Board of Estimate and Taxation

April 2017 Monthly Topic Materials

Board of Estimate and Taxation Report/Update

League of Women Voters Minneapolis  March 2017

Background: Why an Update

In early 2016 the Chair of the Charter Commission for the City of Minneapolis, Barry Clegg, approached the League of Women Voters Minneapolis (LWVMpls) and inquired about our position(s) on the Board of Estimate and Taxation (BET.) At issue was the question of whether the LWVMpls might support a charter change to add a seventh member to BET.

The Minneapolis Library Board had a seat on the BET until the Library was subsumed by Hennepin County in 2008, leaving BET with an even number of members. The six members include the Mayor or designate, the City Council President, the chairman of the Ways and Means/Budget Committee, a commissioner of the Minneapolis Park and Recreation Board (MPRB), and two citizen members elected city-wide for four-year terms. (Appendix A)

The Board of Estimate and Taxation’s function is to set maximum tax levy rates and approve bond sales for various city and Park Board tax funds.

LWVMpls’ current position supports abolishing the Board of Estimate and Taxation and designating the Mayor and City Council to perform the duties currently performed by the Board. This position was adopted in 2006 following the study, Minneapolis Government: Balancing Act II. (https://www.cura.umn.edu/sites/cura.advantagelabs.com/files/publications/P2006-2.pdf

In a 2009 referendum Minneapolis voters were asked “Should the City of Minneapolis adopt a change in its charter to the composition of the Board of Estimate and Taxation so that the Board’s membership consists of the members of the City Council, with the actions of the Board subject to the powers and duties of the Mayor?” (Charter Amendment No. 168). The measure failed, although LWVMpls, the Star Tribune, and many current and former city officials urged its passage. Total voter turnout was 45,968. Of those, 38,744, or 84%, voted on the BET amendment, and 65% of those voted against the amendment.

At the time of the referendum, BET also handled the City’s internal audit function, but that role is now served by the Internal Audit Department, with oversight provided by a six-member Audit Committee. (Appendix B)

Update Process

To prepare this update, the LWVMpls Local Government Committee, chaired by Joan Niemiec, conducted interviews with 19 individuals. (Appendix D) The questions we asked were:

  1. What have been your experiences with BET since the membership has been six members?
  1. What impact(s,) if any, have you observed with the current composition?
  1. Have there been any tie votes? How was this resolved?
  1. Why do you think that Minneapolis needs the BET?
  1. What alternative(s) to the BET might work to satisfy these needs?
  1. Other issues – anything that we haven’t covered that you would want to discuss or comment upon?

Those we interviewed had a variety of experiences with BET ranging from less than one year to more than 20.

What We Heard

Question One allowed us to assess the interviewees’ individual experiences working with BET. Some had had no contact with BET prior to January 2008 when the library merger was effected and membership dropped from seven to six. Others noted that the number didn’t seem to have much impact. A charter change by ordinance (which requires a unanimous Council vote) in April 2016 now specifies that two-thirds of BET members (four of six) must support any bonding approval.

Our interviewees had this to say about BET composition and size:

  • There could potentially be lots of problems with six on BET depending on the issues but BET is working very well now.
  • If there aren’t four votes, then the money shouldn’t be spent. With seven members on BET, five votes were needed (71%). Four votes out of six is 67% or 2/3 support. This is a pretty standard threshold for government bodies.
  • Adding a seventh member would be good for times when the interpersonal relationships on BET are not so good.
  • Elected members need financial expertise.

Questions Two and Three were designed to assess how BET has functioned with six members and whether this contributed to any problems or improvements. We discovered that to the best of anyone’s knowledge, there have been no tie votes since BET membership has stood at six.

Those we interviewed had these comments on the issue of impact and function:

  • There are incentives to work together since no single entity is in charge.
  • It’s very collegial now, though that has not always been the case.
  • BET has an important function in mediating between the city and the independent Park Board—if the Park Board were a city agency, it would not be necessary.
  • Members realize they must work things out in order to get the results they want.
  • Citizen members have an opportunity to ask all sorts of questions that might not get asked if they weren’t there.

Responses that addressed the need for BET were generally favorable:

  • BET is the backstop for anything that might be illegitimately arrived at. BET certifies that proper processes have been followed and tracks whether money is spent as prescribed by law.
  • BET is another set of eyes on capital spending…that is not in the total control of the Mayor or City Council and includes the Park Board.
  • Setting taxes and incurring debt are too important to leave solely to full-time elected officials.
  • Several other bodies that provided opportunities for citizen input have been abolished, so this is one of the last places for citizens to feel they have a voice.
  • The benefits of the additional layer of government with independently elected members outweigh any costs to efficiency.

We decided that for the purposes of this update it wasn’t necessary to examine alternatives to BET as these would require a far more rigorous and extensive study. This proved to be fortuitous as most of our experts had nothing to offer as an alternative although there was mention of “something similar to CLIC.” (Appendix C)

Conclusions

Based on our conversations with individuals familiar with the Board of Estimate and Taxation and its work, we could see no compelling reason at this time to recommend a charter change to bring the BET back to seven members. We believe that our response to the chair of the Charter Commission should be to leave the membership at six.

