Ground Level Category Archive: Local government finance

For volunteer fire departments, recruits can be hard to find

Posted at 3:57 PM on May 23, 2012 by Jennifer Vogel (0 Comments)
Filed under: Local government finance, Public safety

It's getting harder in many Minnesota communities to find volunteer firefighters.

A case in point is White Bear Lake, says Tim Vadnais, chief of the city's fire department, which operates on a "paid on call" model. That means firefighters are paid around $12 per hour during emergencies but volunteer their time for training and special events.

"If I go back to when I first got on the department, there were many firefighters who were the single wage earners in the family," Vadnais said. "Now that has changed to where both people work and have children. They are making good money and like to spend their money on toys and enjoy the cabin and so on. It has changed from the early 1970s until now."

According to the State Fire Marshal's office, the vast majority of Minnesota's 792 fire departments are staffed by a combination of paid on call firefighters and volunteer, unpaid firefighters. Only 10 departments are fully staffed by so-called "career" firefighters.

Yet, in some cases, communities are having a tougher time drawing volunteers. "Many are," said Rob Boe, public safety project coordinator for the League of Minnesota Cities, who noted there are exceptions, departments with brimming waiting lists. He said sometimes the age of a particular population is the issue. "We've got part of the state where they don't have a lot of people of the age to be firefighters available."

More onerous training requirements can be a factor too, Boe said. He also thinks there is a "generational issue," meaning that today's younger people are less likely to give their time than generations prior. "I think it's a component of it," he said. "Part of it isn't all bad. We have parents devoted to their children and both working hard."

The generational issue comes into play for other volunteer-heavy endeavors as well, as Dave Peters wrote here recently.

In White Bear Lake, which provides fire and ambulance service to a handful of surrounding communities, firefighters receive benefits other than the $12 per hour, like pensions. But that's not necessarily enough to draw candidates anymore, so Vadnais has added additional fringe benefits, including health savings accounts and cheap houses for rent.

The department used to offer small rooms in the fire station for $50 per month. But in recent years, White Bear Lake has bought homes close to its fire stations that rent for $200 per month per occupant plus utilities. "As houses came up for sale, we thought this is a good time to purchase them," Vadnais said. "Rather than live in a 12 by 12 room in the fire station, it's more desirable to live in a house instead. It's more of an inducement. It helped recruit for the department and went over very well. I wish we had about four more."

White Bear Lake, like a lot of communities these days, is being creative when it comes to public safety in the face of tighter budgets. Some have folded their police departments and instead rely on the county sheriff for protection or have partnered with nearby cities to share police or fire services and save dollars. Still others are working harder to lure volunteers.

"A couple of years ago, our finance director did a study on other cities our size, looking at their fire department budgets," said Vadnais. "There is a west metro city the same size as White Bear Lake that provides fire but not ambulance service. That city has a career fire department. We have paid on call that provides fire and ambulance for close to 50,000 people in six communities. Our budget is $2 million less than that west metro city's. It behooves me to keep this an unpaid department as long as I can."

A year ago, the White Bear Lake fire department landed a FEMA grant that allowed it to ramp up recruitment efforts. The five year grant paid for the health savings accounts for firefighters and for advertising. It also allowed the department to hire a full time recruitment and retention staffer. "It's going well," said Vadnais. "Our maximum level of firefighters is 55. We were down to 45, but with the next hire, we'll be up to our maximum amount."

Vadnais said it isn't necessarily the wage or other financial benefits that draw people to the team, but rather, "altruism." He said, "People want to serve their community. Once they get in, they get hooked. There is no job better than to be able to go out and help someone at their worst every day of the week."

So, are people becoming less altruistic? "Yes, absolutely," he said.

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Central Minnesotans kick the tires of regional plan

Posted at 3:24 PM on May 9, 2012 by Jennifer Vogel (0 Comments)
Filed under: Aging, Brainerd, Community Development, Economic Development, Local government finance, Rural

For more than a year, a group of a couple hundred people--business owners, elected officials, students, retirees and others--from five counties has been meeting to drink coffee and work toward establishing a set of goals for central Minnesota. They've been hashing over transportation, housing, job creation and other topics with the goal of creating a shared idea of what residents and local governments should try to accomplish by the year 2035.

It's an example of how organizers and leaders in Minnesota and elsewhere are looking for new ways to both sample public opinion and engage people in making choices about the future. The belief is that a strong, consensus-driven vision will lead to better policy and economic decisions. Ground Level has been tracking the project and we've even hosted a couple of related online discussions, which you can find here.

Yesterday afternoon, the group gathered at The Lodge in Baxter, where wooden boats and old motors festoon the walls, to review and give feedback on a preliminary set of plan recommendations built around 11 topics. In some cases, participants expressed skepticism at what the group has so far rendered and pushed toward greater specificity.

"We're getting closer to the end," said Dan Frank of the Little-Falls-based Initiative Foundation, which is helping facilitate the sessions. The process is sponsored by the U.S. Department of Housing and Urban Development to the tune of $825,000 and is one of about 45 efforts HUD is underwriting around the country. "This is the input part today," said Frank. "We want to give you the chance while [the plan] is still in draft form to give us input."

Participants, seated at numbered round tables, were asked to select four topics out of the possible 11 to discuss and to move to the appropriate, topic-centric tables. Specifically, they were asked to comment on what works, what doesn't, what's missing and what's next. "Focus on goals, rather than the how-to," advised Frank, adding that the action steps will come later.

At a table focused on "Changing Populations," participants contemplated an outstate population that's both aging and becoming more diverse. One person said immigrants will be crucial when it comes to offsetting the loss in economic contributions from retiring baby boomers. Another suggested including the goal of trying to improve the attitudes of locals when it comes to immigrants. Yet another said she simply didn't think the draft recommendations were attainable.

At another table, where people were talking "Education and Workforce Development," participants pushed to make the recommendations more specific by suggesting a focus on funding for college and apprenticeships. One person suggested that an emphasis on teleworking and online jobs should be included.

The meeting, it seemed, accomplished what leaders hoped it would. The group kicked the tires of a variety of proposals and gave frank, real-world feedback, which will be incorporated into the final plan.

Cheryal Lee Hills, executive director of the Region Five Development Commission, which has spearheaded the two-year project, told the group that central Minnesota is being held up as a model in other parts of the country, due to the high level of participation in the visioning process and the partnerships forged with foundations.

Hills said there are just two meetings left, one in June and another in August. In June, the group will review draft policies and discuss implementation. "On August 14th, we'll celebrate the final plan," she said, adding that she'd invited U.S. Senator Al Franken to be the keynote speaker. "So far, we're on his calendar," she said.

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After inflation, county spending flat; tax revenue portion rising

Posted at 10:56 AM on April 23, 2012 by Dave Peters (0 Comments)
Filed under: Local government finance

Spending by Minnesota counties has been fairly flat over recent years when you take inflation into account and is even down a little from 10 years ago. Meanwhile, the portion of county money coming from local property taxes continues to inch upward.

That's the long-term takeaway from the annual report by the state auditor on the finances of the state's 87 counties. Auditor Rebecca Otto released the 83-page report today.

Counties spent $6 billion in 2010, most of it in four areas: human services, public safety, streets and highways and a category known as general government spending. Spending on human services has been declining over 10 years; public safety spending has risen.

Where's the money coming from? Local taxes increasingly. The share of county budgets coming from taxes (almost entirely property taxes) was up to 45.6 percent in 2010. In 2002, the share was just over a third.

As anyone paying attention knows, state grants have declined as a revenue share during that period, from just under a third to about a quarter. But county revenue from federal sources has increased as a share, mainly because some human service grants have shifted from state to federal and because of federal stimulus spending.

You can find all the numbers, including some easy-to-grasp pie and line charts, in the report.

You can also check Ground Level's Forced to Choose project on the taxing and spending dilemmas that local governments have been facing in recent years.

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More people are getting there in Montevideo

Posted at 11:24 AM on April 18, 2012 by Dave Peters (0 Comments)
Filed under: Local government finance, Rural, Transportation

(Photo courtesy City of Montevideo)

In 2007, the three-bus transit system in Montevideo in western Minnesota gave people about 15,000 rides, making the dial-a-ride system one of the tiniest of the state's 60-plus transit services.

The next year, ridership declined. Each passenger trip cost the system more than $7.

That's when the town of 5,000 shifted gears, so to speak. The city council stopped thinking about transit as a public works service like street sweeping or sewage treatment. Instead, it started to envision helping people get around as a community collaboration.

It put the operation under a new community development office, not public works. Conversations began with school officials, assisted living homes, people engaged in tourism and others. The city changed the service's name and created a new slogan. It offered help for those with limited English. It connected with employers and started running early buses for workers.

Last year the system contracted with a training center to provide rides for clients, and it cemented a connection with a larger regional system.

The result? In 2011, Montevideo Transit provided more than 27,000 rides at a cost of $5.34 per ride. That 79 percent ridership increase over five years made it the fastest growing transit system in the state. And Nick Haggenmiller thinks it can hit 40,000 this year and bring down the cost-per-ride to around $4.

Haggenmiller is Montevideo's assistant city manager for community development and the service's overseer and evangelist:

"Transit, if simply run in a vacuum of strictly transit related activities, would be a shameful waste of tax dollars," Haggenmiller writes in a letter to the Minnesota Department of Transportation this month. The letter is a response to a request for information by MnDOT, one of a million such bureaucratic tasks state officials can demand. But Haggenmiller's response practically soars.

"Transit is not and should not be an island upon itself. Rather, transit is part of a greater community collaboration, consisting of connecting people and places to cultural and commercial entities. Transit enables people with limited physical or financial means to maintain a greater sense of personal independence and most importantly, be more active citizens in the community."

Outstate Minnesota transit's biggest gains and declines: Click to View

State and federal money for transit systems has been flat and doesn't seem likely to rise. At the same time, gas prices and demographic shifts are serving to create more demand for helping people get where they want to go.

So transit people and others around Minnesota are under pressure to find efficiency, use their imaginations, find new ways of doing things. Here at Ground Level, we're doing some reporting on this right now and plan to roll out coverage soon. But looking through the ridership numbers MnDOT keeps, I was struck by how much the change has varied around the state.

Overall, outstate transit ridership rose 12 percent between 2007 and 2011. You think of outstate Minnesota as dominated by car travel, and it is. But that's still 11 million transit rides to the doctor, to work, to school, often -- just as in the Twin Cities -- for people who have no alternative. And what's intriguing is that some places, like Montevideo, Wadena, Hibbing and St. Peter, far outstripped the overall rate of increase. Others, like Northfield, Faribault and Nobles County, declined by double-digit percentages.

The reasons vary, and even state and local officials charged with tracking the phenomenon are hard-pressed to explain every trend.

In some places, the deaths of a few regular elderly riders can push numbers down. In others, an increasing population of people no longer driving can increase them. St. Peter and Hibbing services have pushed harder to accommodate college students. (In St. Peter, in fact, the Gustavus Adolphus student senate has substantial say in how the service runs to and from campus.) In Northfield, colleges have changed course on contracting and transit system ridership has declined.

Fuel-price-induced fare increases have caused declines in some places. Even the state shutdown in 2011 caused a temporary drop, one local transit official told me.

But I was impressed with how much difference someone like Haggenmiller and others in Montevideo apparently can make just by thinking differently. He said he was hired in 2008 after the city council decided it needed a new approach to helping people get around.

"Taken in sum, it is the opinion of the Montevideo Transit that cooperation and coordination have been the rule, not the exception for the last four years, viewing transit as a community development initiative rather than a system or program of transport," Haggenmiller wrote.

Sarah Lenz, program coordinator for MnDOT, said that previously Montevideo was "doing kind of a pokey little service for seniors and some people with disabilities. They weren't doing anything wrong, but (Haggenmiller) is looking at the big picture."

Have thoughts? You can comment here or on the MPR News Facebook page here.

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3 counties try virtual dispatch consolidation

Posted at 4:29 PM on March 21, 2012 by Dave Peters (0 Comments)
Filed under: Local government finance

Another step on the long highway of collaboration among local governments seeking ways to save a buck: Three western Minnesota counties are combining their 911 dispatch efforts.

MPR News' Dan Gunderson reports that Stevens, Pope and Grant counties are going to save money on equipment and staffing by conducting a virtual consolidation -- all three dispatch centers will continue to operate but they will go together on software and hardware and back each other up.

More here.

And if you want a lot more, check out our Forced to Choose project on how local governments are looking everywhere for efficiencies and savings.

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State auditor's report says cities rely more heavily on property taxes

Posted at 11:59 AM on March 5, 2012 by Jennifer Vogel (0 Comments)
Filed under: Local government finance

Every year, State Auditor Rebecca Otto releases a report assessing how Minnesota cities are doing financially. Today, her office issued her report looking at 2010. (The data takes a while to gather and analyze so there is a bit of a lag in the reports.)

Some of the findings, like the fact that cities spend the largest chunks of their budgets on roads and policing, won't surprise those who read or listened to our Forced to Choose coverage late last year. That project detailed the decisions cash-strapped cities and counties were making when it came to which services to fund and which to cut.

The report does do a great job of identifying trends. While total city revenues increased slightly from 2009 to 2010, the longer view reveals that revenues declined by 10 percent between 2001 and 2010.

In addition, cities came to rely less on intergovernmental funding sources like grants and much more heavily on property taxes. In the past decade, "actual revenues derived from property taxes grew 100 percent," the report said.

It makes sense that with less money coming in, cities would spend less too. Total city expenditures declined by 13 percent between 2001 and 2010, when adjusted for inflation. Over the decade, cities also spent more on operating expenses and less on capital outlays and debt service, a trend we identified in our reporting as well.

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Forced to Choose, writ nationally

Posted at 6:00 AM on March 3, 2012 by Dave Peters (0 Comments)
Filed under: Local government finance

MPR News spent several months last fall exploring the dilemma many Minnesota communities face over their budgets, a project we called Forced to Choose.

Confronted with a tougher economy, less state aid and other forces, many cities, counties and school districts are having to decide between curtailing services and raising taxes. SOME ARE DOING both. In several places the conversation revolved around how much public safety a community could afford; elsewhere it was street improvements or library hours. Or all of the above and more.

Obviously, this isn't unique to Minnesota. This weekend, the syndicated show This American Life is taking a crack at the subject nationally with a program called "What Kind of Country."

Here's how the show is promoting it on its website:

All across the country right now, local and state governments are finding they can't pay their bills. Schools are losing teachers, street lights are going dark, garbage is piling up in public parks, and cops are suddenly an optional expense.

Colorado Springs has become something of a poster child for the topic and apparently will be part of the show. So will tiny Nowthen in Anoka County, where, as reporter Curtis Gilbert chronicled, residents talked long and hard about how much to pay for police protection.

Tune in on MPR News stations at 1 p.m. Saturday or at 10 p.m. Sunday.

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Amid expansion, government jobs still declining

Posted at 11:00 AM on March 1, 2012 by Dave Peters (0 Comments)
Filed under: Local government finance

The state gained 15,500 jobs in January, the Department of Employment and Economic Development announced this morning, evidence that the economy is growing.

It's interesting to note that the growth is in the private sector and that, after all the budget squeezes on local and state government last year, the number of government jobs continued to decline. (See our Forced to Choose project and specifically reporter Curtis Gilbert's piece on local governments deciding to cut jobs.

Here's the state breakdown, with numbers seasonally adjusted. (Click on "Minnesota Seasonally Adjusted.")

There were 274,400 local government jobs in January, down half a percent from the previous month. That total includes K-12 teachers. The number held more or less steady for a number of years recently but then dropped below 280,000 early last year.

It's not just local government cutting jobs. Federal jobs in Minnesota have declined to 31,700, the lowest point in decades. State jobs were down slightly in January, although still near historic highs. (The downward spike on this chart reflects the state shutdown last summer.)

MINNESOTA GOVERNMENT JOBS 1990-2012

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Forced to Choose, even in Spain

Posted at 10:31 AM on February 29, 2012 by Dave Peters (0 Comments)
Filed under: Local government finance

Here's what "shared sacrifice" looks like in Higera de la Serena, a village north of Seville in Spain.

The town basically has run out of money, according to this New York Times story, so on Sundays villagers volunteer to install tiles, sweep and take on other chores that used to be the function of the local government.

The story calls the town a microcosm of Spain's troubles, but if you read or listened to any of our Forced to Choose coverage, you know it's not much of a stretch to apply it to what's going on in Minnesota and the rest of this country.

The question this raises, of course, is to what degree residents here would respond in the same way. Some cities like Red Wing and Mankato have organized volunteers to take on some tasks, particularly sprucing up parks.

If the squeeze on local government budgets continues, I wonder how much attention people will pay to this idea.

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Final tally: Property taxes rise 4.7 percent in 2012

Posted at 10:49 AM on February 3, 2012 by Dave Peters (1 Comments)
Filed under: Local government finance

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The final tally is in: Under the pressure of declining state aid, a tough economy and difficult choices about what to pay for, Minnesota's cities, schools and counties raised the burden on property taxpayers in 2012 by more than $300 million.

In other words, after local officials were Forced to Choose, the tax bill for property owners is rising by 4.7 percent to a total of $8.2 billion, according to the state Department of Revenue.

Many local officials did react to taxpayer unhappiness over early tax estimates by trimming their levies back by year's end. But at the same time, November's voter-approved school levies got added to the equation. As a result, the totals are almost exactly as they looked two months ago when preliminary estimates came out.

So in the end, 50 of Minnesota's 87 counties raised their property tax levies. So did 465 of the state's 854 cities. So did 191 of the state's 336 school districts.

That's a little more than half in each category. But in reality, far more than that actually raised the burden on local property owners. That's because the state has stopped reimbursing local governments for credits property owners received under the market value homestead credit. In past years, that money was counted as part of the property tax levy even though it was coming from the state, not local taxpayers. So local officials who kept their levies flat or even decreased them a little were still asking local property owners to make up at least some of the missing state reimbursement.

Many local leaders have complained about the increasing pressure on their budgets, partly a result of less state aid over the years. But this raises a point of contention in the mind of Rep. Greg Davids, R-Preston, chairman of the House Taxes Committee. He notes that the state had been failing to make those reimbursements for some time and that some cities and counties took advantage of the situation last year and raised property taxes more than enough to make up for the loss of state help.

As a result, he's proposing to limit future city and county levy increases to 1.9 percent, with some exceptions.

He also has proposed gradually eliminating the state's property tax on commercial and industrial property and providing relief for homeowners and others hit hard by changes in property tax law.

As for a DFL proposal to bring back the market value homestead credit, forget it, Davids said this morning. "It's not coming back."

Just to show my arithmetic here: At first glance, the total property tax bill of $8.2 billion looks like only a small increase over last year's $8.1 billion. But last year's tally included several hundred million dollars the state was supposed to pay local governments via the homestead credit reimbursement. So the burden on property owners was lower than that in 2011, even if the state failed to fully pay its commitment.

You can see the levies for all Minnesota's taxing jurisdictions by going to the Department of Revenue's site.

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Local leaders ask state for more flexibility

Posted at 11:00 AM on January 23, 2012 by Dave Peters (0 Comments)
Filed under: Local government finance

Leaders from Minnesota's cities, counties and school districts have banded together to plead for more flexibility from the state to let them try new ways of delivering local services.

The three main organizations that represent local governments in the state released a report today that health and human services, education, transportation, public safety and government operations and boundaries all can improve if state leaders take a number of steps to let local leaders do more to collaborate and come up with innovations.

The three -- the League of Minnesota Cities, the Association of Minnesota Counties and the Minnesota School Boards Association -- held six forums last fall that involved some 400 local leaders, and the report coming out today was a result.

The report is being introduced this morning with bipartisan support in both houses of the Legislature. Taking part in announcing it are GOPers Rep. Carol McFarlane, White Bear Lake, Sen. John Carlson, Bemidji and Sen. Michelle Benson, Ham Lake, and DFLers Rep. Paul Marquart, Dilworth, and Sen. Terri Bonoff, Minnetonka.

It urges the Legislature first of all to pass the MAGIC Act, a proposal from last year's session to let counties experiment with a variety of pilot projects. It also recommends the state create a task force to guide local government redesign efforts.

The organizations offer a critique of how they think the state can get in the way of innovation and thinking differently. Too often, they say, the state demands how services should be delivered instead of focusing on whether they actually get the job done. At the same time, they say, the relationship between the state and local governments has deteriorated, and the state has failed to create a vision that lets local governments see better what changes are in store for them.

They also note that turf concerns can cause divides among local governments, causing, for example, divisions between large and small communities.

The report and its recommendations are some of the fallout from increasing pressure in recent years on local governments. State aid has declined for some and local elected officials have faced difficult choices among services and property tax increases. At the same time, demographic and economic changes are affecting the kinds of demands on those governments. (For more on this, see our Forced to Choose coverage.)

Many have searched for ways to collaborate with neighbors and find other ways to streamline what they do.

"Cities, counties and school boards all understand that . . . our long-term financial picture for state and local governments is grim," said Randy Maluchnik, Carver County Commissioner and president of the counties association. "We need the flexibility to innovate, not just the handcuffs of decreased funding, if we're going to make redesign a reality."

You can find a pdf file of the full report from this page.

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For some, it's a question of survival

Posted at 10:56 AM on December 29, 2011 by Dave Peters (1 Comments)
Filed under: Local government finance

By Tom Robertson
MPR News

Taxes, municipal government funding and the like aren't particularly riveting or sexy. For some the topic is kind of a bore.

But what I learned while working on the Forced to Choose project is that these days, that's simply not true. There are plenty of real life dramas playing out in large and small communities across the state.

For some it's become a question of survival.

"Small towns are, in a sense, just one disaster away... from things going bad," Floodwood Mayor Jeff Kletscher told me a few weeks ago over coffee at city hall. "Rural communities are shrinking. Things are getting tougher. Funding is getting harder to find."

Kletscher, president of the Minnesota Association of Small Towns, shared a startling prediction.

"There will be less than 854 cities in the state of Minnesota in 10 years," he said. "I'm fairly confident of that. Some of them just aren't going to make it."

When you think about it, some of that dying has been going on for many decades as rural populations shrink. But Kletscher and others worry the decline may be accelerated by shrinking state aid to small towns.

Since 2003, cities and towns have seen a cumulative loss of more than a billion dollars in state aid . The 40-year-old 'share tax dollars around the state' policy known as the "Minnesota Miracle" has been challenged.

City leaders in some towns say that is driving up local property taxes.

Ely is perhaps the poster child this year for tax increases. City leaders initially proposed a 27 percent increase in city property taxes for 2012. And although in the end they managed to cut the increase in half, some residents still worry the city is spending too much.

Ely Mayor Roger Skraba says local government aid cuts since 2003 ate away the city's reserves and prompted them to delay things like routine maintenance on roads and buildings.

Skraba says those delayed projects can no longer wait, and that, he says, is why taxes in Ely will skyrocket next year.

And when I visited with him earlier this month, Skraba talked in those same fatalistic tones as some other small town mayors I ran into.

"My community is dying," he said. "I don't like to say that, but it's a fact."

If what Skraba and others are predicting is true, then Minnesota's small towns are in for some big changes. They'll have to rethink what services are affordable.

But could it be that all of these reductions in state aid have been a good thing? That it's encouraged smart changes that make local government run better? Some lawmakers think so.

"We've got more government than we need, I believe," said Rep. Linda Runbeck, R-Circle Pines, who chairs the House property tax division.

"My position is, we see a lot of duplication," she said. "We don't know where it's being spent for important things and where it's not."

Officials in Bemidji, Grand Rapids and elsewhere say they are indeed more efficient than they once were, but they emphasize that belt-tightening can go only so far.

"OK, we're riding the storm, but what happens when we can't do that anymore?" asks Shawn Gillen, the city administrator in Grand Rapids.

"The long run is going to be the real question," Gillen said. "We can't do as many projects if we want to keep our tax rates low, and we can't buy capital equipment. You can't continue that forever. You've got to fix streets, you've got to buy new trucks and snowplows and firetrucks. Any more massive reductions [in state aid] right now and you're going to see cities really in trouble," he said.

Cities have enjoyed two years of relatively stable state aid funding. But another potential billion dollar state budget deficit looms on the horizon.

No doubt, that will mean more tough choices for everyone.

(See also what reporters Jennifer Vogel and Curtis Gilbert and editor Dave Peters take away from their Forced to Choose coverage.)

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After much debate, Nowthen contracts with Anoka County for police services

Posted at 5:09 PM on December 28, 2011 by Jennifer Vogel (0 Comments)
Filed under: Local government finance

The Nowthen city council voted unanimously today to contract with the Anoka County Sheriff's office for police services. The matter had been intensely discussed in recent months as council members seemed to waver between supporting the contract and preferring to do without all but emergency response in order to save money.

"It's a good solution," said council member Jeff Pilon. "And I think it was done in a way that (members of the public) who said they were opposed to the contract, at the end of the meeting, they were happy we did what we did."

Nowthen, a city of 4,400 about a half hour northwest of Minneapolis, was the only city in Anoka County that didn't have a police department or a contract for coverage with the sheriff. A few weeks ago, the city voted not to raise its levy to pay for additional patrols.

Sheriff James Stuart responded with a letter to the mayor and council spelling out the types of incidents his department might no longer investigate. As Stuart told MPR News reporter Curtis Gilbert, it was a matter of fairness. "Where that becomes a concern for us is when all of these surrounding communities are paying for law enforcement coverage and yet we continue to provide that service for them for free."

Whether and how to pay for police services is a debate taking place in many Minnesota communities. Given shrinking budgets, even policing is now on the table.

Nowthen picked up the matter again today, when it voted on and accepted the sheriff's proposed contract. Since the city had agreed not to raise its levy for policing, it had to find the money elsewhere. "We went through the budget," Pilon said. "We've been through it with fine-toothed comb." He said Nowthen will pay the sheriff--$106,000 for the contract's first year and $214,000 for the second--by tapping an unspent fund and restructuring bond payments on the city's maintenance building.

Overall, the decision-making process was a struggle. In part, said Pilon, that's because the city is so new. Incorporated in 2008, Nowthen used to be called Burns Township. As a township, voting was more direct. But as a city, the council has to represent residents. "It was a challenge," he said. "How do you use other people's money?"

It was also difficult to know what residents wanted. "One of our challenges is we have three school districts, three post offices and three newspapers," said Pilon. "Central identity is difficult. Part of going forward now is communicating this, how we did it and why."

"The people who are most opposed are typically the most vocal," he added. "What I kept hearing is, 'We want what we have now but we can't afford to have taxes go up.' I think most people will be pleased."

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Rating social programs in Washington State: a model for Minnesota?

Posted at 9:00 AM on December 27, 2011 by Jennifer Vogel (1 Comments)
Filed under: Local government finance

People in Minnesota have been talking a lot about "government redesign," as I wrote in this piece for our Forced to Choose project.

When it comes to improving and streamlining services though, one of the big unknowns is how to value government functions. How do you know which programs are a good public investment and worth keeping? Which don't work and should be scrapped? Which services could be delivered in a better way?

These questions can be difficult to answer. Yet, in Washington state, they've come up with a formula that assigns concrete values to a host of social programs. The formula discerns a program's cost, its financial benefits and its likelihood of success. And it comes up with hard, consistently-derived numbers that allow lawmakers to compare one service to another.

Since the mid-1990s, the Washington State Institute for Public Policy, a bipartisan group that conducts research for the Legislature, has been looking at "evidence-based" policy making.

"The Legislature asks us to make 'buy' and 'sell' recommendations to them," said the institute's director Steve Aos, sounding a bit like an investment adviser. "What works to reduce crime? What should we purchase as far as programs go? If they're not working, what should we sell?"

