In 25 to 30 years, when the community center in Brooklyn Park needs a major repair, city officials won't have to borrow millions of dollars or beg residents to vote for more taxes. Instead, they will make a withdrawal from the city's savings account.
The idea is unique in the state -- creating an endowment that over 50 years will pay for $300 million of projects. While many cities do plan for the next 10 to 15 years, national experts are seeing local government officials pick up on the idea of planning city budgets like they manage their own retirement funds.
Over the past 10 years, Brooklyn Park has been socking away money a little at a time by making annual transfers from its general fund and making some tax increases permanent.
For example, in 1998 residents voted to raise taxes to pay for fire department improvements. When the tax increase expires in 2012, the city could lower taxes, but instead, will keep them at the same level and put the money in the savings account.
With this system, the city guarantees that taxes won't go up dramatically when another big project needs to be paid for, said Brooklyn Park Finance Director Cory Kampf.
In a recent national survey, hundreds of government financial managers ranked long-term financial planning as one of the top areas of interest, said Anne Kinney, the director of research and consulting for the Chicago-based Government Finance Officers Association, which surveyed a sample of its 17,500 members. The League of Minnesota Cities said it doesn't keep track of cities' financial plans, but financial experts say Brooklyn Park's approach is novel.
"Basically, [we're] saying the city has a city hall, public safety buildings, streets and parks that will need to be repaired or replaced over 50 years, just like your house, so how is the city planning to do that?" Kampf said.
The endowment currently has a balance of about $7.2 million, but over the next few decades the city, whose projected 2008 budget is $33.9 million, will increase the amount of money it saves.