We did not ask specifically about how a seventh member would be chosen, but that was part of the discussion with many of the interviewees. Possible options would be an additional appointment by the City or the Park Board or an additional elected citizen member. While several expressed a desire for additional Park Board representation, they acknowledged that was unrealistic, and with one exception recommended an additional elected member. No one advocated for another member appointed by the City. An additional elected member seemed to be the preference of most the interviewees who expressed any opinion on the issue. At the same time, we noted that voting on this and other down-ballot contests tends to be low, with only about 60% of voters in the 2013 city election voting on BET candidates.

Our recommendation to maintain the status quo means that neither the City Council and Mayor (with three votes) nor the balance of the BET membership (MPRB appointee and two elected public members) can act without securing the support of at least one other member. On the other hand, the City can block any action with its three votes. We do not wish to suggest that there are “sides” within BET, although that is sometimes the case on specific issues as it is in any decision-making body. The balance on the Board means that issues must be fully examined and negotiated before binding decisions can be reached. In the end, we believe that this is beneficial for the City and its residents.

Finally, as LWVMpls strongly suggested in two earlier studies, Minneapolis Government: A Balancing Act (2005) and the subsequent Minneapolis Government: A Balancing Act II (2006) there are many steps that could be taken to improve accountability, transparency, and responsiveness in city government. While there are no doubt times when it is important to make small changes – as one of our interviewees said “around the edges” – for example in modifying the roles of various government bodies or changing their membership, it may be that a better approach would be to make thoughtful, substantive changes in a thorough restructuring of Minneapolis government.

LWVMpls BET Committee: Joan Niemiec (Co-Chair Local Government Committee,) Pat Kovel-Jarboe (Co-Chair Local Government Committee,) Martha Allen, Margit Berg, Ginny Craig, Susan Gray, Sally Sawyer, Julie Wallace

Appendix A

Board of Estimate & Taxation Members

(all terms through January 2018)

David Wheeler, President, elected member

Carol Becker, Vice-President, elected member

Anita Tabb, MPRB representative

Betsy Hodges, Mayor

Barbara Johnson, City Council President

John Quincy, City Council, Chair Ways and Means

Appendix B

 Internal Audit Department and Audit Committee

The Internal Audit Department, with oversight provided by the Audit Committee, provides comprehensive internal audit services to the City of Minneapolis and functions in accordance with the International Standards for the Professional Practice of Internal Auditing set by the Institute of Internal Auditors (IIA). The Internal Audit Department serves the City of Minneapolis and the public interest by providing objective services that enhance the city’s ability to manage risk, improve internal controls, optimize efficiencies, reduce costs and strengthen accountability.

The department reports to the City of Minneapolis Audit Committee, comprised of three Council Members and three appointed citizen members. One member is appointed by the Park Board (generally an elected Park Board commissioner), one by the Mayor, and one by the City Council, for three year terms. The Minneapolis open appointments list of boards and commissions describes the Audit Committee as a standing committee of the City Council. The committee’s ordinance states:

The Audit Committee shall be responsible for the oversight of the City’s internal audit function. The Audit Committee is also responsible for appointing and removing the Internal Auditor; review and approve the Internal Auditor’s annual audit plan; review the audit reports directed to it and make recommendations to the City council on the appropriate course of action on any such audit reports; monitor the Internal Auditor’s results; and review reports of the State Auditor prepared for any of the city’s departments, boards and commissions.

Appendix C

Capital Long Range Improvement Committee (CLIC)

 The Capital Long-Range Improvements Committee makes recommendations to the City Council and Mayor on capital improvement program development and annual capital improvement budgets. It has 33 members, all appointed. The Mayor appoints seven at large and the City Council appoints 26 – 2 per ward. Appointments are for two years. While CLIC does make recommendations for Park Board projects, there is no Park Board appointee. CLIC does not have a role in bond sales.

The job description for CLIC appointees states the following as the Nature of Work:

Responsible for reviewing and critiquing approximately 120 capital budget requests submitted by City Departments, Independent Boards and Commissions of the City to arrive at a financially balanced, programmatically proportioned, and equitably distributed five-year capital program recommendation to the Mayor and City Council.

Appendix D

Names/Roles of Interviewees

Carol Becker, elected public member BET

Steve Brandt, retired reporter, Minneapolis StarTribune

Anita Duckor, retired, former member of Minneapolis Public Library Board

*Bob Fine, former member of MPRB

Betsy Hodges, Mayor (accompanied by Peter Wagenius, Policy Director in the Mayor’s Office)

Barb Johnson, Minneapolis City Council President

Spencer Kronk, Minneapolis City Coordinator

Cora McCorvey, Executive Director, Minneapolis Public Housing Authority (accompanied by Tim Dunrose, Chief Financial Officer)

Jayne Miller, Minneapolis Parks and Recreation Superintendent

Kathy O’Brien, former Minneapolis Council member and former Minneapolis City Coordinator

Jack Qvale, Secretary, BET

John Quincy, Minneapolis City Council Member

*Mark Ruff, Chief Financial Officer, City of Minneapolis

Susan Segal, Minneapolis City Attorney

*Jill Schwimmer, former elected public member BET

Anita Tabb, Minneapolis Park and Recreation Board President and MPRB member of BET

David Wheeler, elected public member BET

* these individuals were interviewed via email