To derive valuations, said Aos, "We go through a formal process to dispassionately review the scientific evidence on what works or doesn't work. We read every research study we can. Who's done innovative things that rigorous analysis suggests work?"

One of the institute's earliest projects involved juvenile crime, which included evaluating each program by its direct cost to taxpayers and by how much society benefits if a crime doesn't occur. On a long list of juvenile justice programs, the institute assigns a high value to a comprehensive family therapy program, for example, and a very low value to Scared Straight.

The way Aos figures it, the state has saved money on this approach. When it comes to juvenile and adult justice, he said, "We think that today the cumulative effect of all those investments is that, as of 2011, there are about 1,100 fewer people in adult prisons than there would have been without the programs. That's a substantial benefit to taxpayers."

Aos says Washington State stands apart in taking such a rigorous approach to public policy, though other states and countries are interested in following suit. "I've been on the road a lot," he said. "I just got back from giving 14 talks in Australia. The UK is implementing some of what we've done."

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Forced to Choose: Our reporters' takeaway

Posted at 11:34 AM on December 29, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

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We launched our Forced to Choose series nearly three months ago with the knowledge that Minnesota communities are being pressed to make harder and harder decisions about their futures. The economy is slow; political winds cause hard feelings over how to proceed; long-term demographic shifts are exacerbating matters.

In many communities there is no way to avoid dealing with questions of taxes, services, reinvention.

These issues aren't going away and neither will our coverage. But as we wrap up this local-government tax and budget season, we've asked for a takeaway from the three reporters who spent many weeks and several thousand miles exploring tight budgets, frayed street infrastructures, upset taxpayers, happy taxpayers, homestead credits, frustrated city managers and agonizing mayors, commissioners and school board members.

What they told us is illuminating. Check them out, either by scrolling down the blog or clicking on the links in the next three paragraphs.

Reporter Curtis Gilbert produced a wrap-up piece for Morning Edition today, focusing on taxes raised and government jobs cut. But here he writes that what he found most interesting was the angst and agonizing Minnesota community leaders go through when they deal with these questions.

Reporter Jennifer Vogel looked at peeling wallpaper in Austin's city hall, found a housing project that misfired in Claremont and examined the rising interest in sales taxes to ease fiscal pressure. In this post, she notes that sometimes the people with their backs against the wall find the most valuable innovations.

Reporter Tom Robertson honed in on how these forces are perhaps felt most keenly in Minnesota's many small towns, and he writes here about the question of survival.

You can find all their reporting and more on our Forced to Choose page, a site we will keep updating as taxes get levied, laws get revisited and more Minnesotans make the choices they have to.

In the end, what intrigues me the most is the ephemeral question of how communities make those decisions.

How does a community define itself and then make changes in that definition when it is forced to? Do city councils take resident surveys? Do they bring in the Citizens League to conduct intricate, give-and-take budget sessions that give interested residents a voice?

I recall talking to Kay Kuhlmann, council administrator in Red Wing early on in our project. Faced with the task of paring the 2012 budget, she wasn't short on ideas that could work. What she was short on was consensus. Each idea had supporters but also an enemy.

It's too much to ask that this not be a messy process. Conversation often is. It might be too much to ask for consensus even. But these tax-service-job decision gears will keep turning year after year, and information about choices and consequences can be the oil that prevents them from freezing.

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Necessity, the mother of government reinvention

Posted at 11:21 AM on December 29, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

By Jennifer Vogel
MPR News

No question, the financial picture is shifting in Minnesota. Cities weathering cuts to state aid, a down economy and declining property values have come to rely increasingly on property taxes to fund their budgets. At the same time, many communities have become leaner, cutting back on parks, libraries and even police services, as we've reported in our Forced to Choose series.

But trimming staff and delaying road repairs will only get a city or county so far. People all over the state are discussing ways to alter the very way government works. They want it to be more efficient and cost-effective and maybe, in the best of all worlds, provide better services to people who need them.

I found it interesting that some of the most challenged places in the state are ahead in this regard. They're reinventing because they have to.

A trip to western Traverse County, the least populated county in Minnesota, provided a case in point. The county has just 3,558 people in it and they skew quite a bit older than the state average. A main industry is farming and as far as I could tell, there is just one motel in the entire county, in the county seat of Wheaton.

That's where Janet Raguse, the county coordinator, works in the basement of a partially-empty brick courthouse. She told me that the county has been "reinventing" itself since the 1960s. Because the tax base is small there, it can't afford a lot of government. It shares department heads--for social services, public health, veterans services--with neighboring counties. It applies for grants jointly and participates in buying groups.

For years, people have talked about having fewer counties in the state, which ideally would mean less bureaucracy and overhead to pay for. But in Traverse County, these partnerships have de facto created a version of that already. Most departments are just one or two people and sometimes they're run by a director in another county.

Beltrami County is another example. It's one of the poorest counties in the state, with 21 percent of its people living below the poverty line. As county administrator Tony Murphy put it, "We're always in crisis."

Yet, out of that crisis has come inventive thinking. Since 2007, the county has been moving toward what is known as "outcome-based" government, which is exactly what it sounds like. Programs are judged primarily by how effective they are. In contrast to a straight up budget-cutting strategy, the county has been willing to invest additional dollars in new efforts.

For example, it now provides two years of education to promising welfare recipients rather than the more typical one year. Murphy went to the state and fought for permission to make this change. The county will spend more money up front, but expects to save in the long run as beneficiaries are able to land jobs and leave the county rolls for good.

Again, it seems to me that Beltrami County is being creative because it can't afford to serve its constituency well and do things the same old way.

State demographer Tom Gillaspy predicts that the state will grow older by the end of the decade. That means we'll have more people who need services and fewer people working to foot the bill. In other words, the state will look a little more like Traverse County.

Even with improvements to the economy, it appears that financial pressures aren't going away any time soon. And, if Traverse and Beltrami Counties are any measure, that pressure will keep pushing local governments to do things differently.

(See also what reporters Curtis Gilbert and Tom Robertson and editor Dave Peters take away from their Forced to Choose coverage.)

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What Nowthen might not get if it doesn't pay sheriff

Posted at 8:28 AM on December 22, 2011 by Curtis Gilbert (2 Comments)
Filed under: Local government finance, Public safety

The Nowthen City Council is reconsidering its decision to sharply reduce police coverage next year and has invited Anoka County Sheriff James Stuart to a meeting Dec. 28 to discuss the city's options.

Stuart sent a letter to council members Tuesday listing the types of incidents he would no longer investigate next year if the city doesn't start paying for his services.

The list includes burglaries, noise complaints, trespassing and traffic violations, as things Stuart would not respond to. The sheriff would still investigate deaths, vehicular injuries, car thefts and sex crimes, as is required under state law.

Stuart's list provides an insight into the dynamics swirling in an increasing number of communities as cities contract with sheriffs for law enforcement or otherwise try to determine what level of law enforcement they want

The letter also outlines a less expensive contract than the sheriff initially proposed. It would not require the city to pay for a new patrol car, and it would use a different staffing model.

The annual cost would be $213,740 starting in 2013, about $35,000 less than the earlier proposal. The sheriff has offered to provide the coverage at half price for the first year, an option that also existed under the initial contract he proposed.

City Clerk Corrie LeDoucer says it's probably too late for the city to increase its $1.1 million property tax levy for next year. She says the city could scrape together the $106,000 needed for the first year of the contract by refinancing its debt and tapping some unspent funds.

Nowthen, population 4,400, is the only city in Anoka County that does not have a police department or a contract for coverage from the sheriff. Incorporated in 2008, Nowthen is Minnesota's newest city. It used to be called Burns Township.

Previous sheriffs have tried to get Nowthen to start paying for patrols. Stuart is the first one to outline consequences if it did not.

Here's the letter from Sheriff Stuart.

Nowthen-12-20-2011

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Surprised by depth of agonizing

Posted at 11:05 AM on December 29, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

By Curtis Gilbert
MPR News

I'll admit it. I was surprised by what happened this year in Foley and Nowthen.

The surprise wasn't that the communities weighed reduced police coverage against higher taxes -- from the moment the stories broke, saving money on public safety seemed a distinct likelihood. As a reporter on our Forced to Choose project, what I didn't expect was the depth with which leaders agonized over the decision, changed their minds and in some cases changed them back again.

"We've done a lot of big things (since becoming a city in 2008)," City Councilwoman Laurie Olmon told me when Nowthen was weighing the choice back in late October, "but I think that's about the biggest."

At the time, Olmon strongly supported raising the city's taxes by as much as 27 percent in exchange for a sheriff's deputy to patrol the city eight hours a day.

"I'm very scared about this. I'm scared for you," Olmon told the 150 residents who turned out for a community meeting on the subject last month. "We have domestic violence in Nowthen. We have rape in Nowthen. We have crime in Nowthen."

But over the course of the next month and a half, those tax-averse residents changed her mind. They also won over another Nowthen city councilmember.

"I just don't feel in my own mind, in my own heart that we can go without any protection at all," City Councilman Harlan Meyer told me when I first interviewed him.

Early this month, Meyer and Olmon both voted to hold the line on taxes. Both said extensive citizen lobbying convinced them the city would likely be fine with whatever minimal protection the sheriff would give them next year.

But in the end, Nowthen leaders shifted somewhat again and seemed finally to find a happy medium, not raising taxes but figuring out ways to shift other costs down the road and still sign a contract with the sheriff.

Elected leaders in Foley also said public opinion was on their side when they chose to hire General Security Services Corporation to patrol their city's streets rather than the Benton County Sheriff.

"I had three or four people today saying, 'I think it's a good idea,'" City Councilman Dean Weber told me following the council's unanimous vote to draw up a contract with the private security firm back in October.

But as in Nowthen, it's clear Foley's leaders wrestled with the decision. A month later, the council voted to restart negotiations with the sheriff -- only to reverse itself again just two weeks later.

In spite of Attorney General Lori Swanson's warnings against the arrangement, private security guards will provide public safety in Foley starting Jan. 1.

The League of Minnesota Cities has predicted for years that declining state aid would lead to cuts in public safety, "but really this is the first year in 2011 that we've seen ample evidence that that's starting to be the case," executive director Jim Miller told me.

Miller said so-called "core services" are understandably last in line for cuts. But since police service makes up the largest chunk of most city budgets, it was inevitable those expenditures would eventually become targets.

Forced to Choose showed us how that happened -- and what a difficult decision it was for the local leaders.

(See also what reporters Jennifer Vogel and Tom Robertson and editor Dave Peters take away from their Forced to Choose coverage.)

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Central Minnesota chooses a future

Posted at 11:15 AM on December 16, 2011 by Dave Peters (0 Comments)
Filed under: Community Development, Local government finance

Brainerd, Minn. -- About 130 people from five counties got together Thursday and voted on their future.

They weren't making choices about next year's taxes or a big road or school project, or weighing in on a divisive election.

Instead, they voted on what they wanted central Minnesota to look like in 25 years and what they thought it was worth investing in and planning for.

Broadband? Yes, they said. Lots of connectivity is needed to make everything else run smoothly.

Water quality? Yes, improving lake quality is a plus for the economy.

Roads? Enough to move products to market but perhaps let others go without maintenance.

Economy? Invest in ways that encourage increases in manufacturing, retail, health care and agriculture but maybe let sectors involving arts, construction, real estate and education services continue at current levels.

Affordable housing? More than is available now but don't aim for the moon.

The exercise these people -- business people, local officials, high school students, retirees and others -- went through for two hours in a meeting room at The Lodge in Baxter was part of a two-year planning process. Sponsored by the U.S. Department of Housing and Urban Development to the tune of $825,000, the "Central Minnesota Resilient Region" project is trying to create a shared idea for what residents and local governments can shoot for by the year 2035.

Launched in February, it's one of about 45 efforts HUD is underwriting around the country. Only a little over a dozen are rural.

It's an example of how a variety of organizers and leaders in Minnesota and elsewhere -- some elected, some not -- are trying a variety of ways to both sample public opinion and engage people in making choices.

In this case, for almost a year, small groups of people have been talking about land use, transportation, housing and economic development, and now those conversations will be woven into a large, single vision.

When organizers asked people's help in imagining potential economic, environmental and lifestyle futures that they need to prepare for, "We got everything from very optimistic to very dark and disturbing," said Phil Hunsicker of Envision Minnesota and one of the project's organizers.

On Thursday, Jean Coleman, sustainability organizer for the University of Minnesota Regional Sustainable Development Partnership, led participants through a series of choices about parts of what that vision might look like.

How much growth did people want to see? Coleman sketched out alternate futures and asked them to choose. Most of those in the room made choices involving some growth but not rampant increases that might be prompted by a booming economy.

What about transportation? Most rejected a future of comprehensive public transit and road system improvements and the investments required. Instead, they preferred a vision that improved main rail and road lines but let some local streets go unmaintained.

"You're the experts," Cheryal Lee Hills told the people in the room. Hills is executive director of the Region 5 Development Commission and has spearheaded the project.

Local elected officials have been among the 200 people included in the project, and when it ultimately produces a vision for the area, they will be key to whether policies get enacted to carry it out.

Organizers plan to bring the group together again in May to look at how people's preferences on Thursday might translate into public policy.

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Deciding how much policing you want to pay for

Posted at 12:47 PM on December 14, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

The idea that intrigues me most from our recent Forced to Choose reporting is the art of deciding how much police presence you want to pay for.

As cities and counties have faced increasing budget pressure in more austere times, public safety is typically the last place local officials want to touch. But these days, even police expenditures are being examined and in some cases eliminated, and it feels like a whole new conversation is about to open up.

The city of Foley is contracting with a private security firm so it won't have to pay the Benton County sheriff. You can feel the wave of concern rolling through the state's law enforcement folks.

In a similar mood, the city of Nowthen decided last night not to raise taxes to pay for a contract with the Anoka County sheriff. Some of the debate preceding the council decision made it seem that at least some taxpayers are willing to test the notion of having less access to law enforcement.

New London decided this month to save $12,500 and pare back by a few hours the amount of policing it expects from the Kandiyohi County sheriff.

What does a sense of security cost? Answering that is no doubt more art than science but it does seem possible to break it down into discrete elements: Do people want 24-7 patrolling? Are there other ways to be present? Do business doors on Main Street need to be rattled at 3 a.m.?

MPR News reporter Jennifer Vogel explores these issues in a thorough story today and is talking to Tom Crann about them and more on All Things Considered this afternoon.

And if you step back a little, you can see how this debate over policing is only one element of a larger conversation about redesigning local government in Minnesota.

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Two tax decisions: Same result from opposite directions

Posted at 8:12 AM on December 14, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

Two Minnesota communities chose the property tax status quo on Tuesday but perhaps with opposite motivations.

In one case, the city of Nowthen decided not to raise taxes, thereby reducing their law enforcement protection. In the other, Brooklyn Center voters chose not to let taxes fall so they could maintain school spending.

After hearing from many of Nowthen's 4,400 residents, the city council Tuesday night voted 3-2 not to include in its 2012 budget a $250,000 tax increase. That means it won't contract with the sheriff for law enforcement, and the sheriff says that will cause him to patrol less than he does now.

Councilwoman Laurie Olmon left the door open to reconsidering after the city tries this for a year. "I'd rather take a stand and say no, I'm not going to tax our citizens for something that we're getting overpriced for," she said.

Anoka County Sheriff James Stuart has threatened to sharply reduce service in Nowthen next year, if the city doesn't start paying for public safety. Stuart proposed a contract that would have increased the city's budget by 25 percent.

Meanwhile, not far away, voters in the Minneapolis suburb of Brooklyn Center chose by a wide margin to approve a levy after defeating ballot questions eight times in a row. The decision means an existing levy remains in effect and school officials won't have to make $600,000 in budget cuts.

More on that by reporter Curtis Gilbert here.

We have a lot more on how Minnesota communities are making decisions in austere times in our Forced to Choose section.

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Hearing attendance translates into 'yes' to property tax increases

Posted at 11:49 AM on December 9, 2011 by Dave Peters (1 Comments)
Filed under: Local government finance

Ely resident Gary Kovall speaks to the Ely City Council at a tax hearing earlier this week.

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Minnesota property taxpayers are facing bigger tax increases in 2012 than they have for several years. But attendance has been sparse at most of the hundreds of truth-in-taxation hearings local governments have been holding around the state.

Does that mean Minnesotans are saying they're OK with tax increases?

Remember that there are more than 3,000 cities, school districts, counties and townships with the authority to levy property taxes and each one has its own demands and priorities. We've been reporting this fall with our Forced to Choose series on all the choices they face over libraries, street repairs, even policing. And raising taxes is one of those choices.

So when you look in total at what all those local officials are doing and the relative silence at taxpayer hearings, you do come to the conclusion that on some level communities seem to be agreeing to raise their taxes next year.

As the Department of Revenue reported two weeks ago, the total burden on owners of homes, businesses and other property is proposed right now to go up as much as $379 million, almost 5 percent.

That number will shrink by the end of the month, just as it has in years past. The Minneapolis School District, for example, is promising to knock its proposed tax levy down by more than $10 million. Last year, local governments reduced levies by a total of $53 million between September proposals and December final tallies.

Eric Willette, director of property tax research at the revenue department is guessing the reduction will be smaller this year but even if it's the same or a little greater, the total burden on taxpayers is going up more than it has since 2009.

Taxpayers haven't been quiet everywhere. The city of Farmington, for example, proposed a 14 percent increase in its property tax levy to build some reserves and eventually save on debt service. Mayor Todd Larson told me residents basically said "nice plan but not now" and the city eliminated the proposed increase.

Ely was another place taxpayers were vocal about a big increase, and the city council is trying to whittle away at the budget.

But in many places turnout at truth-in-taxation hearings was light to non-existent. Willette said one factor is that although local officials may be asking for property tax increases, they by and large aren't seeking big budget or total levy increases. Many are mainly passing along to taxpayers the burden that used to fall on the state. That may be making higher taxes an easier sell.

When we asked sources in our Public Insight Network what they think about taxes and local services, we saw a variety of attitudes. Some aren't getting the services they think they should. Some are having a tough time finding the cash to pay higher tax bills. But many say they are satisfied with local government services and consider taxes a necessity.

"I don't feel that I pay very much tax for all the services I receive," said Steve Valencic in Minneapolis. "Overall, it seems like a pretty good deal."

When you look at the results this fall, you have to conclude that the last group more or less carried the day.

One final thing to keep in mind, as Jay Kiedrowski at the University of Minnesota's Humphrey Institute noted: Some people don't like to come out to public hearings but they still vote.

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Plea to overhaul local government hits Legislature

Posted at 8:34 AM on December 7, 2011 by Jennifer Vogel (0 Comments)
Filed under: Local government finance

Around the state, people have been attending meetings and hearings to discuss how to redesign government. The goal is to change the way services are provided so they cost less and also, in the best of all worlds, are more effective as well. Over the past year, these meetings have been held in city halls, churches, VFWs and hotels.

On Tuesday, it was time for members of the House State Government Finance committee to get a peek at what all those confabs have wrought. "This year we widened the invite and brought in all kinds of voices about how we as a state can be on the cutting edge again of innovation and delivery of services," said Rep. Diane Loeffler, D-Minneapolis, who has championed the redesign effort with Rep. Carol McFarlane, R-White Bear Lake, and others.

Specifically, the legislators began working with the so-called "big three," meaning the Association of Minnesota Counties, the League of Minnesota Cities and the Minnesota School Boards Association, along with various private foundations. Recently, hundreds of people from the city, county and school realms came together for a series of regional meetings to discuss innovation and ways they might work together. "I was pleased at the fact that it was a non-partisan, open-minded discussion that happened," McFarlane told the committee. "Not all redesign needs legislation."

The League of Minnesota Cities held its own series of meetings around the state this year. And according to executive director Jim Miller, "One common theme I see regardless of time or location (is that) people on the ground, people in our cities and counties and school districts are completely and irrevocably committed to trying to make their communities a better place. The resolve is greater than it has ever been."

Miller went on to note that whether libraries or police coverage, "There is an attachment to those services." People don't so much want to lose services as rethink how they are provided. "It no longer makes sense to have police services that are more costly if the only outcome is that the ID on the squad car is from that community," Miller said.

"Redesign is a goal we all have, but it can be remarkably difficult to achieve," said Jeff Spartz, executive director of the Association of Minnesota Counties. "In many respects we're still taking the first steps toward redesign." He suggested that government entities need to find the "openness to look beyond boundaries" and that leaders need to be careful to make sure new ideas filter down to the employees responsible for doing the work. "We need to develop a culture of innovation," he said.

Some of the discussion revolved around the greater discussion itself, specifically its duration. Rep. Keith Downey (R-Edina) said, "I'm encouraged but also frustrated. " He pulled out a 1995 report commissioned by then-Gov. Arne Carlson that suggested the state needed to change the way it does business. Many of the particulars mirrored those being discussed yesterday. "My question is, apart from just flat out not funding what you're doing, how do we catalyze this and make real?"

Miller responded that it's important to recognize that, "What we're talking about isn't anything new. It's not as though we woke up this summer and thought, 'How do we provide services better?' There are literally thousands of examples of collaboration."

Later in the hearing, officials from Austin, Beltrami County and the Mahtomedi School Board would, in fact, describe myriad collaborations and innovations taking place in their communities. Mahtomedi schools have a lab in partnership with MIT. Austin shares a law enforcement center with Mower County. Beltrami County has begun to measure success by outcomes.

Miller continued, "How do we move forward so we're not having this conversation 10 years from now? It's not any one thing. But the partnership between state and local government has eroded significantly." He said that every year, the League is asked by the Legislature to bring forward a list of mandates that if eliminated or relieved would save money and spur innovation. "Year after year, what happens is not much changes at the end of the session," he said. "If we are going to be able to be as effective as we can at redesigning government...you have to give local officials the flexibility to make decisions at the local level."

Spartz added that the public is much more engaged in the effort than they were in 1995 and that makes a difference. "They understand that this is not a cyclical problem, but a permanent problem," he said. "I think the public is there now and opportunities will present themselves much more rapidly."

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Puzzlement reigns over tax notices; share your story

Posted at 10:58 AM on December 1, 2011 by Dave Peters (1 Comments)
Filed under: Local government finance

Cody Tresselt-Warren doesn't get it. His property taxes are going up, but his property value has gone down. The city, county and school district have cut or frozen their budgets, yet his property taxes are still going up.

Tresselt-Warren is a first-time homeowner - he and his wife Christine moved into their Apple Valley home in April - and so far he's happy. "I enjoy beautiful parks and trails, a very responsive police and fire department, and a strong public works department." He doesn't mind paying a little more for the services he receives and his property taxes are only going up 1 percent this year. But this insert in his proposed property tax notice got him frustrated:

The cuts that are having the most direct effect on the couple are school district budget cuts. Christine has been substitute teaching for the two years since she finished school but has yet to find a full-time teaching job.

Cody is a tax accountant so he understands the basic numbers - it's the lack of specifics that's gotten him frustrated. So he'll be at the Apple Valley budget and tax hearing next week to seek the details. At 25, he'll probably be one of the younger people at the meeting, but he wants to be an active homeowner and understand what's happening in his community. He'll check in with us after the meeting and let us know what he learned.

He's one of the people in our Public Insight Network who shared his thoughts on property taxes.

We've been hearing from other property owners around the state about what's going to be happening with their taxes next year - and how they feel about it. PIN analyst Molly Bloom talked to Tresselt-Warren and put together a collection of those other responses. Some are happy with what those taxes are buying; some are not.

Sari Milinovic in Duluth, for example, doesn't like some of the school spending she sees. Jamila Hakam in Minneapolis says Hennepin County is doing fine with its tax money.

Read what they and others have to say on the map below. We'd love to hear from you, too - share what's happening with your property taxes here or in the comments.

View Property taxes around Minnesota in a full screen map

Read more about the dilemmas communities all over Minnesota are facing when it comes to taxes and spending by visiting our Forced to Choose series.

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Local leaders look for way to reshape government

Posted at 11:41 AM on November 30, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

For the past month or so, hundreds of Minnesota mayors, school board members, county officials and other local government leaders have gathered quietly in a half dozen sessions around the state to brainstorm their way out of their increasingly high-wire predicament.

On the table has been everything from sharing police dispatchers to doing away with many of the county, city and school district boundary lines that crisscross the state. The meetings, convened by the Association of Minnesota Counties, the League of Minnesota Cities and the Minnesota School Board Association, come at a time many of those local officials are feeling more and more of a financial and service squeeze: Keep taxes down but don't give up services.

The last of the six meetings was held Tuesday evening in Eagan, where about 100 metro area officials got together, and the ideas were legion:

--Streamline the complicated delivery of social services, making recipients more productive without abdicating the need to offer support.

--Get police and sheriff departments to share ideas, training and practices more often.

--Reduce the number of cities, counties and school districts, figuring out a way to maintain community identities at the same time. "There's too damn many boundaries," was the way one official described it.

--Get rid of state mandates that hem local governments in and discourage experiments.

The backdrop for the thinking was a sobering introduction by state demographer Tom Gillaspy, who tried to drill home the idea that the world has changed and isn't going to change back. As the 65-plus generation expands to unprecedented levels and the labor force shrinks, he outlined a half dozen facets to what has come to be called the "new normal."

--Slower economic growth. Productivity gains won't make up for a decline in the number of workers.

--Talent will be scarce. Those who find it will succeed.

--As the economy in general focuses on productivity, the public sector needs to step up.

--Government deficits and service cuts will be chronic.

--Paying for past promises will be a growing concern.

--Disruptive events will be more frequent.

--New opportunities will present themselves.

If local leaders want to get beyond the dilemma of raising taxes or cutting services, they will have to push for increased economic growth and increased government productivity, Gillaspy said. And that doesn't just mean figuring out more efficient snowplowing methods. It means things like increasing the high school graduation rate and innovating to deal with advances in medicine that change the population.

Legislators have been involved in these "redesign" sessions and will try to move the conversation into the lawmaking arena. But there was a strong current that the state role may be in part simply to get out of the way.

"We have to let people try things and make mistakes," said Rep. Carol McFarlane, R-White Bear Lake, who attended all six of the sessions. "In government (too often) we don't allow that."

New Prague Mayor Chuck Nickolay has been involved in a Scott County collaboration and thinks there are lots of opportunities. "You can't do everything, but pick the easy things," he said.

McFarlane is a co-chair of the House Redesign Caucus, a bipartisan effort established in 2010 to encourage new ways of looking at local government. She'll be talking about the topic before the House State Government Finance Committee at 10 a.m. Tuesday, Dec. 6.

The effort to get local leaders talking about ways to reshape local government is getting support beyond the "big three" local government organizations and the redesign caucus. The Bush Foundation, the Blandin Foundation, the Minneapolis Foundation, the Minnesota Community Foundation, the Northwest Area Foundation and the St. Paul Foundation have leant support as well.

As we continue our Forced to Choose project, we'll be looking at this question of delivering services differently. Stay tuned.

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Who's raising property tax levies the most? Look outside the metro area

Posted at 9:02 AM on November 29, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

More than 3,000 cities, school districts, counties, townships and other districts have the power to levy property taxes in Minnesota. These governments are run by the most local of elected officials, the people who tax and deliver services to their neighbors and then hear about it in the coffee shop or over Thanksgiving dinner if they don't get it right.

At this point, almost 1,900 of these entities are proposing to raise the amount of money they want to collect in property taxes next year.

That's another way of looking at the breakdown of information provided by the Minnesota Department of Revenue last week. Taken as a whole, local governments are seeking some $350 million more from property owners than they did in 2011.

(If you're really crunching the numbers closely, you'll see that the total increase in property tax levies on property owners is $379 million, but a little bit of that is levied by the state, not local governments.)

