The Office of the Minnesota State Auditor posted rankings of all cities in Minnesota for 2017. Floodwood was ranked for revenue and expenditures against other cities with less than 2,500 people. The results are eye-opening.
While Floodwood was in the lower 22% for Taxable Tax Capacity it was in the top 21% for Net Tax Levy. Property taxes were also in the top 21%. The Taxable Tax Capacity is the ability of individuals and businesses to pay taxes. A tax capacity of 100% would mean taxing away 100% of income. The ranking is not saying that Floodwood is at any level near 100%, but it is worse off than 78% of other cities of less than 2500 people.
When it comes to grants, it ranked in the lowest 6% for Federal Grants but in the top 14% for State Grants. Between both grants they were in the top 23% for Total Intergovernmental Revenues.
The Charges for Services were in the top 15% and top 6% for Fines and Forfeits. While All Other Revenues were in the top 17%, Total Revenues were in the top 19%.
The Total Current Expenditures was in the top 6%. The largest contributor by far are the costs for Police and Ambulance which ranked 2 out of 413 or in the top 0.5%. They had $330,102 in costs, amounting to $626 in costs per person.
The other items contributing the most to expenditures was the Fire Department (top 18%), Streets and Highways (top 26%), and Parks and Recreation (top 24%).
The city offset their current expenditures to some extent by having a Total Debt Service that was in the lowest 23%. Total debt service refers to current debt obligations, meaning any interest, principal, sinking-fund and lease payments that are due in the coming year. Overall, Total Expenditures was in the top 22%.
The year 2017 showed that Floodwood is in the top 19% for revenues and top 22% for spending. As property taxes are already in the top 21%, the school referendum, if passed, will make this ranking only get worse. The Taxable Tax Capacity will also be negatively affected.
More financial stress on individuals, given the current situation will leave many struggling to meet a reasonable ‘sustenance’ level. Sustenance is defined as the minimum required to survive independently without more income or government assistance. For cities it means the ability to sustain a population and maintain the maximum capacity of its economy.
The school acknowledges declining birth rates, and little is said about its ability to survive without ongoing financial support (referendums) in the future. Since 2010, Floodwood’s population has ranged from 521 (now) to 529 in 2011. The school is the largest employer in Floodwood employing 50 people, several locally. Increased state funding will help the school, but it doesn’t solve the declining enrollments. Jobs bring families and Floodwood simply doesn’t have growing employment rolls, particularly well-paying ones. Kids deserve a good education, and Floodwood has some excellent teachers, but overall, test scores have not been good. The need for a referendum speaks to the failure to rein in costs.
There is a limit to what people can or will pay. When the bill is being paid only by property owners, it falls to a smaller number of individuals. Floodwood is proving you can’t have it all. Sometimes you must give up something to keep something else. The number one cost thrown about by citizens repeatedly is Floodwood’s four police officers. The audit showed that Floodwood is second for Police/Ambulance costs out of 411 cities with populations under 2500. Some room could be cleared to support the school needs without overburdening taxpayers. The failure to reduce tax burdens or sustain acceptable tax levels poses the greatest risk to the city overall. Given the financial facts, the voters have some tough choices to make, now and ahead.