
cooperation. Nothing would move forward unless at least two sides
agreed.
This balance was broken when the Library Board was eliminated and its
member not replaced on the Board of Estimate. As it currently
stands, the Board of Estimate has six members, which can make it
difficult to pass items because the board can easily stalemate.
Also, the delicate balance of power has changed. Now the City can block
any item it disagrees with, giving it substantially more power than
previously. This means that an important check and balance on the
power of the City has been lost. It also means that the independent
boards, now the Park Board, is at a significant disadvantage in having
its issues addressed, having only one member out of six.
There are three issues that the City, the Mayor and the Park Board
interface around at the Board of Estimate. First is the property
tax levy. This means that the entities all have to come together
to set the maximum amount they will increase their levies. The
Board of Estimate does not actually set taxes, however. This is left to
the individual jurisdictions. The Board only sets the maximum, in
essence creating the framework for the decisions by the other
jurisdictions. But the Board of Estimate provides an important
mechanism for
forcing the two groups to work together. The City cannot impose
its will on the Park Board while the Park Board is not completely free
to set whatever levy it wants. The structure of the Board means
that they have to compromise together to set a levy.
The second way that the various entities interface at the Board of
Estimate is to issue debt. The Legislature does not allow the
City Councils of cities of the first class (i.e. Minneapolis and St
Paul) to borrow money (by issuing debt, i.e. bonds). Minneapolis
has the Board of Estimate to do this while St Paul has to get approval
from the Legislature to borrow money. Ostrow’s last minute
change to seat the City Council as the Board of Estimate was a
recognition that you cannot eliminate the Board of Estimate without
eliminating
the City’s way of borrowing money. There is also an important
balance of power that occurs with this function. The Board cannot
legally sell bonds for park projects unless both the Park Board and
City Council agree on the exact list of projects and amounts.
Again, the City, the Mayor and the Park Board must come together for an
action to occur.
The third thing that the Board of Estimate does is oversee the
activities of the Internal Auditor. The Internal Auditor
investigates fraud, waste and abuse cases and also examines the City
and Park Board processes for their potential for fraud, waste and
abuse. Having the auditor report to the Board of Estimate instead
of the entities that are being audited provides an independence that
would not otherwise exist. It also means that the City Council,
the Mayor and the Park Board jointly bear responsibility for clean
government. And clean government doesn’t just happen – it
is something that has to be worked at every day.
It is also important to understand the role of the two elected members
of the Board. The two elected Board of Estimate members cannot
pass anything on their own, having only two votes on the Board.
In fact, their votes only come into play when the City, the Mayor and
the Park Board cannot agree on something. This means that the
independently elected individuals really serve as independent
“judges” or “referees” without a “dog in
the fight”. This provides an important mechanism for
helping resolve issues between the City, Mayor and Park Board. It is
also a mechanism that does not come into play very often because the
structure of the Board means that the City, Mayor and Park Board have
an incentive to work things out without having to bring in the
independently elected persons. But they are there when impasses occur.
The Board structure ensures that the City and the Park Board address
their issues because they HAVE to work together to accomplish
things. But because this structure exists, the two sides
typically work out their issues. This is why you rarely hear
about the Board of Estimate and the elected representatives on the
Board. If it is left to the three groups voluntarily
agreeing to working out their issues, this most likely will not happen
because no formal mechanism makes it happen.
My proposal is to add a seventh member to the Board of Estimate,
replacing the lost Library Board member with a Park Board member.
This would bring back the balance that existed in determining the
property taxes, it would bring back the coordination in capital
planning and it would strengthen the joint responsibility for clean
government. It would also change the Board from six
members to a more workable seven members.
I also wanted to respond to a couple of statements made at the previous
meetings of the Charter Commission. One Commissioner stated that
eliminating the Board of Estimate would save money. The Board has
two employees, one that handles bond sales for the City and Park Board
and an internal auditor. Both of those employees would be needed
regardless of the elimination of the Board.
The only savings would be from the salaries of the two Board members.
The elected members get $35 a month ($840 a year for both members
together), an amount that has not been raised since the Minneapolis
City Charter was adopted
in 1920. Because of this, it is not correct to say that there will be any significant savings from eliminating the Board.
Another commissioner stated that he did not know what the Board of
Estimate does. I have been extremely concerned that the Charter
Commission has never had a good briefing on what the Board of Estimate
does, how it functions and why it is critical to our form of
government. The Charter Commission never had this briefing before
taking a vote to eliminate the Board. I know that for myself,
probably one of the experts on the Board of Estimate, I have been able
to speak before the Commission for a sum total of a minute and a half
while Paul Ostrow got significantly more time to put forward his
proposal to eliminate it. This is simply not good public policy,
especially for a group that has been so deliberative in its other
decisions. I spoke to the Chair about this after the last meeting,
especially about the decision to split the decisions to eliminate the
Board and strengthen it. I appreciate the Board was overshadowed
by other
decisions but the two proposals should have been considered together.
Paul Ostrow changed his proposal at the last minute from eliminating
the Board of Estimate to having the City Council sit as the Board of
Estimate. In the second option, the one supported by the Charter
Commission, the Mayor does not have a veto option because the Mayor
currently sits on the Board of Estimate and does not have a separate
veto power over the Board. This leaves setting the levies and
determining what capital projects are funded and overseeing one of our
mechanisms for clean government solely in the hands of the City
Council. This is a critical shift of power and one that should not be
implemented. There should be checks and balances on the actions of the
City Council.
Last, the Charter Commission voted at its last meeting to not place an
item on the ballot to eliminate the independent Park Board. Yet
by placing the proposal to eliminate the Board of Estimate on the
ballot, it has, in essence done just that. The fates of the
independent Park Board and the Board of Estimate are linked –
eliminate one and you eliminate the other. The proposal that the
Charter Commission adopted, having the City Council sit as the Board of
Estimate, places all the power to determine funding for the Park Board
in the City’s hands. The Park Board no longer has a formal
role or voice in determining its own funding. I believe that very
quickly this relationship will deteriorate to where the City Council
will not only dictate funding levels but it will also dictate other
policy items beyond just funding. A quid pro quo will develop
where the City will have a list of demands from the Park Board
for the Park Board to receive funding. And quickly, we
will not have an independent Park Board. I believe this will
be exacerbated by the financial challenges that we have ahead.
Part of what I also fear is that if the Board of Estimate is eliminated
and the City Council starts to exert inappropriate influence on the
independent Park Board, that then there will be a cry for a mechanism
to force the two sides to sit down and work out their
differences. There will probably also be included a proposal for
a few independent referees to step in when the two sides cannot
agree. And then we will recreate the Board of Estimate and have gotten nowhere.
Sincerely
Carol Becker