One big takeaway is that the big levy percentage increases seem to skew outstate.

The champion increase? Except for a tiny lake improvement district, that distinction goes to little Ranier on the Canadian border, where the property tax levy may rise 400 percent to $160,000. The reason for the increase looks like a classic case of the cost of maintaining infrastructure.

The city, which lies just east of International Falls, annexed a chunk of unorganized territory. So its population is quadrupling to 600 and its land value is rising by the same amount. But the levy is rising even faster because of new expenses associated with the annexation, said Koochiching County Auditor Bob Peterson. Water lines to the formerly rural area need to be replaced, and that required the property to be brought into the city.

Residents of the formerly unincorporated territory are not unhappy with the tax increases they're facing, Peterson said.

Another outstate city proposing a big percentage increase is Appleton at 45 percent -- the city is dealing with the closing of a big private prison and its economic consequences.

In all, two-thirds of the state's 854 cities are proposing an increase right now.

Of the state's 87 counties, four are proposing double digit levy increases. All of them are outstate --Waseca in the south and Pope, Lincoln and Grant in the west. In all, 64 have proposed an increase and 15 are planning for a flat levy. But some of those numbers will come down before final levies are set.

For example, I just talked with Wabasha County's auditor-treasurer and she said the county board has proposed a no-increase levy so far but is planning to cut it at least several percent by the end of December.

The outstate trend holds true for school districts. In fact, a handful in and around Todd County -- Eagle Valley, Browerville, Bertha-Hewitt, Staples Motley and Long Prairie are among those seeking 50-percent-plus levy increases. For the state, about half of the 330-plus districts are proposing increases, although that does not include new referendums approved by voters this month.

The Twin Cities are not immune from big percentage increases. Farmington, where residents are shouldering substantial debt payments for infrastructure and a new City Hall, is proposing a 15 percent increase. Oak Park Heights is proposing an 18 percent increase as it considers shifting some services from fee support to property tax support. That shift might actually result in a decline in total bills from the city.

About 1,000 local governments are planning at this point to hold their levies flat next year. Some 400 managed to lower their levies.

These are the levies that residents have a chance to talk about at truth-in-taxation hearings this week and next. Local officials have until the end of December to set their final levies. They can reduce them from the proposed levels but cannot raise them.

As a point of comparison, last year after all the levies were made final, a little over 1,800 taxing entities raised their property tax take.

You can find all the Department of Revenue figures for proposed levies here. Keep in mind they don't include figures for the school referendums just passed and there may be a few errors here and there. The last column is the key percentage to look at.

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Minnesota property taxpayers looking at 4.7 percent increase

Posted at 12:21 PM on November 23, 2011 by Dave Peters (1 Comments)
Filed under: Local government finance

The hundreds of cities, schools and counties in Minnesota are proposing to raise the state's total property tax bill by a combined $99 million next year. That will be up 1.2 percent to about $8.2 billion, the lowest increase in some years.

But in past years a slice of that bill has been paid by the state, and that isn't going to happen next year. (The state eliminated the homestead credit and its associated reimbursement scheme.)

So in reality, homeowners, business people and other property owners will pay the full amount. That's a 4.7 percent increase for them. Another way to look at it: Those taxpayers are paying a total of $379 million more than this year. That's the biggest increase since 2009.

The numbers address what has been a contentious debate since the state solved its budget problem temporarily last summer. DFLers have argued that the state's action simply forced local governments to raise property taxes. Republicans have responded that local government officials have the power to trim budgets in response to less state aid.

These aggregated numbers don't resolve that debate but they do show that local governments chose to pass on at least some increased costs to property taxpayers.

State revenue commissioner Myron Frans offered this analysis in a press release:

Minnesota's local governments have been working hard to keep property tax levies down, even in the face of deep cuts in state aid programs like local government aid and county program aid that have forced them to trim their budgets and to cut services. The combination of eliminating the homestead credit and cutting local government aid means that despite the responsible actions of local officials, property taxpayers in many areas will see real tax increases.

Next week, those local governments start to hold hearings allowing property owners to vent.

The biggest dollar increase is coming from cities, which the state hit hardest with restrictions in local government aid this year.

Here's a breakdown of which local governments are raising how much:

As the Minnesota Department of Revenue noted in releasing the compilation, individuals' experiences can vary widely. Changing property values are always a factor, and so are spending decisions by local governments. This year, a huge factor has been the elimination of the homestead credit and the creation of a homestead exclusion. That has shifted the property tax burden in ways that were hard to predict and that vary from community to community.

More about how communities are coping with austerity at our Forced to Choose site.

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North Dakota oil fields drive up costs in western Minnesota

Posted at 8:38 AM on November 23, 2011 by Jennifer Vogel (3 Comments)
Filed under: Local government finance

This past summer, when the city of Wheaton wanted to repave two half-block stretches of street near Broadway Avenue, they were surprised to find that the private company they'd normally hire had sent its paving or "milling" machines to the oil fields in western North Dakota.

"We literally could not get the machines in this area to do that work," says Jamie Beyer, administrator for Wheaton, a city of 1,500 near the South Dakota border. "It's driving the price up. When the (state government) shutdown happened, the equipment moved to North Dakota."

Trying to keep taxes down in a time of tightening budgets, Wheaton hasn't been doing much road repair to begin with. "We've cancelled most of our projects," says Beyer, who also serves as city clerk, treasurer and airport manager. In the long run, she says, "The infrastructure crumbles and it's more costly to have to completely reconstruct a road than repair it. It's very troubling for us."

So when the city received an estimate for paving the two half-block stretches that topped $76,000--it recently paid less than that to pave three full blocks--it chose to put the project off.

In a small city like Wheaton, $76,000 is a lot of money, says Beyer. "That is the cost of having the swimming pool for the year. The library for the year. The fire department for the year. We have been at bare bones for a while now."

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Shocked by your tax notice? Look again

Posted at 11:51 AM on November 22, 2011 by Dave Peters (4 Comments)
Filed under: Local government finance

If you just opened your truth-in-taxation notice and are stunned to see how little your house is apparently worth, take a deep breath. No, your house hasn't really collapsed in value the way a lot of tax notices seem to indicate.

What may have plunged is your "taxable market value," which is not the same as what your house might fetch on the market.

Last year, your "taxable market value" was, for most homeowners, the same as what the assessor actually thought your house was worth, that is, your estimated market value. Local tax officials used it to determine how much property tax you owed and then they subtracted a homestead credit if your house was worth less than $413,800.

This year, your "taxable market value" is still what your tax is based on, but it can be quite a bit lower than the true market value. This year, houses worth $413,800 or less have some of that value "excluded" before your tax is determined. So a house with a market value of $100,000 has a "taxable market value" of $71,760.

Ken Rowe in the Hennepin County Taxpayer Services Department, where they've been fielding complaint calls, likens it to the difference between adjusted gross income and taxable income on your federal income tax return.

But just because your taxable market value decreased, don't leap to the conclusion that your tax is going down, too. Remember, the credit they used to subtract from your tax is gone this year. Taxes are all over the map. Our sample of 28 Minnesota cities shows that the tax on a median value home is rising in 22 of them.

This is clearer in some counties than others. Ramsey County, for example, shows the arithmetic on individual truth-in-taxation notices, by including your estimated market value and then subtracting the exclusion to yield your taxable market value.

For a full look at how communities are coping in these austere times, check out our Forced to Choose coverage.

And here's my conversation about this with Tom Crann on All Things Considered:

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Future of Minnesota cities debated on Midmorning

Posted at 10:55 AM on November 21, 2011 by Jennifer Vogel (0 Comments)
Filed under: Local government finance

Will cities provide fewer services in the coming years? Will property taxes double? Is the suburban model unsustainable?

Chuck Marohn, who heads a group called Strong Towns, along with Jim Miller, executive director of the League of Minnesota Cities, and Dave Peters, who will be familiar to readers of this blog as the editor of the Ground Level project, spent an hour with host Tom Weber on Midmorning today answering those questions and discussing the future of Minnesota's cities. To hear the conversation, click here.

"We need to think big, but we need to think differently," said Marohn.

Miller suggested that cities need more flexibility when it comes to raising revenue, especially in the face of reduced state aid, whether from local sales taxes or other sources. "The Minnesota miracle is eroded, if not on its last legs," he said.

Peters noted that some cities, like Hutchinson, have indeed passed sales taxes in order to pay for infrastructure projects, as we've reported in our "Forced to Choose" series here.

While cities have survived austere times in the past, said Miller, what they're facing presently is different. "What we've seen in the last decade is a structural change," he said. Yet, the mechanisms cities have for dealing with the crisis is the same as they had 20 years ago. "We don't have the solutions to match the problems going forward."

Marohn suggested that cities have overbuilt their infrastructures and only solutions that change the way we look at roads, water treatment plants and home building will work. "Local government runs pretty efficiently," he said. "We just don't live very efficiently."

He suggested loosening state regulations on cities in order to allow them to be more innovative. City services and structures tend to be homogenous, he said, with the same land use codes and benefits packages and so on. "When you have homogeneity across these different places, when things start to go bad they start to go bad everywhere."

In the end, the fundamental questions we as citizens need to address, said Miller, are, "What do we really want? What is important to us as a community?" Once we know the answers to those questions, we can move forward and work on getting and paying for those priorities.

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Township taxes on the rise

Posted at 3:21 PM on November 16, 2011 by Curtis Gilbert (0 Comments)
Filed under: Local government finance

Property taxes have gone up substantially in Minnesota's rural townships over the last decade, a new report shows. The tax money filled the gap left by declining state aid.

"As the state and federal government give less to our towns, more of the cost of maintaining our roads and ditches in towns is going to be placed on property tax payers," State Auditor Rebecca Otto said.

The report from Otto's office shows local property taxes accounted for 73 percent of the average township budget last year. That's a huge increase from ten years ago. Then, property taxes accounted for only half of the average township budget.

About 18 percent of Minnesotans live in townships. They tend to be in rural areas and most have fewer than 300 residents.Townships generally have lower taxes than cities do, and their budgets have few frills. More than half of township spending goes to road maintenance.

Source: Minnesota State Auditor

"Costs of gravel have gone up at extremely rapid rates, costs of asphalt for those who have paved roads," Minnesota Association of Townships attorney Kent Sulem said. "Our actual expenses do not go down, but our sources of revenue have depleted rapidly."

Townships haven't been eligible for local government aid since 2000. Other forms of state aid have dried up over the years as well.

"The only resource left is the property tax," Sulem said.

The state auditor's report is based on last year's data. Sulem expects to see township taxes continue to rise in the coming years due to the elimination of another state aid program called the homestead credit.

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Hennepin and Ramsey tax notices are in the mail

Posted at 12:06 PM on November 16, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

Next year's property tax notices are hitting the mail this week, so we can stop guessing about what they're going to say, at least in Hennepin and Ramsey counties.

Hennepin County notices went out Tuesday afternoon, and for 57 percent of residential property owners, there's an increase over this year's bills, according to Ken Rowe in the tax and property office. A huge majority of those increases will be in the single digits.

More than four out of 10 homeowners will actually see a decrease when they open their notices. That's about typical for recent years, Rowe said. As predicted, the bigger increases are falling on higher value homes. Consider that in Minneapolis almost a quarter of homeowners will see an increase of between 5 and 10 percent. In Wayzata, that's true for more than half of homeowners.

The news in Ramsey County isn't quite as good. While three out of 10 homeowners will see a decrease when the notices go out on Friday, half the county's residential taxpayers will see a single-digit increase and another 19 percent will see taxes going up between 10 and 20 percent.

A few will actually see a tax increase of more than 20 percent, Ramsey County's Chris Samuel said. Mostly those are people getting a double whammy -- rising property values during a time when most have fallen and the impact of a shift in tax burden resulting from a change in state law.

Samuel said the numbers are just about what people predicted -- better news for low value homes, worse news for high value homes, apartment building owners and commercial property. The big factor there, of course, is the elimination of the homestead credit for homesteaded homeowners and its replacement with an exclusion that is shifting the tax burden significantly in some places.

That shift is expected to be more pronounced in smaller communities outstate.

For a sampling of early numbers around the state, check out our graphic showing how median value homes are getting hit in a couple dozen cities. Most are going up.

Remember that these numbers are based on preliminary levy proposals approved by city, school and county officials. Those levies can be reduced between now and the end of the year. They cannot be raised.

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When forced to choose, how do you decide?

Posted at 10:38 AM on November 4, 2011 by Dave Peters (1 Comments)
Filed under: Local government finance

In Anoka County Thursday night, almost 150 residents of the new city of Nowthen attended a public hearing to have their say on whether the city should raise taxes or trim the police protection it gets from the sheriff.

At the same time, in Edina, five long-time residents gathered around a table and discussed city budget choices, trying to offer suggestions for city leaders. Should enterprises like the city's golf course or ice arena support themselves or get help from the taxpayer, for example?

Next week in Duluth, voters will decide between property taxes and less park and library spending. Elsewhere, cities have surveyed residents online and in the mail to get their opinions. Earlier this year, the League of Minnesota Cities spent months going to about a dozen cities to talk with residents about what they want their communities to do. The League is going back next year.

And, of course, in the next month or so, everybody can get in on the action at truth-in-taxation hearings being held by cities, schools and counties throughout Minnesota.

Communities come to judgment in a variety of ways about how much money to spend and what to spend it on. Some of those ways work better than others.

Twenty years ago, for example, truth-in-taxation hearings were jammed and were a pretty clear way to tell elected officials that people thought taxes were going up too fast. Lately, a lot of those annual hearings have played to empty auditoriums, providing precious little guidance to the leaders trying to set priorities.

That's why the Edina session was interesting. Convinced the truth-in-taxation hearings weren't particularly helpful, Edina this year enlisted the Citizens League to lead three discussions this week that delved into the choices before the city.

A lot of cities would love to have Edina's problems. A main question this fall, for example, is what to do with a one-time $2.5 million excess, partly a result of the success of the city's liquor stores. Should the city use it for property tax relief or speed up spending on some capital projects? More generally, is it more important to avoid property tax increases or maintain quality services and amenities?

For two hours, guided by the Citizens League's Stacy Becker, the five batted these questions back and forth in front of the mayor, city staff and a council member, who were there to provide information but weren't the main event.

At one point an Edina retiree offered up, "I need less bling in my life and more quality of life for everyone."

But even among the few residents last night, you got a glimpse of the difficulty in coming to judgment. Via instant-feedback clickers, the five managed at one point to express the desire that city operations like the golf course and arenas should pay for themselves and in the next minute express at least some opposition to higher fees, selling more ad revenue, selling naming rights and relying on private donations.

Every idea has an enemy, as one official in another city complained to me recently.

Even so, as Mayor James Hovland said afterward, it was a good start on improving how Edina makes its choices.

"We're trying to tap the collective intelligence in the community," said city manager Scott Neal.

Beyond all the immediate decisions about property taxes and street repair and police protection, how to do that is really the most interesting question.

If you want to see this in action, especially if you're in Edina, you can join a webinar Sunday evening. See this for details. And go to our Forced to Choose site for lots of information about communities making choices.

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Do libraries give us a core service?

Posted at 11:58 AM on November 1, 2011 by Dave Peters (7 Comments)
Filed under: Local government finance

How crucial are libraries to a community? Beloved by many, they nonetheless are among the first places residents turn when faced with a desire to save money.

The building housing the public library in Lake Elmo is for sale. MPR News Photo/Judy Griesedieck

We've been exploring this question as part of our "Forced to Choose" project. MPR News Ground Level reporter Jennifer Vogel is reporting on the trends and talking with Tom Crann on All Things Considered this afternoon. Then Wednesday morning, reporter Tom Robertson will report on Morning Edition from Duluth, where residents are being asked directly to pay more to keep their libraries humming.

We also asked people in our Public Insight Network to give us their thoughts. We have a lot of librarians in the network, so we heard a lot of reasons to consider libraries core services at the heart of what a community is. But we heard from others as well, some of whom wonder whether technology and cultural changes are making it necessary to think in different ways.

Here's what people told us. Add your own thoughts in the comments.

Michele McCaughtry, director, Wabasha Public Library

Library usage is higher than ever in Wabasha despite some negative talk about libraries being "non-essential" or that the Internet will replace the need for mortar and bricks building. I worry that for some people, the negative political talk will discourage use of public libraries, especially the young and old. It is a kind of "cooling," a pressure to not have people use the services, thus denying equal access to information.

Diana Tallent, director, Lonsdale Public Library

Library use increases dramatically during a recession. The first thing people get rid of when they lose their job is Internet access and many companies will only accept electronic submissions of resumes nowadays. People flock to the library to use the computers, Internet, to write resumes, to look for jobs, to apply for unemployment, to research which fields are hiring and how to train for those positions.

Terry Genelin, resident, Le Sueur

Even the poor have computers and smart phones. Libraries are fading in importance. When I do stop by I see kids playing video games and checking out music and DVDs which are available from stores in town. Enrichment activities are fine but the "GOOD" parents are the ones that use them [and] they can afford to pay for services and don't need the tax-supported system. We should consider the services to be part of the school facility making more use of the public school and eliminating the extra structure maintenance.

Sister Edith Bogue, member, Duluth Library Board

The libraries are now so busy at peak times that librarians cannot adequately respond to all questions. There are occasionally very heated situations about giving up the use of a computer or other resource when time is up, and the patrons do not have the quiet environment needed for careful reading or searching for important information.

Jim Weygand, board member, Carver County Library

Carver has a very good library system, but it is gradually moving to mediocracy. The Norwood Young America Library was replaced and the size was tripled, but because of budget cuts staffing was not increased. The Chanhassen library evening closing was moved from 9 p.m. to 8 p.m., shortening the available hours as well as affecting availability for evening meetings of many groups.

Stacia Marlett, volunteer, Golden Valley Library

The Golden Valley library is always busy, with adults and kids. I know that the shelves there are messier and fuller than I'm sure the librarians would like. This means people have trouble finding the items they want, which means they are either left dissatisfied or have to get a librarian to help them, which ties up the librarians from doing the tidy work necessary for a good experience.

Jamie Stanley, reference librarian, Northfield Public Library

Libraries are a refuge for the disenfranchised and can help public school students who have a need for a space to work and for information related to their education. Libraries are core, but the city of Northfield doesn't think so. It's the old story of pitting the library against police and fire. To go head to head with this "law and order" thinking is a no win for the public library. Frightening.

Mel Strand, resident, Waseca.

With our schools under great financial pressure, students are relying on the library for more up-to-date equipment, references, and materials than the school can provide. People are also turning to the library for entertainment materials, including books, music, CDs, etc., and job searches because of tough economic times in this small community. The Library is a major basis for community activity. I doubt that most people realize its importance, including our local politicians.

Rick Morris, resident, Waseca.

Libraries are a quality of life issue for me. A place to go for cheap books in my case, but for others it's a source for kids reading programs, computer services for those who can't afford a computer in the home, a social hangout for those who read the Wall street journal, a source for answers to crossword puzzles etc. In this day and age it is evolving into a new entity. I don't know what it will become but I don't believe reduced funding is the answer. New E-books and technological surprises should be a part of the new library, not a substitute for them.

It used to more quiet. Now the librarians, especially the director are some of the loudest and most boisterous. It appears to have become a day care center with no supervision or oversight. I have witnessed very inappropriate use on the computers.

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Property taxes are rising for most, early estimates show

Posted at 4:11 PM on November 10, 2011 by Dave Peters (3 Comments)
Filed under: Local government finance

Will the budget agreement the Legislature and Gov. Mark Dayton reached last summer leave Minnesota's property taxes higher next year?

In a word, yes, an MPR News spot check shows.

A caution: This is Minnesota, and when you talk property taxes, things get complicated. Taxes are not going up everywhere and not for everyone, and it looks like most increases will be in the single digits. But when you open your truth-in-taxation statement this month, chances are it will show an increase, our analysis shows.

We asked local tax officials in more than two dozen places to tell us what was happening to the tax on a median value home. More than three-quarters said preliminary estimates show taxes rising in 2012, even after taking into account a decline in values in most places.

These numbers have been a point of contention since July, when the state temporarily solved its budget problem.

DFLers tend to say property tax increases next year will be the state's fault: By cutting aid to local governments, the state effectively forced those already-thin governments to make up for it by raising property taxes. Republicans tend to say, no, it isn't: Property tax decisions are in the hands of local leaders who can cut spending much as the state did to keep taxes down.

Because city, school and county officials don't sign off on their budgets and tax levies until December, it's too soon to be certain of the numbers. But local officials have set preliminary targets, and here at Ground Level, we were eager to know early results. So we asked county auditors around Minnesota to tell us what the numbers show for selected homes in their counties. These are the numbers reflected in your truth-in-taxation notice.

We picked several dozen places -- urban, suburban, regional hub, small town, rural -- and looked at what the taxes were this year on homes of several different values. Then we asked the auditors to take into account three things:

--Changing home values.
--Preliminary 2012 levies set by city, school and county officials.
--The state's new way of determining how to give the owners of homes worth less than $413,800 a tax break.

The result?

In 21 of the 27 places we've heard back on, the median value home appears headed for at least a small tax increase.

In Plymouth in the western suburbs, for example, the median home value has dropped from $304,000 to $299,500 this year, yet the estimated tax on that house is expected to rise 4.2 percent to $3,888.

In Red Wing down the Mississippi River, the value of the median home has dropped from $149,700 to $144,311, but the estimated tax is rising just under 1 percent to $1,829.

In Minneapolis and St. Paul, median home values are falling but the estimated tax on these houses is rising 1.2 and 3.6 percent respectively.

We have a much better display of the numbers if you click on the map above. Remember, your tax will depend on what happened to your home's valuation, what your elected officials decide to spend at the end of December and a bunch of other things, so use the data we've put into this map as a guide, not gospel. (It may take a moment to load fully; then roll your cursor over the map for details.)

What is pushing taxes up (or, in some cases, down)?

Two big factors: The state changed the property tax law, shifting the tax burden to higher value homes and commercial property. That plays out differently in different places. Secondly, local officials in our sample are -- mostly -- proposing to raise the total they collect from property owners. That means property taxpayers will make up some or all of the money local governments used to get from the state.

Where taxes are falling

It's instructive to look at a couple places where taxes appear to be heading down.

In Grand Rapids, taxes look to be dropping for homes of virtually all values because the Itasca County tax base got a huge boost. A power plant expansion and an oil-carrying pipeline came on line, so the burden is spread over more property than last year.

In Brooklyn Park, on the other hand, taxes are going down because home values have fallen more quickly there than in the rest of Hennepin County and the Osseo School District. In essence, Brooklyn Park homeowners own a smaller share of all the property in the county, so their burden is less, said Ken Rowe in Hennepin County's property tax office.

In St. Cloud, where the tax on a median value home is dropping a few dollars, hold-the-line elected officials get some credit. Stearns County, the city and the school district all are shrinking the total property tax levy they're seeking. When the state eliminated the market value homestead credit, it created a situation where local officials have to lower their levy, not simply keep it flat, if they hope to prevent taxes from rising.

That's something most cities, counties and schools in our sample decided they couldn't do, at least so far. Most raised their preliminary levies, although, as I mentioned, they can still lower them before the end of December.

High value homes hit harder

Median values tell only part of the story, especially this year. Elimination of the homestead credit and creation of the homestead exclusion is shifting the tax burden toward higher value homes and toward businesses. See our Legos-laden video to find out why.

In Albert Lea, for example, the tax on a median value home is dropping a little but the tax on what was a $200,000 home a year ago is estimated to be rising more than 7 percent, even though that home is worth less this year.

If you owned a Red Wing home worth $100,000 last year, your tax is headed down by 5 percent. But if your Red Wing home was worth $400,000, the estimated tax is going up almost 7 percent. Again, that's true even assuming your home is worth only $385,600 now.

Low-value homes will see taxes drop in most of the places we checked.

The next two tables show how taxes are changing for homes that last year were worth $100,000 and $400,000, respectively.

The small town experience

For yet another look into the property tax kaleidoscope, consider the situation in the vacation and retirement mecca of Cass County in northern Minnesota.

Say you own a home worth $200,000 in Walker, the county seat. You're looking at an increase of almost 9 percent to $2,324 largely because of levy increases planned by the city and the school district.

Now say you own a home with the same value in surrounding Shingobee Township, where lake homes abound. Your tax is estimated to be rising 18 percent, but it will still be only $941. For some more rural parts of the county, tax bills might be jumping tenfold, but that could mean going from $5 to $50, said Cass County financial director Larry Wolfe.

Homes in those low-tax-rate areas were getting a huge break from the homestead credit, and most of that help is getting wiped out under the new law.

One factor not represented in these estimates is school levies. In many districts, voters decided Nov. 8 whether to approve additional levies. In some cases, these taxes wouldn't take effect for another year. In others, they would raise 2012 taxes above what the preliminary estimates cited here show.

And remember: Other than the school levy question, local officials can lower these estimated taxes between now and the end of the year. They cannot raise them.

So are property taxes rising? For most, yes. Did the Legislature and the governor cause that? We'll no doubt be arguing over that at least through next year's session.

We tracked down these numbers as part of our Forced to Choose series on how communities are coping with more austere times. Check out all the stories here.

Here's my conversation with Morning Edition host Cathy Wurzer about this.

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Minnesotans find themselves "Forced to Choose"

Posted at 3:51 PM on October 26, 2011 by Dave Peters (0 Comments)
Filed under: Community Development, Economic Development, Local government finance

Over the past couple of weeks, MPR News listeners have heard a half dozen news stories on All Things Considered and Morning Edition generated by a new project called "Forced to Choose."

In Owatonna, voters are choosing between higher taxes and letting a historic set of buildings deteriorate. In Foley, residents hope to save money by cutting police protection. All over Minnesota, businesses are bracing to bear a bigger property tax burden resulting from a state effort to save money.

Today we've launched the online version of this project, a look at how Minnesota communities are coping with a new austerity that is putting pressure on city, school and county budgets, on taxes and on how residents come to agreement on what they want their communities to accomplish.

The new "Forced to Choose" site will collect, amplify and add to the stories we're doing for broadcast. For example, you can listen to reporter Jennifer Vogel talk this afternoon with All Things Considered host Tom Crann about the increasingly shabby look some Minnesota cities are taking on and then check out her thoroughly reported story online with all the details.

Likewise, if you're confused by how the state changed the property tax law in its special-session efforts to balance the budget (and who isn't?), check the stop-action video MPR News staffers Curtis Gilbert and Molly Bloom put together. It's got music, it's got houses made of Legos and it's only three and a half minutes long.

Did the Legislature in effect raise property taxes this year? We're surveying selected cities to find out and will report the results soon.

Look for a lot more in coming months as cities, schools and counties choose what to spend money on, what to give up, how to pay for what they want. This reporting effort is part of our Ground Level project to look at community issues, but we've pulled in other resources as well, assigning a total of a half dozen reporters, editors, photojournalists and web developers.

We're going to report on decisions about fixing streets, providing enough police, closing libraries and finding innovative ways to save money -- all crucial elements of the public debate.

But we also want to shine light on how communities come to grips with these questions and how they make decisions. What happens when every idea has an enemy? Does a customer-service approach leave residents expecting more than they're willing to pay for?

We've already tapped into our Public Insight Network to learn from residents about city services, libraries, law enforcement and other topics. We'll continue to do that and to look for other ways to let people contribute. Feel free to comment here and stay tuned for more coverage.

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Minneapolis property taxes rising only slightly

Posted at 12:09 PM on October 14, 2011 by Dave Peters (2 Comments)
Filed under: Local government finance

If you own a median value home in Minneapolis -- one worth a little over $180,000 -- it looks like your property tax is going up next year but only about 1 percent. That's a tax increase of $34.

