By Scott Neal

The city of Eden Prairie’s budget preparation process has received quite a bit of attention this year. And for good reason. There is a new City Council in place following the 2006 elections. There was the creation of a new Budget Advisory Commission by the City Council to add a new set of eyes and review to the thousands of little decisions that make up the totality of the city’s biennial budget. There was also the prospect of increasing taxes and reducing city services. The discussion of proposed reductions to the city’s human services programs and staffing levels stirred a large number of people to enter the budget process and share their feelings with us.

The completion of the city’s 2008-2009 biennial budget is just around the corner. On Dec. 18, the City Council will meet for its final regular meeting of the year. They will approve a budget for the 2008-2009 biennium. They have to. It is our last meeting of the year and we must have a new budget to start the calendar year on January 1, 2008.

The budget proposal that is currently before the City Council is one that proposes to spend $41,182,327 in 2008. That’s an increase of 4.9 percent over 2007. The proposed budget includes sufficient funding for everything the city does now, including new operating costs at the newly expanded Community Center. The proposed budget includes a baseline of funding for contracts with a number of local nonprofit human services organizations and for the continuation of current staffing levels and services from the city’s Housing and Community Services Division. The proposed budget also includes funding for a new police officer, a new information technology technician and a new facilities technician at the Community Center.

On the other side of the ledger, the proposed budget includes a reduction in the amount of property tax the city levies for its long-term Capital Improvement Program (CIP). In 2006 and 2007, the city levied a property tax of $1,000,000 to generate funds for the CIP, which is a special fund the city is building up to prepare for future investments in the city’s capital infrastructure, such as our roads, bridges, sidewalks, trails, parks, public buildings and large capital equipment, like fire trucks that cost hundreds of thousands of dollars. The supporting rationale for this practice is that the city can benefit future taxpayers and residents by prudently accumulating money each year to help cushion the blow of large costs for projects in the future. The counter argument is that the city should not burden current taxpayers with taxes that will benefit future taxpayers. Future taxpayers should shoulder the burden of their own fiscal needs and decisions. The proposed budget includes a reduction of the $1,000,000 CIP tax levy by $250,000 in 2008 and $100,000 in 2009.

Examining the city’s budget for its changes in spending and services is one way to look at the proposed budget. Another way to look at the city’s budget is to examine its proposed tax impact. The city measures its tax impact by looking at the proposed change in city property taxes on the median single family home. I understand that this way of looking at the budget isn’t useful for all property taxpayers, but it is the best measure for well over 50 percent of the city’s individual property taxpayers in 2008.

The median single family home in Eden Prairie in 2007 is valued at $347,800. The net city tax on this property in 2007 is $1,073. If the City Council approves the proposed budget, the net city tax on this property in 2008 will be $1,084. The net increase from 2007 to 2008 is $11. Not $11 per day. Not $11 per week or per month. It’s an increase of $11 for the entire year. That’s an increase of less than 1.0 percent, or 0.98 percent, to be precise.

The budget proposal before the City Council right now is a good budget. It’s not a perfect budget. No budget is perfect. The budget has undergone a complete analysis of the new Budget Advisory Commission. It has been worked and reworked a dozen times by city staff since February when the budget process started. The proposed budget maintains city services at their current levels, while beginning to reduce the rate of growth of city spending for the future. And we do all this while producing a property tax increase for 2008 that is roughly half the anticipated annual rate of growth in the nation’s Consumer Price Index.

I think the proposed 2008-2009 city budget is a good budget. I will recommend the City Council adopt the proposed 2008-2009 budget at their final council meeting of the year on Dec. 18.

 Scott Neal is Eden Prairie’s city manager.