MN Orgs. Push for Transparency in Gov’t Spending

NAIOP's Minnesota chapter, the Minnesota Taxpayers Association, and the Minnesota Chamber of Commerce plan to draft legislation requiring all government entities to use the same structure to report how they budget and then spend taxpayer dollars.

A commercial real estate trade organization, a taxpayer association, and the state's largest business group are launching an effort to reform the way public governments in Minnesota create their budgets and report them to the public. Their goal: to enable property tax payers to understand what's driving annual property tax increases-and make informed decisions about whether tax dollars are being well spent.

It was more than a year ago that NAIOP's Minnesota chapter began to look at what's behind property tax increases-and the 700-member organization quickly found it difficult to discern why they need to continually go up. “Minnesota has a strong tradition of business properties subsidizing all other properties,” says Kaye Rakow, director of public policy for NAIOP Minnesota. She added that members of her organization have long been concerned about how much of the burden they bear.

To begin addressing that issue, NAIOP Minnesota developed a task force of 25 volunteer NAIOP members-some of whom happened to be current and former city council members from various municipalities-to conduct behind-the-scenes meetings with business leaders and legislators. NAIOP also hired the Minnesota Taxpayers Association (MTA) to conduct research on how budgets are developed and reported throughout the state. More recently, NAIOP partnered with the 2,400-member Minnesota Chamber of Commerce to help communicate and build action around its findings.

Late last week, NAIOP mailed 14,000 flyers to various contacts around Minnesota, including 750 NAIOP members, dozens of media outlets, and local chambers of commerce. Each chamber received a package of 25 flyers with an endorsement letter from the Minnesota Chamber, encouraging them to pass the flyers along to members and others, and to post information to their Web sites.

In essence, NAIOP, the MTA, and the Minnesota Chamber want all city and county (and eventually state) government entities to use object code reporting-a standard, easy-to-follow way of accounting how they're budgeting and then spending taxpayer dollars. Today, many budgets are difficult for the average person to understand.

Local governments now report their spending through broad functional categories, like “police,” “libraries,” and “parks”-along with how spending in each area has changed over time. But those categories don't tell taxpayers what, exactly, their money has purchased. They also don't allow taxpayers to make informed judgments about government cost structures and the efficiency with which their dollars are being spent.

“We would like legislation requiring all units of government in the state of Minnesota to report their budget information using the same object codes” within those functional categories, says Mark Reiling, a principal at commercial real estate firm Cassidy Turley in Minneapolis and a member of NAIOP Minnesota. Examples of object codes include “salaries and wages,” “health benefits,” and “office supplies.”

Rakow said Tuesday morning that her organization plans to start immediately drafting legislation to introduce during the legislative session that's now underway. She vows that if the legislation doesn't gain the support it needs this year, her group will be back in front of the Legislature in 2012. “We're not going to give up on this,” she says.

But regardless of whether a bill is introduced, Rakow says that progress will be made this year. “We have an idea, we're in the process of planting seeds, and we're going out there to make things happen,” she says.

Legislation isn't a must-have in order for NAIOP's task force to achieve its goal, says Mark Haveman, executive director of the MTA. While it would certainly speed up the process of change, the MTA could collect publicly available information to create object code reports for some government entities on its own. Rakow says NAIOP would consider funding such an effort and making the reports available to the public.

“The MTA started 85 years ago because people were losing their homes. Property taxes and low government spending was the issue. We had 30,000 citizens watching local government spending,” Haveman says. “That model has evaporated because economic conditions allowed it to go away. Now, we'd like a digital version of what we had in the '30s-one that fosters public debate where citizens are the cornerstone of the debate.”

“We're focusing on cities first,” Rakow says. While NAIOP has had positive dialogue about this subject with the League of Minnesota Cities, the two organizations have yet to sit down and talk in depth about working together. Rakow hopes to arrange such a meeting for later this week.

NAIOP's task force believes that cities will welcome the idea that they all should use the same type of standardized, object code reporting. “With the kind of transparency we're talking about, they'll be able to benchmark their city against Brainerd or Bodet and ask: 'Hey, these guys can do this [for] 30 percent less than us. Why is that?'” Haveman says.

Organizers of NAIOP's task force believe that what they're advocating makes enough sense for it to eventually become a reality. Exactly how that might occur remains unknown. “It's probably going to take two years before we can meaningfully benchmark community cost structures so cities can routinely discuss their budget with the public,” Rakow says.

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