Owners of lower-value homes could actually see taxes fall a few bucks. People with higher value homes will see increases in the 4 or 5 percent range. If you're keeping track, that's better news than St. Paul residents will be getting.

You won't get a bill until next spring, but it's tax season now for the local officials who have to figure out how a new state law, preliminary budget decisions and changes in property values come together. They're charged with sending "truth-in-taxation" estimates to all property owners next month, so we asked a number of county officials around Minnesota to give us a look at how those numbers are shaping up.

I posted something earlier on St. Paul, so I wanted to get Minneapolis numbers out as soon as they arrived. Here's what Ken Rowe at Hennepin County provided:

Minneapolis taxes by the numbers

You can see, for example, that a home worth $300,000 a year ago is now worth an estimated $291,900 and will be taxed under the new state exclusion as though it were worth $280,931. It's tax is projected to be $5,107, an increase of 3.8 percent.

I'm repeating myself here, but the reason some taxes are going up more than others within Minneapolis is mostly because the state changed the way it's giving a break to some owners of homes worth less than $413,800.

On the other hand, the reason Minneapolis taxes as a whole are going up less than St. Paul's (and a lot of other places around Minnesota) is that Hennepin County and the city of Minneapolis are levying a total tax take next year about the same as they did this year. The Minneapolis School District is up by nearly 10 percent, pushing overall taxes up somewhat for city residents.

Again, use caution taking these numbers to the bank. These are preliminary citywide numbers and an individual's results can vary. They are based on the assumption that the assessed value of your home dropped about 3 percent in the past year. That's the amount a median home declined in value.

We're going to track this issue closely in coming months as a project we're calling "Forced to Choose." Reporter Tom Robertson produced a report from Bemidji for All Things Considered Thursday and I put up a companion blog post on the increases headed toward owners of business property.

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St. Peter's zero levy increase makes a point

Posted at 12:32 PM on October 13, 2011 by Jennifer Vogel (0 Comments)
Filed under: Local government finance

Across the state, cities have set their preliminary property tax levies, a maximum number that will be made final in December. One wrinkle has been the state's new Homestead Market Value Exclusion, which replaces the old Market Value Homestead Credit. It's a complicated transition with hard to anticipate impacts on taxpayers. If you want to read more about it, Ground Level's Dave Peters has done an admirable job of explaining the change here.

The upshot is that even if cities keep their levies flat, property taxes for many homeowners will increase. By how much and on which properties is being sorted out county by county. Meanwhile, legislators and city officials have been embroiled in strenuous PR campaigns to deflect public blame.

Times continue to be tough for Minnesota's cities, with decreasing state aid, a slumping economy, declining property values and rising health care costs. And most cities--at least preliminarily--appear poised to raise their levies, if often by small amounts.

That's not the case in St. Peter, just southwest of the Twin Cities. The city plans to keep its levy flat, mostly to help strapped taxpayers in a time of economic turmoil. But Mayor Tim Strand, who used to head the Coalition of Greater Minnesota Cities, has another goal in mind as well.

"It was extremely important" to keep the levy flat for 2012, says Strand, "mainly because of the Homestead Market Value Exclusion. I wanted to say to citizens, even if we keep the levy at zero, the taxes are going up. The Legislature might not have been aware of the ramifications of that. If we all kept our levies at zero, taxes would go up anyway. It was important to us to make the point."

Given years of ever-tightening budgets, it's galled some city leaders to hear legislators blame cities for the tax increase by arguing that if they wanted to keep the taxes of individual property owners flat, they could simply lower their levies. Most say they don't see any fat left to trim.

St. Peter has made significant budget cuts, delaying purchases, putting off street repairs and mowing the parks less often. They've prioritized the reduction of overtime hours. The city was able to spruce up Highway 169, which runs through town, thanks to federal stimulus dollars.

Ironically, by holding levies steady, cities may bring in more property tax dollars under the new exclusion than they did under the old credit. That's because they weren't receiving the total state reimbursement in recent years, while now taxpayers will pay in full. "Local taxpayers are filling in where the state used to fill in," says St. Peter City Administrator Todd Prafke. In his mind, the Legislature raised taxes. "In St. Peter, this results in a tax increase," he says.

That's an assertion that Republican lawmakers have taken exception to.

The credit/exclusion amounts to a small portion of the city's overall levy of approximately $2 million. And given state aid reductions over the years, the fact that taxpayers will step up where the state fell short isn't very comforting. "It's a small amount in the scheme of things," Prafke says. "It's not through anything we've done overtly to raise funds."

"[This is really] about the ongoing disintegration of the local/state relationship and at times, we all forget it is about all of us," he adds. "Not state vs. local. Not people or taxpayers against the government at any or all levels. It really is about how do we want to pay for the service, infrastructure, amenities that we want within our collective community."

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Business property taxes heading for an increase

Posted at 4:15 PM on October 13, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

Business owners in Minnesota are going to take some of the biggest lumps when they open their property tax bills next year.

For example, the way things stand now, the owner of commercial property valued at $300,000 in St. Paul can expect a tax bill of more than $11,000, an increase of more than $1,000. In Minneapolis, that same business owner can expect a similar bill, up more than $850.

Outstate, the bills may be smaller but the increases are of similar magnitude. In Hibbing, in fact, the owner of a $300,000 business is heading for a property tax bill of $11,000, up more than $1,300. (These are figures that could decrease when local officials set their budgets in December.)

This is why local officials and business leaders were gathering in Bemidji Thursday morning, to learn about and brace for changes in the system. MPR News reporter Tom Robertson was there and filed a report for All Things Considered.

Robertson's report marks the beginning of a Minnesota Public Radio News project called "Forced to Choose." It's going to be a several-month exploration -- both online and on the air -- of how Minnesota communities are determining what they are willing to pay for in these more austere times.

For a lot of people the question is simply how much they have to pay in property taxes, and the state made a shift in the law this year that is affecting virtually every taxpayer in the state. While that law change is pushing down taxes for some owners of low-value homes, it's shifting the burden toward businesses.

We asked county auditors around the state to give us the numbers for a $300,000 commercial property in selected cities. What was the tax this year and what will it be next year, based on preliminary plans made by school, city and county officials?

Here's a sampling of what they told us for a dozen cities. The estimates could be reduced before the bills go out next year.

If you're curious about that Grand Rapids decline, it's because a power plant expansion and a new oil pipeline from Canada substantially boosted the tax base in Itasca County, says auditor Jeffrey Walker.

In all these cities, many homeowners are going to see lower percentage increases or even decreases in their taxes.

What's going on here? The simple answer is that the means by which the state gives a break to owners of homes worth less than $413,800 is cutting into the total tax base local governments can use to generate property taxes. That means business property owners pay a larger share of the total tax take.

"Our economy is already taking a hit from everything," cabinet-maker Chris Keenan told Robertson. "I've watched my taxes increase. I've watched the regulations change. And it's just getting harder and harder to stay in business," he said.

The bulk of our reporting for the Forced to Choose project is being done by Robertson and fellow reporters Curtis Gilbert and Jennifer Vogel. Although they're diving into tax rates and budgets, the deeper question is that some communities are starting to have a conversation about how they define themselves. (See the Ground Level post last week about planner-engineer Chuck Marohn's ideas about thinking differently.)

Here's how St. Peter city administrator Todd Prafke put it to Vogel in an email this morning:

"We all forget it is about all of us. Not state vs. local. Not people or taxpayers against the government at any or all levels. It really is about how do we want to pay for the service, infrastructure, amenities that we want within our collective community."

Stay tuned while we shed light on that this fall.

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St. Paul property taxes go down (for a few) and up (for many)

Posted at 8:40 AM on October 6, 2011 by Dave Peters (1 Comments)
Filed under: Local government finance

If you own a house in St. Paul that's worth $400,000 or more, brace yourself for a bump in your property tax bill of as much as $500 next year.

On the other hand, if you have a low value home, say $100,000 or less, it looks like your tax is actually going to go down.

The numbers for St. Paul are among the first available as the property tax season cranks up and the number crunchers start doing their thing.

We don't have a big sample from around the state yet. But there are two important -- and separate -- questions to ask about St. Paul's numbers that can be illuminating for residents elsewhere. Why the difference between the two experiences and why the sizable increase for higher value homes?

First, the difference in experience between high and low value homes. Chalk that up mainly to the state's change in the way tax breaks are figured for many homes. Homes worth less than $413,800 are losing a sliding "credit" and gaining an "exclusion" and that shift is rippling through Minnesota in varied ways. (Keep in mind the car ads on TV -- your actual mileage will vary.)

Second, why will owners of high and even median value homes see tax increases of anywhere from 3.5 to 8.5 percent? That finger points mostly at the fact that Ramsey County, the city of St. Paul and the St. Paul School District all are making plans to raise the total amount of money they collect via property taxes.

Here are the numbers:

St. Paul by the numbers

Ramsey County preliminary property tax levy -- up 1.7%
St. Paul city preliminary property tax levy -- up 6.5%
St. Paul school district preliminary property tax levy -- up 3.6%

Tax on selected St. Paul homes

I got the St. Paul numbers from Chris Samuel in the Ramsey County property records division, who based them on three main factors.

First were those three levy increases. All are preliminary and might be lowered by year's end, but for now, the city, the schools and the county are preparing to seek more money from property taxes than they did last year.

Second was the fact that the median value of a home in St. Paul dropped by 4 percent. For the information I asked from him, Samuel applied that percentage to all values of homes.

Third was the state's elimination of the market value homestead credit and the creation of the homestead market value exclusion. That removes part of the value of low-value homes from the tax base, effectively shifting the burden toward higher value homes and commercial and industrial property.

For example, a house worth $400,000 a year ago paid $5,926 in taxes in 2011. Now that house is worth more like $384,000 and will pay $6,430, an increase of 8.5 percent.

For another example, a median value house was worth $155,500 a year ago and paid $2,076 in taxes. Now that house is worth about $149,300. Under the new exclusion, it and has a taxed value of $125,500, and it stands to pay $2,151, an increase of only 3.6 percent.

Without that third factor -- if the state had left the system alone and continued to reimburse local governments for the credit low value homes were getting -- everybody's taxes in St. Paul would be going up between 4 and 5 percent, Samuel said.

The hardest hit? Small commercial properties, like ma and pa stores with a residence on the second floor, and larger apartment buildings, which are actually seeing their values increase, Samuel said. They could be seeing tax increases in the 16 or 17 percent range, he said.

For all the hand-wringing over the change the state made, it's interesting to note that, in St. Paul, at least, most of the tax increase for high-value homes is caused by the levy increase, not the new law.

After all the gnashing of teeth about changing formulas and property assessments, as usual, it really boils down to what local governments think they need to spend on the services they think residents want.

Samuel is a little ahead of the game with his numbers. Most of the other tax folks around the state are still waiting for school districts to come up with their preliminary levies for 2012. Once those come out in the next few days, we'll start to see how this pattern plays out elsewhere.

One footnote: Both Samuel and I remember 1994, what he refers to as "the year of 1,000 angry taxpayers," when St. Paul residents turned out in huge numbers at Central High School to make life difficult for local authorities.

Just for a little context, the tax increases that generated that passion were from 27 to 35 percent.

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'We've just built more than we can maintain'

Posted at 5:00 AM on October 5, 2011 by Dave Peters (10 Comments)
Filed under: Community Development, Local government finance

The dilemma local officials face this time of year is usually portrayed as a struggle between cutting services and raising taxes, a choice that gets harder each year as budgets get made and taxes get levied.

As these choices play out, you can see how Minnesota residents define themselves and the places they live in. Budgets reflect community personalities; some even talk about them as moral documents that lay out what a community ought to do with its common resources.

But precious few are coming to grips with the real challenge, says Chuck Marohn.

"We seem to be operating under the guise that there's going to be a recovery," he says.

Marohn is a Brainerd area engineer, planner, writer and voice in the wilderness crying for local governments to adapt to a new world. He is president of Strong Towns, a non-profit organization that advocates for changes in development patterns, and has compiled a booklet from the Curbside Chats he's been delivering to community leaders, a 57-page guide to why he thinks the local world will never be the same.

Chuck Marohn at a Ground Level panel discussion in Princeton last year.

Put simply, his message is that the growth communities have built on and counted on is not sustainable and, in fact, has generated a set of road, sewer and other built-in infrastructure costs that will become increasingly difficult to pay.

"We've just built more than we can maintain," he said Tuesday.

Marohn was part of a panel discussion Ground Level hosted last year in Princeton, focusing on the costs of growth in nearby Baldwin Township north of the Twin Cities.

His new report cites a number of examples showing long-term maintenance costs of housing development roads, industrial parks and sewer systems outweighing the ability of the beneficiaries to pay for them. He points to the small city of Backus, which needs to replace its 1960s era sewer system. The cost is $3.3 million, or $27,000 per household. The median income is the same $27,000.

The proposed Stillwater bridge (rendering above courtesy of MnDOT) is likewise designed to generate a poor return, he argues. If the planned bridge over the St. Croix River were considered a local improvement and served 16,000 vehicles a day, its $668 million cost would translate into a $6 toll for each trip, Marohn figures.

Faced with tighter budgets, cities all over Minnesota are deciding to delay street repairs and maintenance to save money, for example. That's not cutting; it's simply putting off expenses, in Marohn's mind.

What they should be doing, he thinks, is making choices about what local investments truly will pay an acceptable return in terms of tax revenue or benefits and sacrificing the rest. He says he doesn't see many communities making choices like returning roads to two-track paths.

A few nuggets from his new booklet:

The benefits of growth are immediate: additional tax base and tax revenue. The costs come after one life cycle, when infrastructure needs to be maintained.

Once a problem is identified, it is natural to want a clear solution. We are often asked what can be done to solve this problem? When people ask this question, they often mean: What is the solution that will allow me to continue to live essentially the way I do now without undergoing too much turmoil? The answer is: no such solution exists.

The standard economic development model at the local level in the United States relies on convincing an employer from outside the community to relocate to the community. We have established an immense system of subsidies, supports and programs to facilitate these transactions. Not only is this vastly inefficient, it almost never works as planned.

Marohn doesn't minimize the difficulty. He sympathizes with city managers who see a problem -- traffic congestion or crumbling sewers, say -- and don't like the expensive fix that consultants may suggest. But they see no alternative.

So what's his advice?

--First, stop building infrastructure projects that add to a community's long-term maintenance obligations.

--Add up the true long-term obligations a community has taken on to maintain its infrastructure.

--Then divide communities into high-amenity and low-amenity areas. Put the public investment into the former and cut investment in the latter. Maybe not every place needs a wide street.

--Shift emphasis from cars to pedestrians.

And if that leaves some communities or parts of communities withering, there might be no way to avoid it, Marohn thinks. "A lot of these areas will be used for salvage. Send a machine out and grind up the asphalt."

When it comes to economic development, Marohn likes two approaches.

One, pioneered after tough times in Littleton, Colo., is known as "economic gardening," helping existing small companies (10 to 100 employees) become growth engines.

A second calls for relying less and less on bringing products and services from elsewhere, finding ways as energy prices rise, to make things locally. Food is a prime example, he said.

"We're not going back to 2005."

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X = what? Cities grope for way to describe new property tax law

Posted at 11:20 AM on September 27, 2011 by Jennifer Vogel (1 Comments)
Filed under: Local government finance

"Complicated" is a word that comes up repeatedly these days when you talk with city managers about the new Homestead Market Value Exclusion.

This is what the Legislature approved last spring to replace the old Market Value Homestead Credit. Now, rather than the state reimbursing cities and counties for homesteaded property tax reductions, the taxable value of some homes will be reduced for taxing purposes, leaving local municipalities with a revenue gap.

Tim Pugmire did a good job of explaining the change earlier today on Morning Edition. You can read or listen to his report here. Ground Level's Dave Peters also has written a nice piece describing how the new law might play out across the state, which can be found here.

But even as cities grapple with the impacts of the new exclusion--even those that keep levies flat will end up raising taxes on some taxpayers--they also have to figure out how to explain the intricate system to the public. Aside from communicating the sheer math of it all, cities want citizens to understand the Legislature's role in rate increases. Conversely, lawmakers are working to place the onus on city leaders.

"I don't think the public is fully prepared," says Chad Adams, city manager for Albert Lea, which has proposed raising its total levy by 2 percent. "We know that even if we go down to zero, a number of our properties, particularly the commercial and industrial, will see a tax increase."

The city is hosting a meeting this evening for local business owners at 6:30 at the Freeborn County government center to provide details. Adams says he'll also spend some of October meeting with residents in the various city wards. "I think since it's so complicated, it's difficult to explain," he says. "We just want to make people aware that something will happen. Just enough will be helpful."

To assist its membership in similar endeavors, the League of Minnesota Cities is creating several documents that can be passed around or included with truth-in-taxation statements this fall. They will feature simple explanations and charts comparing the bottom line effects of the credit versus the exclusion for various home values.

The Minnesota Department of Revenue has issued its own document unraveling the impacts on homestead benefits. It helpfully explains the old credit as "X - Y = Z." According to the document, "If your initial tax was X, and your credit was Y, then the tax you had to pay was Z." By contrast, it explains, "Under the new law, an exclusion changes the initial tax amount (X), and with the credit gone, the new initial tax becomes the final tax (X = Z)."

If you're lost, you're not alone. Like everybody keeps saying, it's complicated.

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Minnesota's property tax change comes into focus -- kind of

Posted at 9:48 AM on September 23, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

Exactly what Minnesota lawmakers and the governor wrought this summer when they eliminated the market value homestead credit for property taxpayers is slowly coming into focus. You can now get a picture of what would have happened to property taxes in your community this year had this change been made a year ago.

The latest visual aid is a 900-plus page pdf file cranked out by House of Representatives tax analyst Steve Hinze that shows how widely varied the impact would have been around Minnesota had the credit been replaced a year ago with the state's new "exclusion."

Bottom line: Communities with lots of commercial and industrial property and high value homes would have escaped major shifts. But some homeowners in cities with lower value homes and little non-residential property (think outstate Minnesota) would have seen tax bills greater by 10 percent or more.

(Definition of terms for those just catching up to this dust-up: The old credit was applied on a sliding scale after your property tax was figured. The state eliminated it so it won't have to pay local governments the difference anymore. The new exclusion will, on a similar sliding scale, reduce for tax purposes the value of your home before the tax is figured. Let's just say not every consequence of this switcheroo was foreseen, and the change is headache-inducing for local officials.)

Using Hinze's model, you can look up every city in the state and see what would have happened to the 2011 tax on a low-value, average-value or high-value home and on commercial or industrial properties under the new program.

And if you did that, what would you conclude? Statewide, property taxes would have been $272 million greater. That's a 3.4 percent increase. The percentage hike would have been greatest outstate and it would have been slightly greater for residential property than for commerical-industrial property, the two largest classes of property.

Beyond that, you would see that the impact is all over the map.

In Ely, the average home would have barely noticed the difference. In Winona, the average home's tax would have been 6.9 percent higher; in New Ulm 5.1 percent higher; in Aitkin 11.8 percent higher. In Minneapolis, average homes would have been hit 1.6 percent harder. In St. Paul, average homes would have seen taxes 3.2 percent higher.

But even within a single city, the impact would have varied a lot as well. Take Caledonia in southeastern Minnesota. The average home value is $106,600 and its tax would have been only slightly higher with the market exclusion than it was with the credit -- 1.9 percent. But a Caledonia home assessed at $71,000 would have seen its tax lowered by 4.9 percent. A $213,000 home's tax would have been 8.2 percent higher.

Here are a couple more cities, just to show the varied impact of the change on differently valued property :

Austin
Home worth $69,600 ---- up 7.9 percent
Average home, $104,300 ---- up 9.5 percent
Home worth $208,700 ----up 11.0 percent
Commercial property worth $300,000 --- up 8.7 percent

Minneapolis
Home worth $160,300 ---- down 0.9 percent
Average home, $240,300 ---- up 1.6 percent
Home worth $480,600 ---- up 3.5 percent
Commercial property worth $300,000 ---- up 1.9 percent

Go to Hinze's data to find your city.

Hinze says the metro-outstate variation is due to the lower property values outstate and the fact that metro area property taxes lean more heavily on commercial and industrial property.

Keep in mind one huge caveat. This is a hypothetical exercise. It assumes that every city, school and county would have levied the same total tax on their residents and businesses with or without the new exclusion. Given their knowledge of their taxpayers' moods, that's an assumption that may or may not be valid. We're running through the real-life test of this as cities, schools and counties set their budgets in the coming months.

Republican legislators in particular are urging them to tighten their belts much as the state did. Many local officials are essentially saying they already have.

But that aside, the great variation in Hinze's data is still eye-opening. And it tells you why local officials are spending a lot of time figuring out how to present tax information this fall.

"Trying to explain it to individual taxpayers is going to be a problem," Chris Samuel in Ramsey County's property tax office told me Thursday.

Hear me discuss the property tax change with Tom Crann on All Things Considered:

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Cities have choices, all bad. Take Red Wing, for example

Posted at 8:25 AM on September 19, 2011 by Dave Peters (1 Comments)
Filed under: Local government finance

Minnesota cities have a bunch of choices this fall -- all of them bad, it seems.

That's clear in the regional meetings the League of Minnesota Cities has started. And it was clear in a conversation I had with Kay Kuhlmann last week.

Kuhlmann is the council administrator for the city of Red Wing, charged with putting together a budget everybody can agree on and live with during 2012. It's tough going.

Reductions in several kinds of state aid have left the city of 16,000 residents with a $1.8 million nut to crack in the next month or two. This is after 34 jobs have been cut in the past three years -- 18 percent of City Hall.

Raising property taxes is one choice and the city has notified the public that it could raise the overall levy on all taxpayers by 5 percent. That, Kuhlmann says, would bring in $600,000. She's suggested using a fund balance to cover another $200,000.

The rest of the choices involve cutting services Red Wing residents like.

Bicycle lane stripes? Who needs them, some might say. Fine. That's $20,000. What else?

Close the swimming pool? Sell the golf course? Consolidate law enforcement with the county? Contract for planning and engineering services?

The hard thing, Kuhlmann says, is that every idea has an enemy.

A change in ditch-clearing methods saved labor costs but is bringing a homeowner's threat of a lawsuit. Most people approve of selling the golf course but opponents are vocal and besides, how much can you get for a golf course these days?

"I've never seen anything like this," Kuhlmann said. "Every choice they have, they feel like is a bad choice. They get pushback on every idea. It's getting pretty ugly."

From Washington, D.C., to Red Wing, it seems, consensus is much talked about and difficult to arrive at.

Adding to the tension is the elimination of the state's market value homestead credit and the substitution of a homestead exclusion from the property base. That's going to have varying impacts on residents' and businesses' taxes, and details are still being calculated.

Ground Level chronicled the tough choices Red Wing had to make a year ago at budget time. It was a good microcosm then and that is still true.

The choices have only gotten harder.

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Cities worry about taxpayer wrath

Posted at 12:17 PM on September 16, 2011 by Jennifer Vogel (0 Comments)
Filed under: Local government finance

NEW ULM -- As the calendar heads into the fall budgeting season, you can feel the tax pressure building in communities all over Minnesota.

At a regional League of Minnesota Cities meeting here yesterday, for example, taxes were at the center of the hottest conversations. Cities are just setting their preliminary levies, which will be finalized in December in most cases, and property taxpayers are getting their first hints at what they'll be paying next year.

Given state cuts to local government aid to cities and the elimination of a state homeowner property tax credit, most cities seem to be grappling with how to raise property tax rates without sparking a revolt.

"We passed a zero percent increase in our levy," said New Prague Mayor Chuck Nickolay during a breakout session on problem solving. But the state replaced the homestead credit with an "exclusion" that reduces some homeowners' property values for the purpose of taxation. That means overall rates will likely go up, pushing more of the tax burden on to property owners that don't benefit from the exclusion. "On average our property tax rates will go up 6.5 percent," said Nickolay.

To prevent the rate hike, he said, the city would have had to lower its levy and cut $355,000 from the budget, painful, in light of significant cuts in recent years.

Because the state exclusion only applies to homesteaded homes valued up to around $400,000, the property tax increase may fall increasingly on the backs of business owners, said Lewiston city council member David Fischer during the same small-group session. "This will all be dumped on local businesses," he said. "The Legislature says they didn't raise taxes. Well, of course they did."

Still, because the state in recent years rarely came through with the promised homestead credit payments to cities, Nickolay said he wouldn't necessarily want the program back, despite an effort by some legislators to reinstate it.

During a full-group session called "Find Out What Really Happened in St. Paul," the League's intergovernmental relations director, Gary Carlson, addressed the elimination of the credit. He acknowledged that the League and other groups had "begrudgingly supported the repeal of the program because the Legislature wasn't paying for that program anyway. In 2010 and 2011, we were receiving 15 cents of every dollar of credit that should have been paid back to cities," he said. That wreaked havoc with local budgets.

"If the Legislature had only eliminated the (credit), only homeowners would have felt it," said Carlson. "But the Legislature thought that wasn't acceptable, so they gave the homeowners an exclusion. That's the piece of the equation that's puzzling to many people."

He said the impact of the exclusion would be felt differently by different communities, depending on their mix of housing and businesses. By Carlson's estimate, smaller communities with lots of lower-value houses could lose 20 or 30 percent of their tax base.

One attendee expressed concern that lowering the tax base could affect a city's ability to issue debt, since the base is part of the formula. In poorer cities, the impact could be dramatic. Carlson acknowledged this unintended consequence of the new law and said the League is working on a solution.

He explained that tax rate hikes could fall mostly on properties not covered by the exclusion--that is non-homesteaded properties. "This is going to push the taxes from those (homesteaded) homes to business property, apartments, industrial properties and certain agricultural properties."

That brought up the delicate matter of how to explain to taxpayers why their rates are increasing, even when the city levy might be staying the same or going up only slightly. Many city leaders at the meeting agreed the onus should fall on legislators, since they eliminated the homestead credit and imposed the exclusion. Legislators have argued that it's up to local leaders whether they raise property taxes. Carlson said the League would issue guidelines that city leaders can use when making explanations. He promised the materials by October.

"Legislators are going to be saying it's our fault," said Alexandria Mayor Dan Ness. "We can't let them do that."

Fischer raised his hand. "Where did the idea originate?" he asked.

"It was actually a technically-adept staff member who lobbies for counties who came up with the suggestion," answered Carlson. "The legislators put it in their tax bill. It was vetoed by governor. But in the end he signed it."

"I guess everybody is to blame," Carlson said.

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What's the water and sewer equivalent to gravel roads?

Posted at 8:30 AM on August 30, 2011 by Dave Peters (2 Comments)
Filed under: Baldwin Township, Local government finance, Water quality

As cities and counties grapple with shrinking pots of money and a desire not to raise taxes, one of the ideas you hear from time to time is to let paved roads go to gravel.

We've built a road and street infrastructure, the argument goes, that we cannot afford to maintain, so let's turn back the clock and drive on gravel roads. Ground Level's Brooke Walsh wrote about it last year in regard to exurban Baldwin Township.

As that post noted, it's not so easy to determine exactly whether you save money in the long run with gravel, but on some intuitive level, at least, it makes sense that you would.

So I wondered when I saw this story in the Duluth News Tribune about a documentary being shot to show how the water and sewer infrastructure is falling apart beneath Duluth.

If the water system gets too expensive to maintain (a la paved roads), what is the gravel road equivalent? Private wells in every backyard? A common well on every street? Bucket brigade organizations to fight fires?

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League to cities: Even if you keep levy flat, your tax rate will rise

Posted at 11:43 AM on August 19, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

The League of Minnesota Cities reiterated this morning that local government officials have a complicated set of tax and budget questions in front of them this fall.

