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Thursday, August 6, 2009

Democrat Proposes 100% Tax Cut

I know, the Lake Herman Sanitary District is a non-partisan office... but it doesn't hurt to have a headline that grabs your attention....

I like to use my title of president of the Lake Herman Sanitary District for comic effect. I'm not even sure it's the right title: I get mail labeling me as clerk, trustee... heck, you could probably just call me sewage boss.

But even boss overstates my authority. President is accurate insofar as I preside over sporadic meetings of a three-person board—currently myself, Lawrence Dirks, and third seat that has been vacant for two of the three years that I've served. Beyond the authority to call meetings, I have no power outside the majority (and with just two of us, that means unanimous) votes of the board.

There is one other fun thing I get to do: I write up the proposed budget for each fiscal year. We don't do much, so there's not much budget. The district was stockpiling cash when I joined the board in 2006, taking advantage of an opt-out to levy about $5000 each year from Lake Herman residents. That's not much, less than $50 per household, but it was money just sitting in the bank doing nothing. In 2006, we dropped the opt-out and reduced the levy to $2000 a year.

Still, thanks to a few years of an opt-out, we sit on a budget reserve of just under $20,000, or almost ten times our annual operating budget. Adding to a reserve that large seems silly to me. Therefore, at our next meeting, I will propose an FY2010 budget that levies $0 in taxes and covers our operating budget by spending down the reserve.

Why a zero tax levy? Why spend down the reserve?
  1. The intent of the opt-out was to build up a reserve that could fund replacing all septic tanks around the lake with a central sewer system. I estimate a central system would cost at least $3 million to build. To raise a 10% down payment, we would have to levy $5000 a year for 60 years.
  2. Local interest in building a sewer system appears minimal, as demonstrated by the absence of individuals interested in serving on the board.
  3. There are not enough taxpayers in the current district boundaries to make a central sewer system economically viable, and neighboring residents have no interest in joining the district to get rid of their septic tanks.
  4. There exists no evidence that the existing on-site septic systems around Lake Herman pose a clear and present threat to the environment.
  5. There exists no evidence that a central sewer system around Lake Herman would significantly improve water quality in Lake Herman and the rest of the watershed.
  6. Without a central sewer system, the Lake Herman Sanitary District has little formal authority to exercise other than to inspect new septic system installation. Such inspections are funded by their own $50 fee.
  7. In the midst of a recession, there is no compelling reason to take tax dollars and stash them in a bank account where they provide no direct services or economic activity.
  8. State law restricts the county cash reserves to 40% of the general fund. Governor Rounds gives school districts a hard time for maintaining budget reserves much smaller percentagewise than the sanitary district currently has. With no major building project on the horizon, a 900% budget reserve is hard to justify.
Now in past discussions of local lake policy, an anonymous commenter has chimed in to say I'm just a hypocrite who advocates big government and high taxes in everything but matters that directly affect my pocketbook. Indeed, this zero-tax proposal would drop my property taxes... by $20. The thing is, I would pay that $20, or even double that, if the Lake Herman Sanitary District were actually carrying out projects that improved the health of our lake.

But the district isn't doing that. I have trouble making the argument to my neighbors that I need to take some of their money and put it in the bank to do... nothing.

Now remember, I speak not as president saying this is the way it will be, but as a Lake Herman Sanitary District board member stating a public position and seeking public input on that position before the official vote. Your input is welcome here, on the Lake Herman Sanitary District blog, and at our August 19 meeting.


  1. So purely out of curiosity, why was the opt-out there in the first place? Was there at some time in the past a realistic plan/timeline for building such a central sewer system?

  2. ¡Hóla, Mike! The opt-out was passed a few years before I joined the board. They had commissioned a feasibility study in 1998, in which Banner & Assoc. from Brookings determined that a system could be built for a bit over $2M. The board had general ideas of applying for grants to build the system, but I have not seen any concrete financial roadmap from that time period. It feels to me like it was just, "Let's a bunch of money in the bank, just in case magic happens."

  3. The fact that you want to reduce taxes and put money back into the hands of taxpayers who will spend that money and stimulate the economy is simply a flashback to your more elightened days as a young idealistic Reagan Republican.

  4. There's a time and a place for everything. Sometimes it's good to reduce government; sometimes it's good to expand it. Sometimes we need to raise taxes; sometimes we need to lower them. Even Reagan showed some flexibility like that: sometimes you need to call the Russkies the evil empire, and sometimes you need to sit down at the table and talk Turkey (and Poland, etc.) with them.


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