Truth Matters
Misinformation and Disinformation in political races has now reached Edina. Let’s not let what is happening nationally happen here. Truth matters in our country and it matters in Edina, too.
The anonymous criticism of the City’s fiscal management in an unauthored email conveniently ignores the fact that the City of Edina has the third lowest property taxes in the Metro on comparably valued homes and that we have had a double AAA bond rating from both Moody’s and Standard & Poor’s, the highest credit rating which can be issued, for over 20 years. Edina has also been the recipient of the Award of Excellence in Financial Reporting and Management over roughly that same period of time. This City is extraordinarily well run, and the Council and staff take their financial responsibilities to the residents of our town very seriously. We work hard to protect that double AAA bond rating achieved by only about 3 dozen cities our size in the U.S.
The unidentified author raises the claim there has somehow been financial mismanagement going on in Edina because, despite a growing tax base, the average rate of property tax increases since 2014 has outpaced the average rate of inflation over that same period.
I asked Bill Melton, Edina resident and a former economist for American Express and a past member of the Minnesota Council of Economic Advisors, to review the assertions made by the anonymous author and Melton’s comments are as follows:
The author accuses the City of Edina, and specifically Mayor Hovland, of incompetent fiscal management—but he never makes his case, and he withholds evidence that flat-out contradicts his argument. His statements are both erroneous and deceptive.
We are told (by the anonymous author) that the US inflation rate—probably as measured by the Consumer Price Index (CPI), but it’s unclear—has averaged 2.9% annually during the last ten years. However, the CPI is unlikely to be a good measure of price pressures faced by Edina, because the city’s purchases are very different from those of the average consumer in the CPI.
Then it gets worse. The statement is made that Edina’s property-tax levy has increased an average of 7.2% annually during the last ten years. This is about two and a half times as fast as the CPI during the period, so there must be fiscal mismanagement on the part of the city. A student who made a blooper like that in Economics 101 would be well on the way to flunking the course! Even if one assumes that the CPI correctly measures prices paid by Edina, there is no reason to expect that increases in the levy would move in line with the index. That could only happen if the real (i.e., inflation-adjusted) value of the city’s expenditures were unchanged over the ten-year period.
That would mean no real growth in outlays for parks, public safety, and the many other services that make Edina a terrific town. To put it mildly, such austerity is not what most residents mean by fiscal management!
Then it gets still worse. In an accusation of fiscal mismanagement, one would expect the author to cite the verdict of the national bond rating agencies. These firms rate the bonds of US municipalities for creditworthiness—which can only be achieved by solid fiscal management. Their verdict on Edina is clear. Ours is one of a relatively small number of towns in the US that enjoys a AAA rating (the highest possible) from both of the rating agencies.
Not only that, but Edina has one of the lowest property-tax rates in the metro area. If our town were plagued by fiscal mismanagement, surely the comparison would be far less favorable.
Undoubtedly Edina will face many challenges in the coming years. Let’s hope that the City will continue to meet those challenges creatively and sensibly, as it has done in the past.
This is supposed to be a non-partisan race, with voters picking someone to lead Edina for the next four years. It would be helpful to all residents making that voting decision to be able to rely on facts and not assertions made by an author who chooses to stay anonymous.
James Hovland