And almost like a mantra, the League said repeatedly that even if local governments freeze the amount of property tax they levy next year, property tax rates will rise. Because of changes state leaders made this summer, to keep actual taxes flat, local governments will likely have to reduce their overall levies. By how much? It gets complex.

The organization held a webinar for city officials trying to figure out the impact of what the state did in its special legislative session this summer. Specifically, officials were talking about the replacement of the Market Value Homestead Credit with the Homestead Market Value Exclusion, trying to help cities prepare for what an official in Austin feared would be some "ugly" truth-in-taxation meetings this fall.

As I said earlier here on the Ground Level blog and with Tom Crann on All Things Considered, the shift eliminates a credit homesteaded homeowners have received on their property taxes, replacing it with a way of reducing home values (for tax purposes) to cushion the blow.

The change will shift the property tax burden to non-homestead property and even so may still leave home property taxes higher because overall property valuation will decline. The precise impact will vary from one community to the next, so it's hard to know the reaction from property owners until we see the truth-in-taxation notices that get mailed out in November.

The League's Rachel Walker told cities this morning it may be able to do some computer modeling to take into account the property mix in their communities and help predict the impact of the new law.

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Divining how Minnesotans want to fix things

Posted at 8:19 AM on August 18, 2011 by Dave Peters (0 Comments)
Filed under: Community Development, Local government finance

Minnesotans pretty clearly think the state's economy is headed in the wrong direction, and they are increasingly likely to say the vaunted quality of life here is getting worse.

And they certainly weren't happy with the outcome or the process state leaders used to address Minnesota's budget problems this year.

Those are some of the top line results of a Wilder Research poll commissioned this month by the Bush Foundation that my colleague Tom Scheck is reporting on today. But what to do about it? One thing the poll shows that some might find surprising is support for cutting the number of people who receive state services.

By now, it shouldn't be a surprise that most of Wilder's randomly selected 600 respondents favored a balanced approach to budget problems, wanting to find more revenue AND cut state services. Fifty-seven percent said this. That was pretty clear from the conversations Bush sponsored around the state last month, which I wrote about here on Ground Level.

But the new survey does offer some nuance around people's priorities.

Heavy majorities say government services should be more efficient and the tax system should be reformed (not necessarily by raising or lowering taxes) to make state revenue more stable. But those are easy things to say and probably wouldn't really solve the problem.

When you get to some of the hard choices Wilder put to people, almost half (45 percent) said reducing the number of people eligible for state services should be a major part of the state's budget solution.

That's interesting for two reasons. First, other questions in the poll established strong support for the notion that government services are critical to life here. (More than four out of five agree with that statement.) People seemed to be saying they want services available but the state has to cut the number of recipients.

And second, by comparison, only a third of the respondents said raising income or sales tax rates should be a major part of solving state budget woes.

There was slightly more support for finding other revenue by broadening the sales tax to food, clothing and Internet sales or by generating new gambling revenue. Thirty-eight percent thought that should be a major part of a budget solution.

You can find all the questions and responses here and Bush's report here.

Disclosure: MPR News is a partner with the Bush Foundation in its InCommons initiative to find means of helping Minnesotans make connections and deal with challenges.

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Market value credit disappearance: Property tax sleeper

Posted at 12:16 PM on August 12, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

UPDATE: Here's my conversation with All Things Considered host Tom Crann about the change in how the state cuts you a property tax break.

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Keep an ear out for what local officials tell you this fall about next year's property taxes.

They may be providing the absolute truth that they are holding your city or school or county levy flat, but you could still see property taxes rise. It could be headache-inducing both for them and for you.

When Gov. Mark Dayton and legislative leaders finally struck a budget deal last month, lots of attention was paid to what is called Local Government Aid (LGA). The final budget reduced by about $200 million what the state had promised cities to help with their local budgets.

Another change got less attention, partly because it's complicated, but the elimination of the Market Value Homestead Credit could have an even bigger impact on your property taxes. Under the old system, local officials set their total property tax levy and then used a sliding-scale formula to reduce the tax on your house if you were a homesteader. The state then reimbursed them for that reduction.

There was a lot not to like about that system. It kept local officials off balance because determining the amount of state reimbursement took many months into the budget year and, moreover, the state in recent years developed the habit of cutting back on that reimbursement. It did so again last month to the tune of $104 million.

So the program was eliminated and replaced with what is called the Homestead Market Value Exclusion. Instead of figuring your tax and then giving you a credit, the new system effectively "lowers" the value of your home before figuring your tax.

In theory, that's an effort to hold you harmless even as the state pulls its reimbursement. In practice? The impact on your tax will vary, and right now there's a lot of head-scratching going on.

The main thing to realize is that by reducing your property's value before figuring out taxes, local officials suddenly have a lower tax base to deal with. That means even if the total tax levy is held flat, the tax rate will rise.

And that means, first, a greater portion of the total market value in a place will be held by businesses and other non-homeowners. So the property tax burden will shift toward them, i.e. their taxes will rise.

But, second, even for homeowners, if the total tax levy is flat, taxes could rise. In fact, on AVERAGE, they WOULD rise. But the extent to which that happens will vary from place to place, depending on the mix of property classes where you live and what your tax rates are now.

Homeowner tax increases are likelier in low-tax areas and in jurisdictions that are heavily residential, says Steve Hinze, tax analyst for the House of Representatives, who wrote a short analysis of the new rules this week. Hinze says that's because the new law's effect on the tax base is greater in those areas than it will be in, say, a community with a big power plant paying lots of property taxes.

"A zero levy increase is actually a tax increase," Hinze said.

He worked out an example of a $200,000 home, using statewide average tax rates and the assumption that everybody will levy the same total property tax amount next year as this year. He shows property taxes on that house rising from $1,924 to $2,005. That's a 4 percent tax hike on a flat levy.

If local officials are bound and determined to hold taxes (as opposed to the total levy) flat, they're going to have lower the total levy by the amount of reimbursement they've been getting under the old system.

This, of course, stands to reason. Less money coming from elsewhere means either local taxpayers have to pay more or local officials have to spend less.

Yet even that's not a clean formula, Hinze said. The ultimate effect will vary from place to place and "the effects are hard to imagine."

The League of Minnesota Cities is fielding questions and planning a webinar next Friday for city officials to work through the change, which adds to the much more publicized effect of LGA cuts, says league policy analysis manager Rachel Walker. Those folks are already getting their budgets in line for 2012. (The process will be a continuation of the squeeze they've felt for years. For more on the pressures and solutions they've found, see Ground Level's Cities in Crisis coverage.)

So take a look at Hinze's example. You should be able to plug in your home's value and get a rough feel for what lies ahead. Then look at your tax bill to remember your current tax rate. Then, as local officials wrestle even harder than they have in the past with budgets, taxes and service cuts, listen closely.

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Balancing the state budget in 3 1/2 hours. Almost.

Posted at 12:01 AM on July 23, 2011 by Dave Peters (0 Comments)
Filed under: Economic Development, Local government finance

What happens when you ask 30 people to sit down in Rochester for 3 1/2 hours and solve the state's seemingly intractable budget problems?

It turns out they can't entirely do it either (which is oddly reassuring in a way), but they do take a good stab at it, mostly arriving at an approach that doesn't use one-time fixes like shifting K-12 money and does include revenue increases along with spending cuts.

They express a swell of interest in broadening Minnesota's consumption taxes, for example, considering a tax on parts of the service economy that has grown outside the tax system -- lawyer's fees, perhaps, or accountant services.

And, as interesting as anything else, Tea Party member Cindy Maves and United Way official Dave Beal sit down at the end to talk about their differences.

The discussion Thursday evening at the Ramada Hotel in Rochester was the last of three that the Bush Foundation engineered this week just as the state government shutdown was ending and the dust was clearing from the budget shootout between DFL Gov. Mark Dayton and Republican legislative leaders.

For the three -- in Grand Rapids, Bloomington and Rochester -- a total of 130 participants were chosen to represent a cross section of political philosophies. Broken into small groups of a half dozen or so, they were told to come to consensus on where they would have found $5 billion to solve the problem -- a "citizens' solution." The goal was to treat the budget as more than just a math problem but to consider it an expression of philosophical principles that perhaps people can agree on.

In general, people preferred an approach that considered spending cuts, revenue increases and redesigning the way the state delivers some services. Tiny minorities said they preferred all-cuts or all-revenue increase solutions. One-time fixes were frowned upon. And trying some longer term structural ideas that Dayton and legislators declined to do, participants offered up a number of ideas: broadening the sales tax, merging higher education systems, eliminating mortgage interest deductions, cutting state employee numbers by 5 percent.

In Rochester on Thursday, people started out all over the map. Some shifted to come to agreement; some didn't. As the small groups soldiered on, I heard various mutterings, exclamations and complaints.

"$5 billion? Really?"

"What about the Internet sales tax?"

"I'm kicking the can down the road."

"I don't believe we have to do this. We have more revenue than we did last year."

"Everybody's going to have to share some pain."

"I lived in Indiana. That's where you nickel and dime services."

"Why does every county have to have its own jail?"

"Face to face at this table, it's a lot harder to be an a-----e."

"We have a spending problem, not a revenue problem."

"Our big idea was the sales tax," said participant Bradley Smoley. "We did balance it and we all like each other."

Former revenue commissioner John James had perhaps prompted the notion early in the evening when he noted that one reason the state has a structural problem is that the economy has grown in directions that bypass the tax system -- the service sector, for example.

At the table including Maves and Beal, there was no last-minute deal as the deadline passed. Maves was adamant that government should provide basic services and no more. Beal and others wanted to raise more revenue. Both said their differences were such that they could never reach consensus -- decision by means of a vote, yes, but consensus, no.

"We learned it's possible to reach a civil impasse," Beal said.

In the end, Maves said she came to appreciate better other people's interest in the sales tax. "I saw people analyze it differently."

For Beal's part, having the difficult conversation was a learning experience. "It's possible to have these conversations, these kinds of disagreements without calling each other liars or evil or godless."

As most of the crowd left the Ramada, Maves and Beal were still sitting, talking.

Not everyone was convinced the effort was really a level playing field. One participant, former GOP Rep. Fran Bradley, said he thought the exercise was predisposed to come up with a solution that would use a variety of approaches that included revenue, although even he said there is value in considering a consumption tax of some sort. Best part of the evening for him: "People could see this is complicated."

While the effort may not have resulted in a single "citizens solution," it did come closer to addressing long-term structural problems than the state's leaders did. Perhaps it can inform the discussion when the math problem comes back in two years.

(Disclosure: MPR News is a partner with Bush in its InCommons initiative to find means of helping Minnesotans make connections and deal with challenges.)

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Some cities more prepared than others for LGA cuts

Posted at 12:28 PM on July 20, 2011 by Jennifer Vogel (0 Comments)
Filed under: Local government finance

UPDATED THIS NOON AS MORE CITY OFFICIALS WEIGHED IN. IF YOU'RE COMING BACK TO THIS POST, SCROLL DOWN PLEASE.

As part of the flurry of budget bills the Legislature passed and Gov. Mark Dayton signed, most cities saw their local government aid (LGA) funding for the next two years reduced to 2010 levels. Cities had been promised an increase for 2011 and it seemed possible they might actually receive larger amounts as the first of two yearly checks was supposed to be issued today.

But those checks were delayed until July 27th (the second round goes out in December) and the amounts will match those originally proposed in a GOP bill Dayton vetoed earlier this year.

The 2010 amounts also fell short of what was originally promised, so some cities saw the writing on the wall and prepared for cuts. "We budgeted at 2010 levels with the assumption that that was what we were going to get," said John Chattin, city manager for Bemidji, which has raised property taxes and cut 15 percent of its workforce over the past five years. "You can't look at a $5 billion deficit and think you are not going to be part of the solution."

"For the third year running we're not looking at any increases in operational budget," Chattin added. "As gas prices go up and other prices go up, we tighten the belt a little more. As a city staff, we're grateful we still come to work anymore. We're surviving as well as we can."

Others, after weathering significant budget reductions in recent years, crossed their fingers and had planned for the bigger numbers.

Bradley Swenson, city administrator for Wadena, which will see its LGA reduced from the promised $1.3 million to $1.2 million, said, "We budgeted for the amount they promised us." The fact that 2011 is more than halfway over will make absorbing the cuts more difficult, he adds. "The sad part is, we planned on it and we're seven months into the year and now we have five months of budget left to try to fix it."

To fill the gap, Swenson says Wadena may hold off on planned capital expenditures -- which are normally scheduled for late in the year--or tap into the city's reserves. "We will have to look at special projects we had budgeted for," he says. "Maybe we'll delay them or not do them."

"This will impact us somewhat significantly," says Chad Adams, city manager for Albert Lea, which will receive $4.7 million instead of the $5.3 million the state said it would get. Since the city is in the black for now for this year, he says, "There is a chance we may be able to get through 2011 without significant cuts."

But 2012 could be another story. "We will have to make some tough decisions," says Adams. "We'll look at service cuts and raising fees." He added, "We had safeguarded ourselves by a few hundred thousand dollars, but not by a million dollars."

UPDATES BELOW

Brad Martens, the city administrator for Winsted, which was scheduled to receive $667,000 in LGA funding but will now receive $548,000, says his city had planned on the higher amount, out of a mixture of hope and desperation. "Because of previous cuts, we've been behind on capital improvements, debt pay-down, and road maintenance."

The city, he says, has already made some improvements that it will now have to find new ways to pay for. "That's the problem with cutting in July," says Martens. "Coming up with $119,000 for the remainder of the year will be difficult for the city of Winsted."

He's not sure where the money will come from, though tapping into funds remaining from the construction of a new city hall in 2008 might be an option. That one-time fix won't help 2012, though, when Winsted citizens could see increased fees and reduced services.

"It's tough," says Martens. "We're currently trying to maintain snow removal. Do we reduce that? Do we reduce the hours our police are on the job? We have a beautiful downtown on the lake that needs redevelopment. This will hinder that too. This is going to be tough for our future."

According to Duluth mayor Don Ness, his city was prepared for some reduction in its LGA allotment, which went from an expected $31 million to $27 million. But add to that the elimination of almost $1.2 million in market value homestead credit reimbursements, money that offsets taxes on homeowners, and Ness says, "The total impact is a $4.7 million cut."

While that's better than the zeroing out of LGA funding for Duluth GOP legislators had proposed, the total cuts will be hard to absorb, says Ness. Duluth has already reduced its general fund budget by 12 percent in recent years through staff cuts and reductions in retiree benefits. "We've been budgeting conservatively and trying to set money aside by holding positions open but we still are going to have about a $2 million budget gap to address," he says.

Ness isn't sure how the city will make ends meet, but, he says, "I think everything has to be on the table at this point. We have been holding a large number of positions open but that is not going to get us the whole way. We will be looking at having to make some even deeper cuts and the result is going to be fewer services to Duluthians."

"We're scrambling at this point," Ness adds. "Unfortunately this has become a pattern with the state of Minnesota in which it is the second half of our fiscal year when the state announces these massive million dollar cuts. And we're forced to react."

And Ness had some thoughts for the state leaders who came up with the latest deal:

"We've made a large number of very difficult and structural changes that have been painful to the citizens of Duluth. It's frustrating when the state of Minnesota seems to be unwilling to make those same types of structural and sustainable changes to its budget. We all recognize that despite the pain that is coming from this so-called deal, the state of Minnesota will be facing the exact same situation with their next budget. But they won't have the tobacco dollars to help them out next time. Nothing from our perspective has been solved."

For more on the way Minnesota cities have been grappling with tight budgets, see our Ground Level topic page "Cities in Crisis."

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Small cities anticipate LGA funding delay

Posted at 2:55 PM on July 19, 2011 by Jennifer Vogel (1 Comments)
Filed under: Local government finance, Todd County

Just as the Legislature is about to begin a special session to settle the state's budget, the revenue department has issued a release stating that Local Government Aid (LGA) checks--scheduled to be issued tomorrow--will be delayed until at least July 27.

I did a quick check of some small and medium-sized cities across the state, and it seems that most can handle the delay. Says Steve Peterson, mayor of Virginia, which relies on LGA for about a third of its $12 million budget, "It won't affect us. It's only a week. We can get by with that. As long as it's not any longer than that."

Gary Carlson of the League of Minnesota Cities did note that some cities have debt payments due Aug.1 and could be relying on the state checks for those.

Perhaps more unsettling for some cities, the Department of Revenue release suggests that the payments "will be revised to reflect the new 2011 levels." The LGA payment amounts that will be approved by the Legislature and governor are unknown at this point.

Without having seen details, the League of Minnesota Cities is anticipating that the amounts could reflect those included in a GOP bill vetoed by Governor Dayton earlier this year. That would mean most cities would receive less than they were promised for 2011, likely the same as they received in 2010.

When cities set their 2011 budgets last December, they had as a guide state-determined LGA "allotments" to be paid in two installments -- July 20 and Dec. 26. Those 2011 allotments were the same as the amount originally scheduled for 2010, but the state ultimately cut 2010 payments back.

All the uncertainty has some small city mayors and administrators hoping for the best but preparing for the worst.

Don Rasmussen, mayor of Long Prairie, which could see its 2011 allotment cut from $845,000 to $736,000, says his city can weather what comes. "We've been pretty frugal with what's going on here and we've been more that way in the last couple of years with all the uncertainty," he says. "We have reserves."

"I'm always optimistic, adds Rasmussen, who is taking a wait and see attitude. "You have to worry about it, but if you sit back and let things you don't know about for sure get to you, you are hurting."

Mark Erickson, the city administrator for Winthrop--which could see its LGA amount go from $454,000 to $394,000--is less sanguine. He says his city would dip into capital reserves or maybe even raise property taxes.

"LGA represents almost half our budget," says Erickson, adding that Winthrop has already cut its city staff from eight people to five. "We have no place else to cut. They cut LGA and we raise property taxes. It's a pass along tax. It's not solving the financial problems. It's just passing the buck."

For background on the financial dilemmas Minnesota cities have been facing for some years, see our Ground Level project, "Cities in Crisis."

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. . . Gone

Posted at 10:01 AM on June 22, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

It's official. Just to catch up from Tuesday's post, Tenney voters decided 2 to 1 to dissolve the city, said Wilkin County Auditor Wayne Bezenek, who counted the votes this morning.

"It took longer to open the envelopes than to count the votes," Bezenek said.

So, on the first day of winter -- six months after the election -- the city will become the third Minnesota city to dissolve itself under the 1949 law governing such matters. The previous dissolutions were Island View in far northern Minnesota and Ronneby near St. Cloud.

The residents of Tenney will become residents of Campbell Township but virtually all services were already being supplied by the county, Bezenek said. The only unresolved issue might be who will manage the couple of streetlights Tenney has been paying for. They could become the private property of residents.

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Tenney MN? Going, going . . .

Posted at 3:42 PM on June 21, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

The people of Tenney have spoken, but we won't know until this evening what they said.

The question before them was whether to dissolve as a city. I wrote about this in March after the 2010 census data came out, placing Tenney and Funkley in a dead heat for smallest city in Minnesota.

Each has five people, but the good folks of Tenney have been working to do away with their city government and revert to rule of the surrounding township, and they voted by mail today.

Wilkin County Auditor Wayne Bezenek sent out five ballots; the postal service sent two back as undeliverable. That leaves three people making the decision, which won't be determined for a few hours when the ballots are opened, he said.

"We know it won't be a tie," was about as much of a prediction as Bezenek would make just now.

This generated a little conversation on Twitter this afternoon when someone wondered what should happen to Tenney's local government aid check from the state next month if voters decide to go out of business. Bezenek said even if voters call it quits, the city stays in business until year's end.

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The check would be in the mail, but . . .

Posted at 4:26 PM on June 2, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

City officials have been on tenterhooks in Minnesota for a long time, wondering whether they will receive the state aid alloted to them under formulas for Local Government Aid and the Market Value Homestead Credit.

The budget stalemate between the governor and legislators has prolonged the suspense, and we're nearing the July 20 date checks are supposed to be sent out.

So the League of Minnesota Cities offers this cold comfort.

The amounts certified last year don't require any further action, so if nobody does anything, cities should get the amounts they were told they would get. On the other hand, the League notes, if state government shuts down, there may not be anyone to mail out the checks.

Perhaps automatic deposit would work.

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Glimmers of change emerge from St. James conversations

Posted at 8:30 AM on May 5, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

The message came accompanied with sandwiches, coffee, pie, ice cream and cookies the past couple days, but it was pretty blunt to 80 some people in St. James, Minn.

"The current way of doing things is not sustainable. Changes will need to happen to services, how they are provided and how to pay for them."

That was Rachel Walker of the League of Minnesota Cities on Tuesday, introducing residents to a conversation about the financial predicament local governments are in as economy and demgraphics change. Read my post from Tuesday for more details on St. James' situation specifically. With support from the Bush Foundation, the League is holding conversations in about 10 cities around the state in the coming months, hoping to emerge with ideas, both for cities to act on and for state policy makers to consider.

The League expects to produce a report of its findings in November, but, having sat through six hours of meetings the past two days, I think the value of this exercise lies in the fact that residents got engaged. There are 80 people in St. James now armed with a better understanding of the challenge. No, they didn't come up with a solution for St. James, but maybe they will.

So when you put it to people the way Walker did, how did the 4,600-resident southern Minnesota city respond?

It wasn't lost on this politically conservative community that, like everyone else, cities have to live within their means. And it was clear people value the police, fire, street, parks, library, transportation and other services they get.

But perhaps some glimmers of new approaches emerged. You could see the wheels turning for people as they thought about the differences between paying fees for using the swimming pool and supporting it entirely with taxes.

--In an adult literacy class, a young man suggested that all of outstate Minnesota communities pool resources and share among themselves but not the Twin Cities.

--Seniors said the rush to provide efficient services online maybe wasn't such a good idea.

--A young businessman at a service club gathering said he thinks it's inevitable to accept new standards. If the roads are full of potholes and you have to drive more slowly, well, turn off the cell phone and pay attention. It's less convenient but it's reality, he seemed to say.

--Citywide sales taxes drew approval from some, some of whom thought it would encourage residents to shop at home to support local services with their tax dollars.

--To others, this new financial reality is more a call to action to "pay" in ways other than with taxes.

Sue Harris, a community education director for a number of schools, called for greater engagement by more people, showing up for meetings, volunteering, helping decide. "If we do it collaboratively, it costs me less."

How to encourage that mix of joining in and leading is the really hard question, but sometimes just holding the conversation is the engagement that counts.

After more than an hour of questions about library services, fire protection, transportation and the like at the Prairie View senior apartments, resident Bethel Anderson said, "I think we take all these things for granted. I've never thought about how they're financed."

She's one more informed person when city officials have to make tough decisions.

Sometimes that kind of conversation and engagement is enough, at least for a start. The League, with facilitating help from the University of Minnesota extension's Center for Community Vitality, is holding a lot more of these over the spring and summer. The dates aren't nailed down but the list of cities is here.

The financial pressure isn't going away. By the time the League is through, the Legislature and governor will have decided how big a whack to take at the state aid check cities are expecting in July. While city officials are holding their breath for that decision, they might want to tune in to this conversation as well and figure out ways to hold similar local versions of it.

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Scouring the minds of St. James residents. What should cities do?

Posted at 8:15 AM on May 3, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

In the southern Minnesota town of St. James, city officials have:

--Ended overtime pay for city workers and frozen wage rates.
--Cut a mechanic's job.
--Eliminated a job in the street department.
--Reduced summer hires from three to zero.
--Turned off half the streetlights.
--Canceled National Night Out gatherings.
--Raised the deductible on employee medical insurance from $300 to $3,000.
--Transferred money from the town's airport into the general fund.
--Started charging people money when the police unlock their cars.
--Held residents' property tax burden steady.

Mayor Gary Sturm rattles off the list rapid fire as he heads out the door to show a home for a Mayberry Realty customer.

"We've done everything we can without shortening the 40-hour work week or cutting the police department."

So now what? St. James, a city of 4,600 and the seat of Watonwon County, gets a little over half its $2.9 million general fund budget from the state of Minnesota. That's a higher proportion than many, so when the state cuts local government aid to cities and contemplates cutting some more, a place like St. James winds up with a front row seat for the conversation over how residents of a city redefine what they want and how to pay for it.

"I'm holding my breath to see what the state does," says city administrator Joe McCabe.

Which is why the town provides a good kickoff this week for a series of hard conversations the League of Minnesota Cities is holding in 10 cities this spring and summer.

Today and Wednesday, the league is talking with small groups of business people, senior citizens, Latinos and others in St. James to get a deeper understanding of what people want from their cities, how those services should be delivered and, of course, how to pay for them. The league is looking for new thoughts, intentionally asking city officials like Sturm and McCabe to stay away and encouraging "opinions, insights and ideas" from more than the normal leaders, said Mary-Margaret Zindren, who is organizing the effort for the league.

While St. James might discover some things about itself and what its residents want this week, the main goal for the league is to come up with a statewide sense that can inform residents all over Minnesota.

"What people in St. James say may be very different from what people in Moorhead say," Zindren said.

It will be interesting to see whether people come up with new ways to save money in St. James. And McCabe is hoping the conversations are a chance to educate residents of about what the city does. But it may be most important to see whether the conversation starts to evolve into an acceptance of a "new normal," in which the definition of what a city is and what people want to do for themselves collectively starts to change.

Chuck Marohn is too relentlessly critical of the status quo for some people but in this post Monday he makes a plea worth reading for new approaches and innovation.

For a good backgrounder on the situation Minnesota cities face, see our Ground Level "Cities in Crisis" topic page.

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One last plea for long-term thinking on the state budget

Posted at 12:42 PM on April 25, 2011 by Dave Peters (0 Comments)
Filed under: Community Development, Local government finance

If we were smart about it, the balancing act at the Capitol in the coming month shouldn't be so much between cutting spending and raising taxes as it should be between short-term action and long-term.

That was the message on MPR News' Midday this morning, which felt like one last plea to the governor and Legislature before they wrap up this year: Please do something long term. Don't just solve a budget problem that will come right back in two years.

On with Gary Eichten were Pam Wheelock, vice president of the Bush Foundation; Stacy Becker, who directed the Citizens League's Common Cents project on the state budget; and Michael Caputo of MPR News' Insight Now.

The conversation was an effort to inject into the state budget debate the results of the Common Cents meetings around the state last fall and winter, looking for ways residents might address the state's budget woes. The strong conclusion from the project, which was conducted by the Citizens League in partnership with the Bush Foundation, was to make long-term changes that get the state where people want it to go, even if that involves short-term sacrifice.

But the fear, apparent at those meetings and again at Caputo's online conversations, is that "when decisions get made, the long term goes out the door," as Caputo put it on the air.

One of the reasons for Bush's interest was to test whether people are ready for significant change, said Wheelock, who's been around Minnesota's budget question for years. They are, she said.

Even people who are willing to see taxes rise want to know whether "If you raise taxes this year do you have a plan for not doing it again next year and the next year?" Becker noted.

Wheelock made a couple analytical points worth highlighting here. One was that a fundamental part of the long-term debate needs to be over what activities and services do we want to provide that are not based on individuals' ability to pay for them? In other words, the rich will always get the best health care, but what level do we provide for the poor?

And the other was the advice to state officials to set policy and then give flexibility and authority to those in local communities to make decisions, combining a sense of certainty with flexibility.

Listen to the hour-long conversation here. Get a sense from MPR News' Insight Now on how people have been weighing in in recent weeks.

Here is Ground Level's March post on the Citizen League meetings.

