Latest Posts

Home

Facebook

Twitter

Search
About

Winthrop Taps Reserves, Cuts Cops and Pothole Repairs to Subsidize Internet Network Debt

Recently American Experiment shared the predicament of ten southern Minnesota cities facing an unexpected property tax hike to subsidize their new high speed internet system. The RS Fiber network was was supposed to pay for itself, but that’s not how it’s working out.

The first phase of construction wrapped up in early 2018, connecting all ten cities to the fiber-to-the-home network and providing wireless service in rural areas. Some 2,000 residents signed on, more than 30 percent of available homes and businesses, yet short of the 3,000 subscriber break-even point.

Then in an August bombshell, RS Fiber announced discontinuation of bond payments for two years, requiring taxpayers to cover an anticipated $1 million shortfall as of February 2019.

Facing the second highest liability of the consortium of cities at $172,586.14 over the next two years, Winthrop provides a typical example of how vulnerable small cities can be to unanticipated financial impacts.

The city council just approved a 6.5 percent tax levy increase, a big improvement over the 18 percent hike first proposed. But to get there, city councilors had to cobble together a lengthy list of budget “adjustments” aka cuts totaling over $37,500. The biggest reductions came at the expense of street/pothole repairs ($19,000) and police services ($5,000).

Cut PD (police dept.) Telephone $600
Cut Streets Structural Repairs $19,000
Cut Snow Temp Employee $500
Cut Library Telephone $400
Cut Fire Prof Svc $1,500
Cut Library Capital Reserves Carpet $500
Cut Library Capital Reserves Computer $500
Cut Municipal Bldg Capital Reserves Windows $5,000

Yet Winthrop also had to raid almost $35,000 from the city’s reserves to make it work. One local taxpayer “voiced his displeasure” at the council meeting according to a  New Ulm Journal report.

“Now you know what the difference between democracy and socialism looks like,” [Mark] Santelman said. “You reach into the pockets of people who don’t want something, for the benefit of a few. I sat here four years ago and I begged you for a public vote. This RS Fiber thing is nothing but a financial disaster.

“You have the elderly and families in this community who now have to reach into their pockets, who didn’t want it and didn’t need it, and now have to bail this thing out,” Santelman said. “All for a few farmers who couldn’t get high-speed Internet. We could have had a vote. I think each of you (councilors) who voted for this should resign. The citizens of Winthrop are your constituency. It’s not the farmers.”

Eventually the city councilor who represents Winthrop on the RS Fiber board tried to put a better spin on the financial fallout.

Later in the meeting, councilor Julie Trebelhorn said the RS Fiber Joint Powers Board is moving forward and is very appreciative and mindful of financial support being shown by project cities.

“Support is still strong. Everybody at the meeting supports it,” Trebelhorn said. “They want people to know the service is here. It’s not going anywhere. It’s a fabulous service. RS Fiber’s rural air service is far better than what anybody else can get.”

This scenario will be played out again next year at the cities responsible for covering the debt payments for RS Fiber in 2019 and 2020. After that? The bond payment schedule runs until February 2037.

Comments

Subscribe

Categories

Upcoming Events

  • 2019 Annual Dinner Featuring Candace Owens

    Location: Hilton Minneapolis 1001 South Marquette Avenue Minneapolis, MN 55403

    From Brexit to Blexit… Britain’s exit from the European Union has not been smooth sailing. Since the leave date has been pushed back to October, Nigel Farage is now running for a seat in the European Parliament. That election date is May 23 which has forced him to cancel all American speaking engagements, including our Annual Dinner. Center of the American Experiment is pleased to announce that Candace Owens, the founder of the Blexit movement and host of The Candace Owens Show, will now be presenting the keynote address at our 2019 Annual Dinner on May 18. We are excited…

    Register Now
  • The Diversity Delusion

    Location: Hilton Minneapolis 1001 South Marquette Avenue Minneapolis, MN 55403

    Please join Center of the American Experiment on Wednesday, April 24th at the Hilton Hotel for a lunch forum with Heather Mac Donald as she discusses her new book, The Diversity Delusion: How Race and Gender Pandering Corrupt the University and Undermine Our Culture.  Heather Mac Donald is the Thomas W. Smith Fellow at the Manhattan Institute, a contributing editor of City Journal, and a New York Times bestselling author. She is a recipient of the 2005 Bradley Prize. Mac Donald’s work at City Journal has covered a range of topics, including higher education, immigration, policing, homelessness and homeless advocacy, criminal-justice reform, and race…

    Register Now