In a related matter -- how communities are looking at what city government should be doing -- the League of Minnesota Cities is planning a set of meetings in 10 cities around the state to let residents examine what they want their cities to do.

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10 cities about to ask themselves 'What next?'

Posted at 3:38 PM on April 13, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

If you think it's time for Minnesota residents to have a serious conversation about what their cities can afford to do, tune into these 10 places:

Austin
Bemidji
Duluth
Eden Prairie
Eveleth
Hastings
Moorhead
Northfield
St. James
St. Paul

Throughout spring and summer, the League of Minnesota Cities is going to host four meetings in each city, drilling into the services cities deliver, how well they provide them and how to pay for them. It's a good list, big, middle and small; urban, suburban and rural, North Woods and southern farm country.

It's a great opportunity for residents to come to grips with the economic and political realities that have been hitting their local governments. Ground Level has chronicled on our Cities in Crisis topic page how all over the state, cities are turning off streetlights, cutting library hours, looking for money-saving collaborations and trying to be more innovative.

And of course this is happening with the backdrop of uncertainty over the state aid that most cities receive.

Some places seem to be dealing with the threats more piecemeal than others, but it's boiling down to a conversation about what is it that a city's residents want to do for themselves over the long haul. As I've said before, I think of this as the gravel road conversation. Is pavement too expensive for us?

Starting in May, the League is going to offer people the chance to dig deep into this. It sounds like lots of people are ready for it -- 39 cities applied for the chance to have the League come to them. Here's the League's announcement. Stay tuned for dates.

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What's your fair share?

Posted at 10:22 AM on April 8, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

My colleague Michael Caputo has another live online forum going today at noon, bringing in former legislative heavyweights to talk about fair share.

This is another offshoot of MPR News' effort to amplify the conversations the Citizens League held around the state last fall and winter to give residents a chance to talk about Minnesota's long-term budget problems.

All over the state, communities are trying to figure out new ways to do things, to get more efficient, to do without, decisions driven partly by budget pressures and partly by different political winds blowing.

Many in those conversations expressed a willingness to shoulder more of a burden of sacrifice if they were convinced that burden was applied fairly. Since that means different things to different people, the Insight Now conversation should be enlightening. What is fair and what's your share?

Here's an introduction to the conversation.

Click here to join in.

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If counties have a better idea, will the state let them try it?

Posted at 8:00 AM on March 31, 2011 by Dave Peters (0 Comments)
Filed under: Community Development, Local government finance, Todd County

In the drive to make local government more efficient and innovative in changing times, Minnesota's counties are about to ask the state to loosen the reins.

Give us the right, they're saying, to do things not prohibited in the law instead of just those things the law directs us to do. And for those things that state rules prevent, give us a flexible, accountable way to experiment without a long, cumbersome approval process.

Case in point: Todd and Crow Wing counties in central Minnesota, like most every county, know that a certain group of residents use a great variety of county-provided help, from social services to health care to corrections. They also know that communication among those government operations can be minimal, that applications for help duplicate each other and that rules prevent smart social workers from doing things they can plainly see would help people and save money.

So together they are trying to develop a project that would break down some of the barriers. Nathan Burkett, administrator for Todd County, gave this example.

A low income mother with a part-time job receives both medical assistance for health care and help from the county to pay for day care. Her employer offers her a full-time job. But if she takes it, her income will make her ineligible for medical assistance and for the day care subsidy and her pay increase will vanish. So why not give a county social worker the power to make a decision: take the woman off medical assistance and save the government some money, but let her keep the day care subsidy to make it worth her while to become fully employed?

Maybe it's a good idea and maybe it's not. Maybe it saves money but maybe it invites a greater likelihood of bad decisions. The point here is that to try it out requires the counties to go through a cumbersome and time-consuming state waiver process in a system whose bias is to say no, Burkett says.

That's what the Association of Minnesota Counties wants to change with a bill it expects to introduce later in April.

Minnesota doesn't rank very highly in measures of government innovation, says Ryan O'Connor, policy analyst for the association. "We're trying to encourage innovation on an issue by issue basis," letting local officials try to solve whatever transportation, social service or health care problems they think they can.

The proposal the association wants to float would introduce what is known as the Cooley doctrine -- letting counties do things not specifically prohibited by law instead of letting them do only what the law dictates (that would be Dillon's rule). It also wants to create a process that counties could use to set up a business plan for new service ventures, identify the desired outcomes and report to the state on the results.

Instead, for example, of making a county have a detox facility, O'Connor said, why not let it experiment with other ways to accomplish what really is the objective -- getting drunk adults off the street? Instead of taking eight years to get approval for redesigning and then building a highway, why not cut the time and cost with a design-build experiment? In return for greater flexibility in such cases, the counties would be expected to provide accountability to the state when the data becomes available.

So far, the counties aren't getting hammered with cuts to their state aid in the same way cities are in legislative discussion. But they do deliver a lot of services that likely will see other cuts in state money. So it will be interesting to see whether the state will grant some greater flexibility as the money shrinks.

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Mankato recruits volunteer cops

Posted at 11:17 AM on March 28, 2011 by Jennifer Vogel (0 Comments)
Filed under: Local government finance, Public safety

In the face of cuts to local government aid and other funding, many cities are turning to volunteers to perform work that city employees used to do. In Mankato, the trend extends even to using unpaid licensed police officers.

One thing: If you're considering applying, you must have your own gun.

This isn't a new program in Mankato, says Todd Miller, the city's director of public safety, but it's been stepped up dramatically in recent months. He says Mankato has a reserve of non-sworn officers who patrol parks and parking ramps and help with traffic control during events. It also has a "part-time police officer unit," as Miller calls it. "They become licensed and sworn and can carry guns and make arrests. We utilize them for some of the same things as the reserves, but they can ride in a patrol with other sworn officers."

When Miller started as public safety director last April, he brought with him a philosophy he calls, "community-oriented governance," which involves "more outreach and more use of volunteers." That's especially important, he says, since there have been so many police officer and firefighter positions cut in recent years. "We have 30 volunteer firefighters," says Miller. "We want to increase that to 45. We have approximately 12 reserve police officers and 12 part time police officers. We want to double that if not more to make better use of the community."

He says volunteer cops are given a uniform but they have to provide their own special equipment, like Kevlar gloves. And they have to bring their own guns, which must be of a respectable make and 9 mm or larger caliber.

As for who is willing to do police work for free, Miller says, "Mankato has a great resource here. We have four institutes of higher education and a number of them have law enforcement or public safety classes. Some volunteers are hoping to get a leg up in their careers. It's tough to get a job. This is how they can get some experience." Others, he says, might be long-time residents who simply want to help out.

There are limits, of course, to how a city can use unpaid officers. "Some are limited in the time they can put in," says Miller. "That's the reason to have a large number. You're never going to get them all at the same time." He says volunteers haven't been used to fill regular shifts yet. "But that's a possibility in the future, too. If someone is sick, can we call them in? Sure, as long as we train and prepare them, they should have the same skills."

"The new normal is here and we are getting tired of hearing we have to do more with less," says Miller. "We're going to do the best we can with what we have."

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Jobs are coming, but there is bad news

Posted at 2:28 PM on March 22, 2011 by Jennifer Vogel (1 Comments)
Filed under: Aging, Health care, Local government finance, Young people

"We have entered the age of entitlements in Minnesota and the United States and in some respects the entire world," said state demographer Tom Gillaspy during a lunch talk on Tuesday at Minnesota Public Radio. "It's an unprecedented time."

Gillaspy was referring to an ominous trend reflected in the latest census data: The state is experiencing a dramatic increase in the number of people who are over 65 and drawing Social Security and other benefits and a decrease in the number of young people entering the workforce to pay for those benefits.

"By the end of the decade, for the first time, we'll have more people over 65 than in K-12 education," Gillaspy said.

The implications are far-reaching. The age imbalance will make it harder to rectify the state budget in the future.

"This decade, it's not going to be nursing homes that are driving the whole thing," Gillaspy said. "That's a couple of decades out. This decade the big issue will be the labor force. It's an odd thing to talk about when unemployment is high."

He predicted, quite ominously, that, "things are about to start popping" as more older people retire and fewer younger people are available to take their jobs.

"By the end of the decade, workforce growth will be essentially nil," said Gillaspy, who noted that the change won't be gradual. "We'll see a big jump in retirement next year and strong increases for a decade after that."

He said that although employment forecasts talk in terms of job growth, for the foreseeable future, employment will center on filling vacancies not creating new jobs.

"That forecast isn't that great," Gillaspy said. "People look at that and say 'There aren't many opportunities.' But when the flood of people retires, we're going to have lots of replacement openings, across every occupation. As far as I know, those will, for the first time ever, exceed the number of new job openings."

That may sound like hopeful news to those who are out of work. But without huge, coinciding increases in productivity from automation and other innovations -- which is possible -- the state and the nation will continually be handed social services bills it can't afford to pay, he said.

That could affect the retirement age, pensions, and whether retirees receive health care benefits.

"Chronic government deficits aren't going to end anytime soon," Gillaspy said. "Unless we can deal with the underlying cause, we'll be back two years later with another $5 billion deficit. And two years later, until there is virtually nothing left except things like medical assistance. We have to see some changes. This is a non-sustainable situation."

On a hopeful note, Gillaspy said that with public investment in education, infrastructure and research, we may be able to invent our way out of the problem.

"These are exciting times," he said. "This will be a more exciting decade I think than any in history. This is a time for heroes. This is a time for leaders and exceptional things. It's not a time for business as usual."

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Anoka County innovates, saves child protection money

Posted at 10:59 AM on March 9, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

In 2008, Anoka County spent $5.3 million to place 607 kids outside their families because of family dysfunctions or safety concerns.

Last year, the county spent only $4.2 million because it had to place only 465 kids outside their homes.

What made the difference? A new philosophy of child protection centered less on the court system and more on the family and the safety of children, county officials will tell you. The resulting project was one of 13 winners in this year's local government innovation competition that the University of Minnesota's Humphrey Institute sponsors.

There were others -- a food drive in Eagan, a collaboration between Maplewood and North St. Paul to share park and recreation services, an innovative way Excelsior found to add downtown parking without using city money, for example. You can see them here.

But the Anoka County effort stands out for its success at saving significant dollars while improving services at the same time.

"It's not about the financial savings," said Cindy Cesare, manager of child and family services for the county. "That's a benefit, but kids are safer and able to remain with the family."

What the county did, after studying other counties and international research, was take money that had been going into out-of-home placement for kids in danger and use it instead to focus on keeping children safe in their own environment. Instead of focusing on monitoring and reporting to the court, child protection workers got more involved with families.

Family members check in more, parents have conversations about their strengths, kids are encouraged to think more about protecting their own safety and outside family members and even neighbors are brought into the conversation.

Even in an emergency, a county worker might quickly pull together relatives, neighbors and others to develop a way to keep an endangered child safe without thrusting him or her into the formal court system.

"It was more adversarial before," Cesare said. "Now it's more a partnership."

The entire dollar saving doesn't go straight to the bottom line because the project has costs -- resources devoted to family group decision-making, for example. And a state grant helped get the effort going, Cesare said.

But Anoka County's project is one of the "reaffirmations that people are doing innovative things" to reinvent local government processes in tough times, said Jay Kiedrowski, Humphrey Institute senior fellow and organizer of the competition.

This year's contest added the feature of putting nominated projects online at InCommons so the public could vote for efforts it liked. Those results constituted 20 percent of the final decision, Kiedrowski said.

For a more in depth look at broader trends in child protection and why case loads are dropping elsewhere, check out MPR News reporter Sasha Aslanian's piece from last November.

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Minnesotans "solve" budget problem: Reform, don't just cut spending; tax but only if it's fair.

Posted at 11:03 AM on March 7, 2011 by Dave Peters (2 Comments)
Filed under: Local government finance

Faced with a need to make important government budget decisions, Minnesotans say they would rather reform the way education, health care and social programs work than simply reduce spending on them.

They see spending cuts as only a short-term solution to the state's problems and they want the state's tax system overhauled to be fairer and more transparent.

Those are some of the findings of a unique series of three dozen meetings around Minnesota over the past several months. More 600 state residents attended the gatherings, put on by the Citizens League and TakeAction Minnesota and sponsored by the Bush Foundation.

The sessions were open to anyone and were an effort to get people thinking about budget choices the state is facing. After hearing basic information about the state's financial situation, the residents broke into small groups and tried to come to consensus about how to approach the problems. The groups were instructed to address the dilemma with any combination of spending cuts, tax increases and government reforms they felt appropriate.

I attended a session in Highland Park in November and came away impressed with the seriousness people in the St. Paul neighborhood brought to the task.

Here's the summary of the gatherings, which Bush and the Citizens League put out late Friday.

People hardly agreed on everything, which was understandable, given the cross-section of political views and economic situations participants divulged. But there was strong criticism of short-term decision-making.

On the subject of raising taxes, a sizable minority expressed the desire to hold the line, but a larger group indicated they could support tax increases if they thought the tax system could be made fairer, by which they meant more transparent and less regressive. Of all the small groups that put their heads together at these sessions, three-quarters "solved" the budget problem partly with higher taxes. Almost as many would cut spending as well.

Almost half of those groups included higher taxes, spending cuts and government reforms as pieces of the solution.

"Cut, reform, raise taxes," was how a Grand Rapids participant put it.

One of the toughest jobs for participants was to find consensus on where to make spending cuts. Property tax aid from the state to local governments was a frequent target, and residents seemed to have a rationale: In the interests of tranparency, put the tax burden where the service is delivered.

"Keep taxes and services local," said a Maple Plain resident. The counter to that argument historically has been that sharing resources across the state guarantees a higher level of basic local services.

Perhaps the most valuable lesson to take away from the whole effort was that people of differing world views and economic situations could sit down and discuss calmly some pretty serious problems and make a good-faith effort at a solution.

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Minnesota cities increase reliance on property taxes, spend less

Posted at 8:50 AM on March 3, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

Minnesota cities have continued the trend of relying increasingly on property taxes to pay for the services they provide, a state auditor's report shows. Over the past decade, cities have both raised property tax revenue and spent less money overall.

The report for 2009 says the state's 847 cities received 37 percent of their revenue from local property taxes. That's up a few percentage points from the previous year and up from 23 percent 10 years earlier. In terms of inflation-adjusted dollars, property tax revenue rose 41 percent in the decade.

Over that same 10-year period, revenue from other governments, such as state and federal aid, dropped to 26 percent of the cities' totals, down from 30 percent in 2000.

Overall, when adjusted for inflation, Minnesota cities took in 11 percent less than they did in 2000 and spent 8 percent less. (See the bottom lines on these two charts.)

The numbers are in an annual report released this morning by the office of state auditor Rebecca Otto, and they clearly reflect the trends city officials have been talking about for several years -- less ability to rely on state aid and a heavier, if reluctant, dependence on property taxes. Across the state cities have trimmed services in a great variety of ways, from reduced library hours to less street maintenance.

The report shows that spending, when adjusted for inflation, rose for public safety but declined for all other major spending categories over the past 10 years -- parks, housing, economic development, streets and general government spending.

Otto's report notes that the area of city spending that has been cut the most over the years is in capital outlays. This reflects city officials' choices to cut first from long-term big-spending plans instead of current operations.

Total spending for all the cities dropped to $5.38 billion in 2009, down 3 percent from a year earlier.

As in the past, the largest expenses for cities are public safety and streets and highways. Together, they account for nearly half of all city spending in Minnesota.

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Government innovation: Vote for a favorite idea

Posted at 8:30 AM on February 17, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

The cities of Milaca and Ogilvie share clerk services to save money.

Crow Wing County is collecting gas generated by a landfill to use as fuel.

Anoka County changed the way it handles child protection cases, cutting the number of children it had to place outside the family and saving more than $1 million in the process.

Every year, the Humphrey Institute at the University of Minnesota shines a light on ways local governments in the state are coming up with innovative ways to provide services efficiently. These three are among those in the running in this year's Local Government Innovation Awards program.

You can weigh in on what ideas you like best by going to the InCommons website. There are about 30 entries you can scroll through and if one or more catch your fancy, select it and click the "like" button. Organizers suggest you pick one school project, one city project and one county project.

The "voting," which ends Sunday, will count for 20 percent of the score judges give to each entry. Winners will be announced March 4.

The institute's Public and Nonprofit Leadership Center is holding the program in collaboration with the Association of Minnesota Counties, the League of Minnesota Cities, and the Minnesota School Boards Association. The InCommons site, established by the Bush Foundation, is being used to let people weigh in.

Humphrey fellow Jay Kiedrowski recently released a report, "Navigating the New Normal," urging local governments to find ways to innovate in the face of budget and economic pressure.

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Pleased cities prep for cuts anyway

Posted at 1:25 PM on February 15, 2011 by Jennifer Vogel (0 Comments)
Filed under: Local government finance

Annandale City Administrator Mark Casey

City administrators across the state were pleasantly surprised when Gov. Mark Dayton announced today that he wants to maintain current levels of Local Government Aid (LGA) and another form of state funding called Market Value Tax Credit (MVTC) reimbursement.

Still, cities, which have learned to do with less thanks to past aid cuts, are wary. Dayton's budget runs contrary to a proposal put forth several weeks ago by the GOP-controlled Legislature, which would have slashed LGA by $300 million over the next two years. The governor vetoed the proposal, arguing that cutting state aid to cities results in increased property taxes.

Most expect a compromise.

"The Legislature has a part in the resolution too," says Albert Lea's interim city manager Patrick McGarvey. "As I told my staff this morning, to take a football field as an example, the goal posts have been set. Gov. Dayton is at one end of the field and the Republican caucus is at the other."

McGarvey's staff "is starting to work on 'what if,'" he says. "If the governor's position prevails 100 percent, we're set with the budget we have for this year. And, conceivably, it wouldn't be a rough 2012." Albert Lea's budget includes its full LGA allotment of more than $5 million, amounting to a third of total expenditures. "We haven't set aside any specific deletions at this point," says McGarvey. "We've already made deletions in previous years and it's time to draw the line."

Shawn Gillen, city administrator for Grand Rapids, has worked to wean the city from reliance on LGA funding, which he considers unreliable. "We're still going to plan on losing it," he says. Grand Rapids is scheduled to receive about $1.3 million in LGA, and would have lost around $450,000 under the legislature's proposed budget. "It would be great if it didn't get cut. We'd use it to pay down our debt or buy capital items," like a second new dump truck.

In Annandale, a city of around 3,000 people, LGA funding of $376,000 per year amounts to 14 percent of the budget. "We could sustain that hit," says City Administrator Mark Casey, though it wouldn't be easy. "We've already lost an officer. That's 20 percent of our workforce."

"I think a city would be naïve to think they are not going to get a cut," says Casey. "To what level that is, it's tough to say. We've been planning for somewhere between 0 and 100 percent."

Comments from Republican lawmakers following Dayton's budget address seem to bear out the skepticism of city leaders. Rep. Greg Davids of Preston, chairman of the House tax committee, said local governments ought to be tapping into their rainy-day funds, "because it's raining."

"Cities need to be able to plan," he said. "Now they're feeling good -- 'Oh look, the government's going to get this.' Well, you're not gonna get that. It's not gonna happen."

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Grand Rapids innovates under pressure

Posted at 4:06 PM on February 14, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

Grand Rapids city administator Shawn Gillen.

Grand Rapids, a city of 10,000 in northern Minnesota, has some things going for it. A big employer, a hinterlands that shops there, a major philanthropic foundation all make life easier in tough times.

But the city is under the same pressure as every other municipality -- shrinking state aid, a tough economy, a desire not to raise taxes.

As a result it has cut city jobs and planned its budgets not to rely on a half million dollars in state aid. But, with a mantra of not reducing services its residents demand, it has done a number of things that others might look to as worthy models. For one thing, in a city that pulp and paper built, City Hall is going paperless. Check out Jennifer Vogel's reporting on the Iron Range city and the changes led by city administration Shawn Gillen.

Grand Rapids is one of hundreds of Minnesota cities trying to figure out how to navigate. For more, see the Ground Level "Cities in Crisis" page.

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Can volunteers save city budgets? Can working with the city next door?

Posted at 9:54 AM on February 14, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

The city of Red Wing has cut 25 jobs since 2009 and reduced spending by $2 million. Can a network of 200 volunteers make up the difference?

Of course not. But City Administrator Kay Kuhlmann estimates the city has gotten $100,000 worth of service from volunteers -- keeping up city parks, gathering trash, maintaining signs and bus shelters and more.

Organizing volunteers, either with unpaid programs like Red Wing or with a paid coordinator like Mankato's, is one way cities have responded to increasing budget pressure, pressure that will only become more intense as the state deals with its deficit.

Another has been to find ways to collaborate with neighboring towns. Annandale, Howard Lake and Maple Lake northwest of the Twin Cities built a sewage treatment plant together and saved money. Other cities are combining clerical and other work.

All these efforts are coming into focus as DFL Gov. Mark Dayton and the Republican-controlled Legislature tackle the state budget, so we are rolling out a new version of our "Cities in Crisis" topic page. Reporter Jennifer Vogel is producing several new stories focusing, not on the angst city officials are feeling, but on the steps many have taken to deal with the new reality.

And the page continues to provide a host of links to summaries of what other cities are doing, research on the "new normal" cities find themselves in and resources for more information.

Check out the page, and you can hear Vogel talk about her reporting today on All Things Considered with Tom Crann.

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Cities to the Legislature: Give us the sales tax option

Posted at 12:30 PM on January 27, 2011 by Jennifer Vogel (0 Comments)
Filed under: Local government finance

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A bill just introduced in the Minnesota Senate would give Grand Rapids the ability to levy a general fund sales tax.

This might sound like a wonky matter of fiscal management, but it represents the leading edge of a larger debate regarding how cities generate money in order to maintain budgets and pay for services in the face of a tough economy and repeated cuts to Local Government Aid.

"I came on board at the city 3 1/2 years ago," says Shawn Gillen, Grand Rapids' city administrator. "Within months, we had the first LGA reduction. The city said, 'We don't want to raise property taxes, nor do we want to reduce services.''' It was a tall order. But, says Gillen, "I like a challenge."

Grand Rapids city hall

Gillen says he's delivered, forcing city departments to operate more leanly. He implemented an early retirement program, invested in technology, found a cheaper way to provide health care to public employees and even streamlined the way streets are plowed and salted. He doesn't call this "cutting." He calls it "re-innovating."

Now, Gillen is looking to supplant LGA funding altogether. "We aren't asking for more money," he says. "We're just saying, if you're going to take LGA away from us, give us more options."

Rather than raise property taxes, Gillen would like to tap the shoppers and diners who use Grand Rapids, a city of about 8,000, as a regional hub, but don't necessarily live in the city. "A local sales tax of 0.5 percent would generate a million dollars per year," he says. "It would replace all the LGA we are budgeted to receive and could reduce property taxes."

So he pushed for the Senate bill, sponsored by Tom Saxhaug, (DFL) District 3.

Historically, the state Legislature - which must approve city sales tax requests - has been reluctant to sign off on proposals that feed a general fund, favoring instead those that target a specific capital project. While local sales taxes exist in about 20 cities across the state, only Duluth's comes with no strings attached: It can be used for whatever the city wishes and has no expiration date.

The reasoning behind the legislative reticence is that LGA has been a preferred funding method, viewed as more fair than local sales taxes since it spreads money from wealthier communities to poorer ones. Bloomington, for example, could raise bucketsful of money from a sales tax, while a small town like Bertha could raise very little. Moving from an LGA- to a sales tax-based system, some have argued, would mean creating a state of haves and have nots.

Now, after years of cuts to LGA, this logic is losing its impact and cities are crying foul.

"If indeed LGA is done away with or drastically reduced, there will be more than one regional center that will look to this as one of the alternatives," says Saxhaug. "LGA started with the Minnesota Miracle. Now we're talking about dismantling the Minnesota Miracle completely."

Saxhaug acknowledges that his bill, as currently written, has a slim chance of passing. "For me it's about getting a discussion going," he says. "I want to start the discussion of how we replace the services in the Grand Rapids area when we don't have LGA."

Gillen, on the other hand, is optimistic that his city will wind up with a sales tax. He expects the language of the bill to be altered somewhat through the legislative process. "Rather than targeting the tax money for the general fund, it would go to 'capital improvements,'" he says, noting that this is still a usefully non-specific destination. "I'm a pragmatist. If that's what will help it pass, we can make it work."

The League of Minnesota Cities, where Gillen serves as a board member, is expected to introduce its own bill making it easier for cities across the state to impose sales taxes. According to Gary Carlson, the League's intergovernmental relations director, the bill should be drafted in the next week to 10 days. "Our city officials in our policy committee wanted us to secure a general authorization for sales taxes," he says.

While the language is still being hashed over, Carlson says the bill would allow a tax for "improvements in the community," a funding destination that could, for example, include road maintenance. Also, the bill would relieve cities of the burden of seeking legislative approval. They would only need a council resolution and a winning vote on a local referendum.

"Even if cities are anticipating aid cuts," says Carlson, "they don't know if these are the end of the cuts to city funding. We might see more cities doing what Grand Rapids is doing, saying, 'Maybe we're better off going alone on this issue.'"

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U of M study to local government: Time to innovate

Posted at 8:30 AM on January 26, 2011 by Dave Peters (1 Comments)
Filed under: Local government finance

NOTE: When MPR News launched Ground Level a year ago to develop new ways to cover community issues in Minnesota, one of the key reporters getting it off the ground was long-time Twin Cities writer and editor Jennifer Vogel. I'm happy to say she's back on the ground for us, and first on her agenda is to add to our Cities in Crisis coverage, delving deeper into how cities are dealing with new financial realities.

It's a timely and urgent matter, and she'll be posting material here regularly. Here's her first:

With yet another round of cuts to Local Government Aid on the legislative agenda, some cities and counties are looking beyond mere trims in services and reconsidering the very notion of how government works.

As Lena Gould, a policy analyst with the League of Minnesota Cities puts it, "You can only cut so many people before you don't have enough to provide the services we're all used to. We need to think differently."

By the League's estimate, if cities continue to operate as they do today, given current revenue and spending projections, many cities will be flat broke by 2015. The situation is urgent.

Jay Kiedrowski, a senior fellow with the U of M's Humphrey School, has just released a report laying out a rough blueprint for the way forward. Called, "Navigating the New Normal," the report cites some interesting real-life examples of cooperation, volunteerism, and plain old creative thinking in Minnesota.

--Mahnomen County, in partnership with a local car dealership, purchased cars for some recipients of public assistance, thus providing reliable transportation to work. Most of those residents who participated wound up leaving the public welfare rolls.

--Annandale, Maple Lake and Howard Lake built a joint wastewater treatment facility, saving operating costs and allowing for a more sophisticated treatment process.

--North Mankato has a new soccer field, but it wasn't built by the city. It was built by the local soccer association.

--In Redwood Falls, a private organization has stepped in to maintain Alexander Ramsey Park, the state's largest municipal park, through private donations, grants, and fundraising.

"Now is the time to innovate," Kiedrowski writes, noting that a time of crisis can be an opportunity for change.

Certainly there are even more good ideas out there. This spring and summer the League of Minnesota Cities wants to host a series of discussions to spur "broader thinking, better solutions." Cities can apply to host a forum here. The deadline for applications is February 11.

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Is community policing enough in Rochester?

Posted at 10:41 AM on January 24, 2011 by Michael Caputo (0 Comments)
Filed under: Community Development, Local government finance

Andy Kilen has a window into Rochester crime. For about 20 years, Kilen has volunteered at the Olmsted County Jail. He directs Next Chapter Ministries -- an organization that gives about 100 offenders a place to transition from jail to the outside world.

Kilen has seen over the past year how Rochester's police chief, Roger Peterson, defined crime as a "serious problem" but wanted to emphasize prevention through community policing. To that end, last November, Rochester Police Department created a new unit - the Community Action Team - that focuses on specific crime hot spots or problem areas of the city.

Kilen praises the Rochester Police and the Olmsted Sheriffs Deparmtent for doing "a great job of catching criminals and locking them up."

But he says community involvement in policing isn't enough. From his standpoint, the community must get involved in the lives of the potential criminals, more specifically, the children of offenders:

"Children who have had a parent incarcerated are far more likely to go to jail or prison. I have heard that it's as high as seven out of 10 children with an incarcerated parent who will themselves be incarcerated at some point. A majority of inmates have children. If the community is going to be safer, residents of the community will need to be involved in solving the problem of crime beyond being angry about it."

To Kilen, the fiction about crime in Rochester is that stepped-up policing alone will solve the problem.

MPR News and the Rochester Post-Bulletin plan on holding a forum at the Mayo Civic Center at 7 p.m. Tuesday, Feb. 1. The conversation will aim at the fact and fiction around crime. Kilen, who will attend the gathering, gave his answer to MPR through the Public Insight Network.

Others in the area have also contributed insight about what they consider the myths and facts surrounding Rochester and public safety:

Sherry Jester
A mother and a retired pediatrician who lives just outside the city limits.
"(T)here is very little knowledge about the gang activity and drug activity in the greater Rochester community amongst the public. (When asked what a Rochester crime fiction might be, she said) Many people (at least among my peers) consider Rochester to be more dangerous than it actually is. I have lived in several communities with much higher crime rates including: Detroit suburbs, Atlanta, Richmond, Virginia. Rochester is a very safe community in my opinion. I have no reservations about visiting any area of town. I do use reasonable caution when visiting areas where I have some concerns."

Michele Blesken
A conflict resolution consultant who lives in Rochester.
"Perception is that there is more crime with the recent years of drive-by shootings in the (northwest) neighborhoods. Yet out Police Chief indicated that crime is not rising and recommended that we spend our public dollars on prevention including early childhood education versus more police on the street. The Rochester city council overturned the Chief's recommendations and instead allocated municipal dollars for new police officers. To their credit the community members that did attend city council meetings made a big stink about public safety and the need to increase the police force to protect what they perceived as increase crime in their neighborhoods."

Diane Hellie
A software engineer who lives in northwest Rochester.
"(Crime in Rochester is) less than most places but we have some problems with gangs. In general the response to public safety concerns is good. I have heard gunshots in my neighborhood twice in the past few years and there have been several murders in NW Rochester. I prefer seeing more emphasis on preventing crime and helping youth so they exceed in school, etc. and have opportunities other than crime."

If you are from Rochester, what can you add to this conversation about crime, fact and fiction? Also, let us know if you could participate in our Feb. 1 forum at the Mayo Civic Center.

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For city budgets, the angst is back

Posted at 2:33 PM on January 19, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

The angst is back. You can feel the blood pressure rising in city halls around Minnesota this week.

Last fall, we found a lot of stories about how cities were approaching their 2011 budgets with trepidation, looking for cost-savings, cuts and new revenue, trying to get residents involved in the debate. All the while, the big unknown was how much a cash-strapped state government would contribute to those local budgets. You can find that coverage at our Cities in Crisis topic page.

Now that Republicans have kicked off the debate with a proposal to cut much of that local government aid, how cities define what they do for residents is back in front of us. You can track developments around the state at MPR News' Minnesota Today, a compendium of what news organizations are reporting on the topic. Some officials say they planned well; some are turning up the volume of objections at the Capitol.

Come back often.

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Who are the hungry in Minnesota?

Posted at 10:38 AM on January 11, 2011 by Dave Peters (0 Comments)
Filed under: Local government finance

Marilyn Jackson works full time but doesn't make enough money to pay all the bills and put enough food on the table for the five grandchildren she's raising.

That puts the Minneapolis woman among the 10 percent of Minnesotans who, as the federal government describes them, don't have consistent access to enough nutritious food. Most of us would just say they go hungry sometimes.

Ground Level has written a lot about the local food scene in Minnesota, how it's growing and becoming more sophisticated. One of the hopes of proponents is that local food isn't simply an economic phenomenon but a solution to nutrition and hunger concerns in the state.

That's why Julie Siple's piece on Minnesota hunger is worth reading and listening to. Siple is embarked on a year-long reporting project for MPR News on the shape of hunger in Minnesota. Check out a good start and look for occasional posts here from her in the future.

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Township spending and revenue ticked up in 2009

Posted at 5:00 PM on January 7, 2011 by Dave Peters (0 Comments)
Filed under: Baldwin Township, Local government finance

Because they are closest to the ground and often considered the most efficient form of government, it's interesting to see how Minnesota's nearly 1,800 townships are handling the current financial pressures. As MPR News reporter Mark Steil points out on the Minnesota Today blog both spending and revenues were up in 2009, the most recent year available.

The numbers come from a state auditor's report that looks at township finances over the past 10 years. As Steil reports, state auditor Rebecca Otto offers no major concerns about township financial houses.

Townships used to get about half their money from local property taxes. But the state took away big chunks of aid some years ago, and now townships get about 70 percent of their money -- most of which is spent on roads and bridges -- from local taxes.

One nugget in the report will be interesting to track. In constant dollars, both revenue and spending had been declining for a number of years, but that trend reversed in 2009. Since almost 20 percent of Minnesotans live in townships, that's not inconsequential. A caveat, however: Not all townships obey the law requiring them to report to the state auditor, so there's some fluctuation in how many reports come in each year. The number was up a little in 2009.

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Minnesotans on budget: We understand short-term pain, but we need long-term reform

Posted at 12:04 PM on December 29, 2010 by Dave Peters (0 Comments)
Filed under: Local government finance

It turns out that when you ask Minnesotans to come out on a cold night, sit down at a table with people they don't agree with and come to consensus about the state's enormous budget problems, some of them actually do.

And here's what they say: Cut spending to some degree, raise taxes to some degree, but really put your chips on long-term reform that saves money, delivers service and treats people fairly, particularly in the areas of K-12 and higher education and long-term health care for the poor and elderly. And make the tax system fairer.

Short-term pain we get, they seem to be saying. But long-term reform we expect.

That's the early reading from the Citizens League after it held several dozen sessions around the state in the past couple months in libraries, community centers and city halls. For more on how those evenings were structured, read this earlier Ground Level post.

The Citizens League is planning several more meetings and will add input from TakeAction Minnesota, enlisted to expand the diversity of the people involved in the conversation. But several themes are shaking out, apparent as Citizens League staffers kicked things around Tuesday afternoon.

--The 500 or so people who participated so far coalesced around the notion that Minnesota is a high-quality, well-educated state that should generally be willing to continue to spend money to maintain that reputation but that needs reform in some areas and a more competent and innovative government.

--Some people like flat taxes or other specific approaches but there was general agreement that the tax structure should be more fair and more transparent. By that they meant everybody should pay roughly the same share of their income in taxes overall. (Among the data the league provided people was a chart showing the top 10 percent of earners pay a lower percentage of their income in taxes.)

--Most people were willing to make across-the-board spending cuts but saw that as a temporary measure, not a long-term strategy. The favorite target for spending cuts was state help on property taxes, even though there was an understanding that property taxes could rise.

--They made clear their desire to be involved, often expressing the sentiment that the evening exercise was actually fun.

That last point may actually be a key to whether this all was worth the effort. Sean Kershaw, Citizens League executive director, thinks what was special about all the conversations and the findings wasn't so much learning what people think about taxes or spending. Instead, he said Tuesday, it was seeing people who came to the meetings with quite different views having a conversation and finding places they could agree.

"That's where we did something different," Kershaw said. "People can get it. It's not impossible to have the conversation."

The participants represented a cross section of gender and of people calling themselves liberal, conservative or moderate. A fifth of the people who showed up answered a question about their financial situation by saying they had a hard time making ends meet.

Kershaw and Stacy Becker, who headed the effort for the league, said they didn't hear a lot of blame being placed on government. But they did hear an expectation and hope that officials stop with short-term budget gimmicks, involve residents in new ways and focus on the long term.

As one participant said, "Why do we frame reform in terms of political possibility instead of what we want?"

When I attended one of the sessions in St. Paul last month, I came away thinking, not about the specific answers people came up with, but that not a few lawmakers and other state officials could benefit by seeing that conversation.

Perhaps it would give them cover to try something less antagonistic than the usual process.

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What's it like for cities to merge? Ask Thomas Terry

Posted at 8:30 AM on December 24, 2010 by Dave Peters (0 Comments)
Filed under: Local government finance

With the pressure on Minnesota cities to save money and get more efficient -- to create the "new normal" -- you'd think Thomas Terry would be in demand. At least to check his memory.

Terry is the city administrator in Elko New Market about 30 miles south of the Twin Cities. Before that, he was community development director in Norwood Young America about 40 miles southwest of the cities.

As you might guess from the long names, both cities are the results of mergers of two smaller cities, Norwood Young America in 1997 and Elko New Market in 2007. And, as Terry will tell you, both have benefited substantially from their consolidations.

The real goal is the long term, he says -- one city hall instead of two, one public works facility, one city clerk. But even in the short term, a review he conducted two years after the merger of Elko and New Market showed that officials of the joined city had held taxes flat and increased services for residents.

Elko New Market, in fast-growing Scott County, has had an advantage of an increasing tax base, but even so, it's interesting to see that when the community consolidated and streamlined, it chose to add services, not cut taxes. Police patrol hours are up, street work and other public projects got done, youth soccer and basketball programs expanded.

Nonetheless it's worth examining as government at all levels tries to save a taxpayer dollar wherever it can.

For full consolidation to work, Terry says, you need a history of trust, equal partners that buy in to the idea, geographic proximity. But even without full consolidation, entities can share services, do things jointly, tackle projects together, he says.

Interestingly, that dovetails with the findings this month by the Minnesota Commission on Service Innovation, created in the last legislative session to examine ways government can trim budgets and still produce quality service.

Among the commission's recommendations is to create a state entity to guide cities and other local governments, identifying the ways joint action can help and helping them achieve savings.

When I talked to him on the phone Wednesday, Terry thought that might be a good idea. And he mentioned the Scott County venture known as SCALE, which gets that county's local governments at the table planning jointly.

But he did point out such a state body did once exist. The Board of Government Innovation and Cooperation existed from 1993 until 2002 and even, the new commission noted, provided a grant to help Norwood and Young America combine.

It was closed in a budget-cutting move.

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Red Wing mayor to veto levy increase

Posted at 5:00 PM on December 15, 2010 by Dave Peters (2 Comments)
Filed under: Local government finance

Red Wing Mayor John Howe said today he planned to veto the 2 percent property tax levy the city council approved Monday. He also plans to use his line item veto on a budget provision that calls for a new franchise fee on electricity and gas bills.

Howe, who will soon be facing the budget dilemma of the whole state when he takes his seat in St. Paul as a newly elected Republican state senator, told me the impacts of the tax increase and the franchise fee were too uncertain for Red Wing businesses in a fragile economic recovery.

He said the city can dip into its reserves to make up the revenue in 2011. Investments in the Xcel Energy generating plant and elsewhere in the city mean that in coming years Red Wing's city budget should be in better shape.

Like practically every city in Minnesota, Red Wing has been wrestling for several years with tighter budgets. State aid has been declining and many services have been cut, but local officials everywhere are reluctant to raise property taxes even in the face of uncertainty about next year's state aid. See more from earlier this week.

The tax increase approved in Red Wing this week actually would result in a residential property tax decrease for most people, but Xcel and other commercial property would see taxes rise.

Howe said both the city and the state need to communicate fiscal reality better to residents.

"A lot of our residents want to increase or maintain services, but they do not want us to raise taxes," Howe said. "This is not an option." Of the state's long-term structural budget problems, Howe said, "You can't get there just by cutting services."

The city council has the ability to override Howe's veto later this month.

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Budget's a wrap, but some cities long for more involvement

Posted at 1:09 PM on December 14, 2010 by Dave Peters (0 Comments)
Filed under: Local government finance

Unlike Minneapolis' experience Monday evening, nobody showed up for the truth-in-taxation hearing in Cambridge, Minn., a week ago.

Lynda Woulfe says that made her sad.

She's the Cambridge city administrator, a person who normally might be relieved not to feel the heat of local residents angry about their tax bills or slow snowplowing service. And on the surface, the news for Cambridge homeowners at this budget-setting time of year isn't too bad.

Although the city is raising its overall property tax take by 1.5 percent, the burden falls on Cambridge businesses like Walgreens, Menards, Target, Walmart and the main street appliance store. Commercial property values have risen while home values have fallen, so homeowner tax bills are going down next year.

But still, Woulfe says, the snow doesn't get cleared downtown as fast as it used to, junked and abandoned homes in town don't get dealt with quickly, and work on streets, a new community center and park improvements have been put on hold.

Woulfe wishes her city's residents were more engaged in discussions about Cambridge's priorities. So she's starting to think about a "citizens academy" of sorts. Maybe invite 30 people next year to sign up to learn about the challenges facing the city. Encourage them to tell others. In the end, maybe the residents of Cambridge would collectively have a better understanding of what they want to do as a city and what they can't afford to do.

It's an idea you can sense getting a little traction in Minnesota.

There's been a lot of angst the past couple years among city officials. State aid has been curtailed, the economy has been hurting, political winds have been blowing in a cost-conscious direction. As a result, all kinds of services have been cut, from library hours to police patrols to street repairs.

But this month, as city councils finally have to make decisions for 2011 without knowing the future of state aid, there aren't a lot of examples of excruciating pain for residents. It's more like a continuation of death by a thousand cuts.

A few cities with special problems are raising their property tax levies by double digits. But most, like Cambridge, are maintaining an even tax keel. The League of Minnesota Cities' Lena Gould says cities present a mixed bag -- some small tax and fee increases, cautious planning for state aid, tapping reserves, and spending cuts everywhere.

Red Wing, for example, is contemplating a small increase in the property tax levy but because the Xcel power plant valuation rose, homeowners won't see tax increases. The city might create new franchise fees on residents' electricity and gas bills as a way to raise $210,000, says council administrator Kay Kuhlmann. There's no more overtime for snow plowing.

Brainerd, which turned off a third of its streetlights to save money, likewise isn't raising tax increases on residents. Capital expenses are being delayed, except for maybe a few police cars. People taking early retirement at city hall won't be replaced, says administrator Dan Vogt.

It's a slow squeeze, regardless of what the governor and Legislature do with aid to local governnments. That's why Woulfe wishes Cambridge residents would get more engaged.

And it's why Gould says the League of Minnesota Cities is starting to plan a road show in the first half of 2011, going to maybe six or 10 communities to get a conversation going on what services cities consider necessary and how to pay for them.

And it's not unrelated to the Citizens League's series of community gatherings in the past month to increase understanding of the state's long-term budget challenges. Hundreds of just-plain-folks have turned out to put their minds into the state's headache-inducing budget challenges and come away with some interesting conclusions and understanding.

It's something to think about as you wait for the snowplows.

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Water bill unpaid? It could go on your tax bill

Posted at 11:21 AM on December 1, 2010 by Dave Peters (0 Comments)
Filed under: Local government finance

In Caledonia in southeastern Minnesota, they've put off street pavement projects and delayed buying new city vehicles. Now they're thinking about getting tough on water and sewer bills.

As the financial vice gets tighter on cities, most are looking for ways to add revenue or trim expenses, and one option in Minnesota is for cities to add unpaid water and sewer bills to your property tax bill.

Some cities do this already, but it's never been tried in Caledonia, population 2,900, city clerk Jennifer Feely says. It's not going to save the day -- right now the city has $11,000 in delinquent bills and an annual budget of $1.8 million.

But it's partly a question of fairness to those who pay their bills on time, Feely said. Besides, "it all adds up."

As we watch this play out in Minnesota (check out our Ground Level "Cities in Crisis" topic page), I keep looking for a sense of broader participation.

City councils shifting water bills, turning off streetlights and cutting back city hall hours are not the same thing as community-wide conversations about what services people want their cities to provide.

I asked Feely about this and she said her sense was that Caledonia residents did have the notion that long-term infrastructure questions were in the air, but the city has not held any community meetings to air the larger situation.

Some cities have surveyed residents, some have pushed their budget planning horizon further into the future, and the League of Minnesota Cities has been actively talking about the squeeze. But I keep looking for an example of a place that has tried to get its residents to go back to square one and define what they do and don't want to do for each other as a local government.

Anybody know of one?

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What's your budget priority? Citizens League is listening

Posted at 9:55 AM on November 10, 2010 by Dave Peters (0 Comments)
Filed under: Local government finance

The 15 or so St. Paul residents gathered upstairs at the Highland Park community library last night didn't solve the state's $6 billion budget gap.

But they took a healthy run at it, one worth paying attention to.

Guided through a handful of questions about priorities and armed with "clickers" to record their thoughts and provide instant group feedback, they asked themselves why the state has a history of budget shortfalls. They looked at expected growth in long-term care costs. They thought about where Minnesota could spend less money and under what conditions, if any, higher taxes might be called for.

Where could more spending result in economic growth? Where could reform of state operations cut spending without hurting services?

When somebody said the presence of eagles in the Twin Cities showed how well the environment was doing, somebody else noted that a canoe trip on the Mississippi might make you think otherwise. In the midst of talk about the value of higher education, one resident noted that perhaps it's a good thing to make students bear a greater share of the cost.

There were silences; there were moments of people talking over others. There were conservatives; there were liberals. There were people just getting by; there were people who expect to be comfortable the rest of their lives.

After two hours, the group put their chips on the table, literally, setting priorities for where they think Minnesota can cut spending, reform services and perhaps even raise taxes. But in the end, it wasn't the result so much as the conversation that seemed valuable.

It's a conversation anyone in the state can get in on in the next few weeks.

The Citizens League, which guided the session, is holding a couple dozen of these budget conversations between now and mid-December and expects to take what it learns to the new governor and Legislature in January. There's one Thursday evening, for example at the Logan Community Center in Northeast Minneapolis. You can find the full list, see results of the sessions held so far and join an online discussion at the Citizens League CitiZing site.

If you go, and you should, don't worry about falling asleep while a speaker drones on pointing at graphs and pie charts. At Tuesday's session, facilitator Stacy Becker did indeed have a few numbers to share about where Minnesota's money goes and what the tax burden looks like. But the beauty of the conversation was the ability of the 15 residents to engage with their neighbors, see in real time the variety of opinion in the room and perhaps start to figure out how to find some common ground.

It was a process carried out with civility and good cheer and cookies. And who knows, someone might be listening.

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Help make the budget choices

Posted at 3:29 PM on November 5, 2010 by Dave Peters (0 Comments)
Filed under: Local government finance

If you're weary of politicians arguing over Minnesota budget matters, the Citizens League is holding a unique set of workshops around the state in the coming few weeks, and anyone interested in weighing in on the state's budget woes should think about attending.

You can find out more, including times, dates and places at the Citizens League site or you can go straight to the League's CitiZing site. Here's the intro:

The workshops are informative, fast-paced and interactive -- illuminating the current reality of the state budget, examining future trends, and asking participants to identify values and priorities they think should help frame state budget decisions for the coming decade and beyond.

The website also gives you the chance to test your knowledge and to join in an online conversation now about the budget and the choices before the state.

From now until the middle of December, the workshops will present information about the budget and invite residents to join the conversation about how to make tough decisions.

Our Cities in Crisis reporting here at Ground Level has showed some of the dilemmas cities find themselves in this year.

In particular, in many cities residents are confronting some pretty key questions about what they want their communities to do collectively, whether it's pay for 24-hour police patrols, library services or street maintenance. Do we keep the streetlights on in Brainerd? Can we afford to pay for a garbage incinerator in Red Wing?

The Citizens League workshops offer the opportunity to ask those questions and similar ones at the state level.

The League's schedule calls for it to do a quick round in late December of double-checking to see if it heard right and then take the message to lawmakers in January.

Disclosure: The effort is backed by the Bush Foundation, which is also a supporter of Ground Level.

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Cities can adjust to an LGA-less future, says former budget chief

Posted at 8:26 AM on October 28, 2010 by Nancy Lebens (0 Comments)
Filed under: Local government finance

For a couple months now, Ground Level's "Cities in Crisis" effort has been tracking the financial squeeze Minnesota cities find themselves in this fall, and you can listen for my report on Morning Edition Friday on where the governor candidates stand on local government aid.

In the meantime, here's what a longtime follower of the issue has to say.

Now a senior fellow at the University of Minnesota's Humphrey Institute, Jay Kiedrowski has worked on budgets ranging from the state of Minnesota, under DFL Governor Rudy Perpich, to the city of Minneapolis. He also worked as an interim city administrator for Orono. Kiedrowski talks here about the future of local government aid and whether things might improve for cities.

Ground Level: Do you think cities have become too dependent on local government aid?

Kiedrowski: Well that's like asking the question, "Have children gotten too dependent on milk?" The answer is yes. But what's the alternative? The state has had local government aid since 1972. Most of the cities in the state of Minnesota receive local government aid. This is the way the state has attempted to hold down property taxes, by ensuring that they get significant money from the state so property taxes don't have to be so high. So yes, they're dependent on it. Can they live without it? It'll take a period of adjustment, but they can.

Either services are going to have to be reduced or property taxes will have to be increased locally. It's not a case where's there's such great inefficiencies that if someone came along and fixed 'em, they would be able to provide services. I've looked at a number of local governments activities and I don't see there's a lot of inefficiencies that have to be resolved. I think we're looking at service cuts,
service changes, increased fees, increased property taxes, all the things that are going to have to occur locally if local government aids are cut.

GL: Cities say that raising property tax base is a big concern right now because the economy is so bad.

Kiedrowski: Think about what your own home is worth. Most people's homes have gone down in value over the last couple of years as the housing bubble burst. And that means the cities have less tax base, less value of homes, less value of industries and commercial properties to tax. So at the same time they need more from the tax base, the tax base has less value. So they have to increase the tax rate. i.e. charge people at a higher rate, just to get the same amount that they would have gotten had the tax base not dropped. So it's a dilemma for local officials.

GL: When do you think the budget situation for cities will improve if at all?

Kiedrowski: Well, once the state gets to a stable budget situation it should get better. It was better in the later part of the '80s and again in the later part of the '90s, things did stabilize as state finances stabilized. But the state for the last 10 years now has operated with a shortage in revenues in comparison with the level of expenditures, we call that a structural imbalance and that is inherently unstable.

So local government aid has been one of the things that has been cut regularly. The difficulty for cities is they have to set their budgets and tax levies by December 31st of the year and they don't find if they're going to be able to keep the local government aids that were appropriated until even May of the following year. So that gives them six months to respond to a change that the state makes in local government aids. And that's been the part that's been really difficult for cities to deal with.

GL: Is the consolidation of city governments, or fewer cities, the answer?

Kiedrowski: When I worked in the private sector for 17 years, I learned a very valuable lesson that you want your organization to be decentralized and close as possible to your customers. That way you make better business decisions, you're more nimble, more innovative and it frankly works better.

So the system we have created in Minnesota of having lots of local units of government arguably would give us that focus on the citizens, the flexibility, the innovation, opportunity to have differences among communities. I'm not necessarily a believer that we ought to have less governments and frankly you don't save much. Maybe the cost of two mayors and two city councils.

Where the real savings could come in is if smaller cities shared services. And there's more of that occurring. So there's a police and fire training center located in Edina, it's a joint powers agreement with the airports commission. I think Bloomington, Hopkins, Edina and there's one other community that actually share that facility. You find a lot of police in the western suburbs being provided for multiple communities instead of being provided by one community. I know in North Oaks the policing is done by Ramsey County.

So there are ways you can share services, or buy services, that can make it more efficient and still allow you to have that local government that's still close to the citizens. What I think Minnesota citizens want frankly is the ability to influence their local government.

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Gravel or pavement? Running costs to ground in exurbia

Posted at 11:33 AM on October 26, 2010 by Brooke Walsh (2 Comments)
Filed under: Baldwin Township, Local government finance

Between 1998 and 2007, Baldwin Township's population grew quickly and with that growth came mile after mile of new paved road.

These young roads are relatively easy and inexpensive to maintain for now, but they are aging at the same pace. This means that when it's time to overlay more bituminous on one, others will need the same maintenance shortly.

Baldwin, in the northeast corner of Sherburne County north of the Twin Cities, sees this coming from 20 years away and is trying to find a way to afford its road infrastructure. In its 2010-2015 Capital Improvements Plan, Baldwin splits its road costs into two categories: maintenance and capital improvements. The plan states that Baldwin will likely need a 6 percent increase per year in maintenance costs to roads -- to continue the kinds of processes that increase a paved road's life, such as chip sealing -- and a 20 percent increase per year in capital improvement costs -- the larger, more expensive projects, such as reconstruction and overlay -- for some time to come.

It further concludes that costs will only increase if these repairs are delayed because the township is unable to raise enough funds.

But if the township can't afford upkeep on all of these roads, what are its other options? What if it returned some of the roads to gravel? It's a question getting increasing attention as local governments find themselves under stress. And, in fact, what at first glance seems short-sighted, in Baldwin Township might save money in the long run.

Stutsman County, N.D. recently decided to return roads to gravel in order to be able to afford its infrastructure, and they aren't alone.

As the Wall Street Journal article states: "In Michigan, at least 38 of the 83 counties have converted some asphalt roads to gravel in recent years. Last year, South Dakota turned at least 100 miles of asphalt road surfaces to gravel. Counties in Alabama and Pennsylvania have begun downgrading asphalt roads to cheaper chip-and-seal road, also known as 'poor man's pavement.' Some counties in Ohio are simply letting roads erode to gravel."

But how feasible is this process?

Sherburne County's road maintenance figures show that costs to keep up gravel roads far outweigh those to keep up bituminous. From 2005 to 2009 the county spent $43,411.23 in maintenance costs on just over 23 miles of gravel county roads. But over the same period of the time the county only spent $27,293.13 in maintenance costs on 2,028.6 miles of paved road. Using those figures, it cost the county about $1,887.44 per mile of gravel road that needed maintenance and about $13.45 per mile for maintenance on bituminous.

The yearly maintenance costs of gravel roads make them appear inefficient, until you consider the capital improvement costs associated with bituminous roads at the middle and end of their lives, which isn't always reflected in yearly maintenance figures.

Baldwin's own cost estimates for maintenance over the next five years illustrate the hidden costs of paved roads. In 2010, reconstruction of 0.128 miles along 99 1/2 St. cost $49,863 dollars, or $389,554.69 per mile. In 2011, reclaim/overlay of 289th and 127th streets for 0.7 miles will cost $43,659, or $62,370 per mile. In 2012, reclaim/overlay of 0.7 miles along 100th St. will cost $97,241, or $138,951.71 per mile. In 2013, overlaying a mile of bituminous on 112th St. will cost $99,915.

While bituminous overlay only needs to be done to roads 20 years after they are built and reclaim/overlay 40 years after they are built, these high costs are hard for townships to absorb all at once, even when they plan for them years in advance.

Over its 40-year lifespan, a low-volume paved road will need to be chip sealed twice, undergo overlay once and then reclaim/overlay. Baldwin's 2010 estimate to chip seal paved road is $3,885 a mile. Cost for capital improvements is obviously dependent on the condition of a road. As the figures above show, these can vary significantly.

Using a weighted average of the above figures, the reclaim/overlay costs are approximately $124,844.90 per mile of paved road. Adding the chip seal costs twice, the estimated overlay cost from the above figures ($99,915) and the reclaim/overlay cost, Baldwin's paved roads will cost an estimated $232,529.90 per mile every 40 years, or $5,813.25 per mile per year.

That's about 3 times what it costs to maintain gravel roads in the county.

As the Wall Street journal said, paved roads were once a hallmark of the United States. With this mentality, it is hard to let go of paved roads, but maybe it's something Baldwin needs to consider. Letting some roads return to gravel at the end of their 40 year lifespan could help Baldwin afford the paved roads it needs while keeping taxes manageable for all residents.

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Red Wing's incinerator on the chopping block

Posted at 8:41 AM on October 12, 2010 by Dave Peters (2 Comments)
Filed under: Local government finance

It seemed like a good idea at the time, 28 years ago, but residents in Red Wing may no longer be able to afford their recycling/garbage-burning operation.

Ground Level reporter Nancy Lebens explores how the financial pressures affecting all Minnesota cities these days have the city trying to figure out how to stop losing $500,000 a year on its incinerator. The on-air version of the story was on Morning Edition today.

You could tell during council discussions the past few months that Red Wing officials are reluctant to give it up. They've been encouraging residents to recycle for years, and the steam heat from the incinerator has been used by a local company.

But the facility needs more garbage and more steam customers to break even, so it joins the list of municipal activities under pressure -- from police patrolling to street maintenance to streetlighting -- as residents figure out what they want to do for themselves.

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Cities' reserves under pressure, too

Posted at 2:00 PM on October 4, 2010 by Nancy Lebens (0 Comments)
Filed under: Local government finance

If you received the bulk of your income in two chunks, you probably would have a plan to keep some of the money set aside to pay the monthly bills. If you're a city with bills and salaries to pay, you do the same thing. It's called a fund balance and more than a rainy day fund, it's a way cities stay on top of expenses that come in throughout the year when most of their revenue comes in June, July, November and December.

How much? The Minnesota state auditor recommends, but does not require, 35 to 50 percent of operating revenue or no less than five months operating expenditures be reserved and not designated to pay for any specific projects. Cities generally aim for that, but the recession and unallotments have taken a toll.

Waconia, a town of about 10,000 located 35 miles southwest of the Twin Cities, will probably see a fund balance in the range of 20 percent of operating revenue, much lower than the 40 percent the city would like to see. Waconia's finances were hit by loss of assessment income from one development. Interlaken was funded by Lakeland Construction Finance LLC, which is now in receivership. The city borrowed to put in roads, lights, water and sewer, which were to be covered by assessments starting in the second half of 2008. City administrator Susan Arntz says those payments, which now total more than $3 million, will be made with interest. Until those payments come in, the cash reserve has to be tapped says Arntz.

We're optimistic we will be able to handle expenses through the next year, depending on how the 2010 finishes. I'm concerned if we end the year below 20 percent.

In Rochester, having a reserve helped cover unallotment last December. City administrator Steven Kvenvold says the city otherwise has been able to keep 41 percent of its operating budget in reserve. In past years, when the budgets were not as tight as they are now, the reserve could cover more capital expenses. But he says that's not happening much anymore.

Faribault's reserves are a bit lower because the city paid unemployment for people who had been laid off in engineering, planning and code enforcement. Income is down from building permits and investments as well, which contributed to a reserve fund level that may be lower than expected come the end of the year. Interim city manager Terry Berg says she's looking forward to the end-of-the-year local government aid payment.

Cities smaller than Faribault and Rochester are keeping less cash on hand. In a 2009 survey, the League of Minnesota Cities asked 445 cities whether fund balances would increase over time, decrease over time or remain stable. Ten percent said they expected to see funds increase, 54 percent thought they would decrease and 29 percent said they would keep the fund balance as is. In cities under 2,500, 7 percent said they expected to see fund balances increasing, 57 percent said the balances would decrease over time and 29 percent saw no change in the future.

The number of cities drawing down their reserves has risen since the middle of the decade, League figures show. Here are the percentages of Minnesota cities that drew down their reserves in each of the past seven fiscal years:

2003 --------- 60%
2004 --------- 46%
2005 --------- 33%
2006 --------- 31%
2007 --------- 32%
2008 --------- 47%
2009 --------- 44%

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Making the crisis personal in Northfield

Posted at 9:49 AM on October 5, 2010 by Dave Peters (0 Comments)
Filed under: Local government finance

We've asked Ground Level readers to contribute thoughts about what's happening in their communities in response to the financial squeeze cities are finding themselves in this fall. (We've been steadily adding to our Cities in Crisis topic page and you can give us your thoughts by going here.)

Here's what Northfield resident Karen Olson wrote about an effort to learn and change on a personal level:

Q: What idea is your city considering or trying in response to this fall's budget squeeze?

A: There are a number of members of our community that have decided NOT to wait for our city to ask the hard questions about the long term future and or immediate budget crises our town is and will be facing. Our response, while staying informed of city conversations and plans, has been to educate ourselves more deeply regarding underlying causes to the economic instability, changing weather patterns, and ultimately the foundational question of how we will power our activities.

That has looked like a number of different things including a LOT of personal reading, researching via the internet what others across the globe are seeing and doing, seeking out engaging speakers on relevant topics etc...and then coming together regularly for mealtime conversations, planning sessions on how to bring these issues to our larger community, and hands on training to reskill ourselves for meeting our own needs with less money and energy and strong community networks!

Q: How does this idea save money or make life better?

A: The immediate and most obvious benefit is the instant engagement for each one of us in alleviating the sense of fear and powerlessness the average citizen feels in today's political environment. Whether it's the lack of genuine representation, or just the painfully slow ability for government to respond and change, taking matters into our own hands as community members, is where civic engagement becomes truly responsive and meaningful. The best part though, is having something to show at the end of the day, like my chicken coop, garden, and refurbished bike for commuting more. We have been able to concretely improve our own resiliency in the face of volatile economic times, we have rethought our values, and have deepened our sense of community.

Q: Who are the people in your city that are making change happen?

A: Just average folks who share a concern for the way things are going. We have organized ourselves around various focuses, but we call our collective efforts 'Transition Northfield'. We are working to understand and implement a transition to a life with less cheap, polluting energy, preparedness for a changing climate, and bracing for shifting economic times. Anyone who shares those concerns can be apart of the work!

Olson is among a dozen or so Northfield residents who have launched something called "Transition Northfield," a loose-knit group interested in a variety of sustainability issues, which she notes they refer to as "resiliency" issues. It's tied to a national non-profit called "Transition United States," which encourages communities to respond in new ways to economic, political and climate changes.

Not a bad place to look, if you want ideas.

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A bridge in time saves Zumbrota?

Posted at 11:14 AM on September 24, 2010 by Nancy Lebens (1 Comments)
Filed under: Local government finance

Zumbrota city officials want to know why the record flood stage of 23.2 feet on the Zumbro river didn't cause more damage than in the previous flood in 2005, when the river also hit 23.2. Zumbrota city administrator Neil Jensen thinks the new, wider Highway 58 bridge may have had something to do with it.

Our downtown didn't flood as it did before...Our bottleneck was with the highway 58 bridge, we just made that bottleneck wider. It may have...pushed through faster and may have done a little better job not backing up into our downtown.

The new Highway 58 bridge opened one week ago.

Jensen says Thursday morning, the flood was predicted to reach as much as five feet above record flood stage by Thursday night, prompting sandbagging of the wastewater treatment plant, the downtown Hub Food Center, and ATMs. Now that the flood danger has passed, the sandbags are moving on, too. North to Cannon Falls where flooding threatens buildings along the Cannon River.

We got some help so we're helping out Cannon Falls. That's the way it's supposed to be.

In case you're curious about whether bridges in Goodhue county can withstand the pounding of floodwaters, Minnesota Compass, a project of the nonprofit Wilder Research lists 11.9% were deficient or obsolete in 2009. That's below the Minnesota statewide percentage of 12.1%

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Shorter contracts the trend for union city employees

Posted at 3:00 PM on September 23, 2010 by Nancy Lebens (0 Comments)
Filed under: Local government finance

If uncertainty were a line item, many Minnesota city budgets would list it. As for quantifying it? One partial measure is the number of mediation cases taken on by the tiny state agency, the Bureau of Mediation Services (BMS). From July 1, 2009 to June 30, 2010 the BMS saw a doubling of its caseload of new public sector contract negotiations, from 69 cases to 139. BMS Commissioner Steve Hoffmeyer says one-year contracts are driving that increase.

We are historic levels because we have to mediate one year contracts in addition to our normal caseload.

Hoffmeyer says that neither the unions nor the cities want to lock in agreements that are not going to be financially workable. He adds the sticking points in most cases appear to be health care costs.

As for renegotiating union contracts, fewer cities appear to be taking that route, though it is happening. Mankato would like to freeze wage costs. City manager Pat Hentges says even with wage freezes and a modest tax increase, the city might still have to cut staff by 2 percent. City employees' current contract calls for a 2.5 percent wage increase in 2011, though many union employees will have to pay more for health insurance.

In outstate Minnesota, many of the unionized city employees are law enforcement personnel. Most of them are represented by Law Enforcement Labor Services, Inc (LELS). Chief executive officer Dan Wells says though still small, the number of requests to re-open contracts is nevertheless notable.

Even in 2003 we didn't see the requests for re-opening of contracts that we are seeing today. City and counties are hurting and that's why we're seeing it at all.

LELS represents around 6,000 law enforcement personnel around the state. He says they may have to take a zero percent increase in future contracts. The union will work to strengthen language in contracts that protects seniority benefits, such as priority when bidding for shifts.

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Can streetlights lighten the budget load?

Posted at 4:24 PM on September 21, 2010 by Nancy Lebens (0 Comments)
Filed under: Local government finance

Brainerd needed a way to resolve a budget problem. The north central Minnesota city relies on local government aid for about 40 percent of its revenue and that state aid revenue was cut by about one fifth in fiscal 2010. If every service was in line for a trim, why not streetlights?

After a summer of hearings to respond to resident complaints and a proposal to turn them all back on, Brainerd continues to keep about a third of its streetlights off. The savings, according to city adminstrator Dan Vogt, are not to be taken lightly: somewhat less than $90,000 a year.

Other cities, like Zumbrota and Wabasha, charged streetlight fees to residents. Zumbrota residents saw a $4.75 per household fee this year. But next year half of that fee will disappear from the water bill where it currently appears. Zumbrota city administrator Neil Jensen says that fee was a mid- budget year response to local government aid cuts of about $150,000. Why won't the streetlight fee continue?
Jensen put it this way in an email:

The council discussed when it was adopted that if the fee could be put back onto the levy they would try and do it. They look at the fee as a revenue source in case of severe LGA cuts with no means of raising additional funds. There was some opposition for the fee on the council and I also think this was a compromise.

Northfield retreated from a streetlight fee proposal last year, and it's not likely to come back despite the city's aim to cut its reliance on state aid in five years. Strong opposition to the fee came from the two colleges in town. Former Northfield city administrator Joel Walinski said St. Olaf and Carleton Colleges are tax exempt properties, so levying a new fee is a difficult sell. The original proposal called for a flat fee charged to single-family residences, then a fee per acre per month for all other properties.

Walinski says 26 Minnesota cities have streetlight utilities that allow them to charge monthly fees and control some of the upgrades to more energy efficient lighting. These cities include Twin Cities suburbs Woodbury and Apple Valley. In its original proposal, the city of Northfield argued that even those who don't have streetlights near their homes benefit from a well-lit city.

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Hutchinson, a Tree City USA cuts forester job

Posted at 9:00 AM on September 23, 2010 by Nancy Lebens (0 Comments)
Filed under: Local government finance

About as long as Hutchinson has had a forester, the city has earned a place on the national roster of Tree City USA. For three decades, Hutchinson forester Mark Schnobrich has pruned boulevard trees, applied for grants and has given free advice to residents with questions about their own trees. Because the city expects less state government aid and has a limited desire to raise property taxes in 2011, the full time forester job will be eliminated. Schnobrich hopes to spend at least part of his early retirement to help make sure Hutchinson hangs onto its Tree City USA designation, though he says he's not sure what will happen to it.

I hate to see 31 years of active community forestry come to end. We hope to have someone in the community take it on.

Hutchinson, population 13,835, is unusual for cities of its size to have a forester to begin with. Schnobrich thinks that a forester shared among a group of cities might be the model of the future.

Ground Level is focusing on the changes cities go through as they deal with new budget realities. Some cities report their budgets are smaller this year than in the recent past. Hutchinson's city administrator Gary Plotz says the budget now is smaller than it was in 2008.

Hutchinson is cutting back positions in other areas as well. The city is trimming its fire department from two full time firefighters to one. At least eight people will be leaving Hutchinson city government before 2011. One of them is Gary Plotz. He says his position as administrator will be combined with that of the city finance director. Plotz already had taken over the duties of the planning director.

Hutchinson's plan through 2014 is to try to gradually eliminate reliance on local government aid. The preliminary levy for 2011 was set at 2 percent, which may be reduced by the time the budget is finally passed at the end of December.

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Got a better idea? Cities tackle their budget squeeze

Posted at 9:00 AM on September 20, 2010 by Dave Peters (0 Comments)
Filed under: Local government finance

In Virginia, Hibbing and a few other cities, police officers write tickets with a digital pen.

In Mankato, city officials have placed a priority on long-term infrastructure projects.

In Ortonville, residents who really want the library to subscribe to a magazine are encouraged to donate the subscription price.

We've highlighted these and a handful of other examples as a kickoff to a new feature on our "Cities in Crisis" topic page.


We want to highlight how some cities are approaching their spending and revenue squeeze and perhaps redefining what they do for residents. Sometimes it might be a bright idea that saves money; sometimes it might be a general outlook residents are adopting to lend a sense of priority.

We expect to add to the list in coming weeks, but we want to hear ideas from others as well. And we especially want to know who in communities around Minnesota are the people making things happen.

You can let us know by filling out the response on the topic page, by emailing me or reporter Nancy Lebens or by clicking here for a form to fill in.

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Angst-filled cities look for cuts

Posted at 9:01 AM on September 14, 2010 by Dave Peters (2 Comments)
Filed under: Local government finance

If you're looking for a case study of municipal angst in Minnesota this fall, Red Wing offers as good a one as any.

It's a centerpiece in the latest look at "cities in crisis" by reporter Nancy Lebens. Last week she showed how even policing is under scrutiny as cities tighten their budgets, and you can find this latest overview of the situation here. She'll be on All Things Considered talking about the story this afternoon.

Even though Red Wing has a power plant that helps the property tax base and the tourism business is doing OK in the historic Mississippi River town, the city has been struggling the past couple of years as state aid has been tightened and the economic squeezed.

Red Wing cut back swimming pool hours to save money, but city officials decided against closing it.

Here's a thumbnail from the story of some of what residents have seen so far.

Already, residents see day-time police patrols less often, and city swimming pool hours have diminished. Streets aren't swept as often, and gravel roads are graded less frequently. In winter, city workers don't shovel as many sidewalks and no longer haul snow from residential cul de sacs. In summer, they mow the grass less often.

Residents don't get the city hall newsletter in the mail anymore, and community access television has been reduced. The city's diversity festival gets less government help; the library purchases fewer materials. Streetlights have been turned off, and the summer recreation program has shrunk. Ice skating rinks aren't maintained as well.

If a loved one dies in the winter, a Red Wing resident must choose between waiting for summer for burial or paying the extra cost of digging a grave in winter.

Meantime, city taxes are rising and fees seem likely to be added to utility bills.

It looks like Red Wing won't close the city pool but they are looking at the possibility of shutting down their electricity-producing garbage incinerator because it's losing $500,000 a year.

As I mentioned earlier, we're building a topic page on this subject. If you want to know what ails Minnesota cities this fall, check it out.

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An online conversation on city finances and police cutbacks (today at noon)

Posted at 3:13 PM on September 9, 2010 by Michael Caputo (0 Comments)
Filed under: Local government finance

You've heard the story by MPR's Nancy Lebens on the struggle cities are having to pay for police. You've read the post by Ground Level's Dave Peters putting those police cuts in context.

Dave really set the tone for what will drive this one hour discussion: What must a city do when it comes to hard budget decisions and public safety? Who is innovative in responding to public safety costs? Let's talk about it. Just go down and set a reminder for this discussion and then come back at noon on September 10today for our online forum.

Now what do you have to say? MPR's website for discussion of issues, Insight Now, will host a Friday lunchtime discussion on city finances and the drain on police services. It's as easy to attend this forum as scrolling down a bit. It's all online and can happen while you snack on a sandwich in front of your computer screen.

Panelists:
*John Pechman, Chisago City administrator who oversaw a police merger with a neighboring city.


*Joel Dhein, Mora city administrator, who saw the elimination of a police department.


*Rachel Walker, who oversees policy analysis at the League of Minnesota Cities and will give the bigger picture on cities and public safety spending.

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Cut cops? Turn off lights? Raise taxes? Minnesota cities redefine what they do

Posted at 6:00 AM on September 9, 2010 by Dave Peters (0 Comments)
Filed under: Local government finance

Brainerd turned off some streetlights to save money. Red Wing is thinking about deep-sixing its 23-year-old garbage incinerator to save a half a million dollars a year and selling the city's golf course to save another $120,000 a year. Wanamingo is contemplating a near-40 percent increase in the city's property tax levy next year.

In Cambridge, after elected officials learned they likely would have to raise property taxes 4 percent every year for a decade to keep city services at current levels, they asked staff members to propose savings through layoffs or reducing city workers' hours.

This is just a sampling of how cities have been forced by the recession and anticipated state budget cuts to try to figure out what they can do without.

It's safe to say there's a lot of municipal angst across outstate Minnesota as cities figure out their budgets for 2011. So we've made the topic a focus of Ground Level.

Minnesotans will hear quite a bit about state aid to local governments as the race for governor proceeds, but at Ground Level we're more interested in how the financial squeeze brought on by a moribund economy and shifting political dynamics plays out in communities around the state.

As we've been working on this, we can hear people asking themselves -- sometimes without realizing it fully -- what it is they want their cities to do.

Swimming pools, libraries, street maintenance, city hall hours, parks programs and more are getting scrutiny. But since the most expensive thing cities do is provide for the public safety, police departments are not immune from this questioning. So that's where we started today with an on air report by MPR News reporter Nancy Lebens.

Her report details how the city of Mora made the tough decision to ax its seven-person department earlier this year and hire the county sheriff, saving $150,000 this year. Nearby, neighbors Chisago City and Lindstrom decided a few years ago to combine their departments. The goal at the time was better service, not cutting the budget, but the result has saved both cities from investing more money to preserve round the clock coverage.

These are ways those three cities dealt with change. Perhaps others can learn from their experiences or have other ways of responding.

To help in the information exchange, we've launched a Ground Level topic page on the cities' financial squeeze this fall. You can find a backgrounder on how cities are budgeting and trying to plan for potential state aid cuts next year as well as links to blogs, data and more.

We plan to add coverage online and on the air in coming weeks and would love to hear your ideas about how cities might spend less or raise more or think about themselves in a new way.

And we'd like to involve readers and community leaders. To that end, MPR News' Michael Caputo is holding an online conversation at noon Friday at Insight Now on public safety as a core service for cities. Join in.

How cities tackle the financial pressure on them is a key issue for communities around the state, one that is demanding leadership and perhaps new definitions of what residents do collectively.

"The city faces a fiscal crisis not seen in the history of Red Wing," council administrator Kay Kuhlmann told that city's council members this month in a memo that laid out a long list of potential budget cuts.

Who's innovative in responding to this? Who's making hard decisions the right way? What do you think your city must do and what can it let slide? Let us know.

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Red Wing considers incinerator shut down

Posted at 10:09 AM on September 2, 2010 by Nancy Lebens (0 Comments)
Filed under: Local government finance

Red Wing's garbage incinerator runs in the red and may be too expensive to keep going. So public works director Rick Moskwa told the Red Wing City Council last night that as much as he hated to suggest it, likely the only way the city council could really save money on the city's 23-year-old garbage burner would be to de-commission it and send specially prepped trash to Xcel Energy for burning.

The incinerator, which Moskwa considers the city's greatest contribution to sustainability, was a big ticket item but only one among a variety of strategies to raise money and cut services that Red Wing officials took up Wednesday. Like cities across Minnesota, Red Wing is trying to prepare for an austere 2011.

The only thing that kept the city council from signing on to the idea of abandoning the garbage incinerator and rid the city of the $500,000 per year loss was the lack of definitive agreements from Xcel and the Minnesota Pollution Control Agency to go ahead. But the council was interested enough to tell Red Wing staff to keep pursuing the deal.

City staff members presented a number of options for the city council to either cut local government services or raise revenue or both. And the council tentatively approved a menu of cuts, tax and fee increases to cut $1.2 million from its 2011 budget. That's an amount equal to most of the state aid Red Wing is scheduled to receive. But the amount the state has scheduled is considered not reliable because of the state's budget squeeze.

Also on the table was the closing of the Colvill Aquatic Center which costs $225,000 a year in taxpayer money. After talking it over briefly, the council decided the pool was too popular to close despite the slim possibility of it ever paying for itself.

As for the property tax levy, the council tentatively OKed a 2 percent increase. But council admininstrator Kay Kuhlmann was asked to find other cuts to keep the levy flat.

Fees that seemed most acceptable were two new franchise fees. An electric fee would amount to a residential base rate of one dollar per household to raise $135,000 and a gas fee of 75 cents per household to raise $75,000. A majority of the council said they hated to see an increase in the newly implemented stormwater utility fee. Even though the utility operates at a loss, many Red Wing payers have told council people they hate the fee.

The session lasted 4 and a half hours. Few members of the public attended the meeting in Red Wing's city hall.

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Red Wing has residents' input, now for the hard part

Posted at 8:42 AM on September 1, 2010 by Nancy Lebens (0 Comments)
Filed under: Local government finance

After surveying around 400 people by phone and collecting comments from the web and at the public library, Red Wing has confirmation that services like police, fire, library and parks are liked well enough to be maintained or improved. But paying for that maintenance is another question.

The effort to collect public opinion has been part of how Red Wing is facing the financial squeeze that is pinching cities across Minnesota.

Police protection is popular, as you might expect. About 78 percent wanted police service maintained or increased. But of those, 49 percent said they did not want their property taxes raised to pay for police; 38 percent said they did. The divide between wanting a service maintained and the desire to pay more property taxes for it was especially wide in street lighting: 66 percent said maintain the lighting, 62 percent of those didn't way to pay more taxes.

The city's incinerator operates at a loss of about a half a million dollars a year. And yet a majority of survey respondents said they are OK with taxes to support the burning of garbage.

Red Wing held two public hearings Aug. 28 and 30 to help city officials search for ideas. Only a handful of the public showed up. Disappointed council members and department heads blamed the good weather and perhaps even the good response from the survey for the very low turnout.

Or it may have been a measure of just how resigned people are to the size of the problem that dwarfs attempts to solve it. When Red Wing had to cut $2 million from its 2009 budget because of reductions in state aid, the four public hearings were full to overflowing according to council president Michael Schultz.

Tonight, facing budget pressure again, Red Wing's city council is expected to present four recommendations for raising revenues. And there will be proposals to cut services as well. The meeting starts at 7:30p at City Hall.

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Northfield joins the club, plans cuts for 2011

Posted at 4:25 PM on August 24, 2010 by Nancy Lebens (0 Comments)
Filed under: Local government finance

They're looking at cuts to do it, but Northfield is another city that has decided local government aid from the state will eventually go away and the time to plan for that is now.

Monday night the Northfield city council presented ideas to the public on how to make cuts in every department in 2011. They ranged from one-time cuts, like not purchasing three police squad cars, to reducing staff in nearly every department.

The immediate problem for the city is dealing with less revenue, thanks to less homestead credit reimbursement from the state of Minnesota to the tune of $288,000 and an anticipated drop in local government aid. The city expects to receive a total $2.3 million in LGA through the end of 2010 and was certified by the state to receive $3 million next year. But it is but is counting on only $1.8 million of that.

Mayor Mary Rossing outlined the charge to the city administration this way:

The challenge we have given the staff and ourselves is to decrease or make up the difference in the budget by $500,000 each year for the next four years. Now if it so happens a governor gets in place who chooses not to unallot or doesn't believe in balancing the state budget on the backs of local government, and we get all the state aid that's promised us then we will be looking at a surplus. But I think that this council is committed to moving forward in that direction so we aren't tied to the whimsical nature of the state.

Northfield's budget projection for 2011 depends on property taxes continuing to rise, as they have done year over year since 2007. Property taxes make up the largest share of revenue.

Eleven people made suggestions to the council. They included subcontracting more city services, using fewer consultants and setting up a volunteer time bank. Less clear was what people consider core services. One said every service that citizens can't see should be excluded as not a core service and perhaps not worthy of taxpayer support.

It was a conversation residents throughout the state are having about rethinking what cities can deliver, and Northfield's city council continues work on the budget tonight.

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Feeling anxiety, Cambridge exemplifies the budget squeeze

Posted at 3:10 PM on August 20, 2010 by Nancy Lebens (0 Comments)
Filed under: Local government finance

It's hard enough coming up with a budget for the next year. The city of Cambridge in east central Minnesota goes the extra distance by looking a decade into the future.

And what the city's finance staff sees is the likelihood of property tax levies that increase anywhere from 2 to 7 percent a year, depending on the scenario the city council chooses. If the levy averages out to less than 4 percent a year, the council almost has to make cuts in the budget that are not one-time savings. And those cuts generally translate into either fewer city employees or cuts in pay across the board. The council members also weighed refinancing debt on the city hall and industrial park.

Thursday night's session of the Cambridge City Council provided a fascinating snapshot of the angst that communities all over Minnesota are feeling, both about the budgets they have to set in coming months and about longer term choices they have to make about what defines their cities. As money from the state shrinks, will residents stand for property tax increases? Are there other ways to raise money? What services absolutely can't be cut in hard times and where can cities make trims?

Ground Level is exploring how cities are addressing these questions and more, looking for places local leaders are trying to take action for the long haul.

Four of Cambridge's five council members heard the bottom line scenario from city finance director Caroline Moe. She told them they should plan on Cambridge receiving only about half the $753,092 in local government aid (LGA) it could receive by law next year. Why anticipate such a hit? History has taught Cambridge that cuts in LGA happen: about half of its LGA was cut in the 2010 budget. In 2009, the state of Minnesota held back 26 percent of the city's LGA.

In 2010, Cambridge raised $4.6 million in property tax levies. Together LGA and property taxes make up 83% of the city's total revenue.

Cambridge, population 7,734 may be envied for its commercial strip with a number of new, big stores: Lowe's, Target, Menards and a Kohl's opening this fall. The city's population has grown 40 percent in the past 10 years.

But budget deficits in the '90s meant the roads needed more work. An industrial park that was supposed to support itself with land sales has required the support of property taxes since 2009.

Finance director Moe asked the council members to consider a 4 percent increase in levy each year from 2011 to 2020 to maintain the current level of services and keep on schedule with capital improvements. Council members Mayor Marlys Palmer, Lisa Iverson, Dave Schornstein and Chris Caulk approved levy increases capped at 3 percent, with the understanding that the finance staff look for more cuts to bring the levy down even more.

But when a budget is drawn 10 years into the future, you might see the impact of your actions in one budget year played out over several. A lower levy in 2011 may make sense now, especially when the recession and higher unemployment levels persist in an election year. But levies may have to rise later unless even deeper cuts are made. That assumes the economy doesn't improve quickly and government aid isn't what cities might expect.

At the end of the two and a half hour work session, the council got another glimpse of economic reality. Caroline Moe told them there were $37 million worth of capital improvements the city wants to do which will be left out of the budget entirely. That's above the $50.2 million total in necessary capital improvements over the next 10 years.

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Can a city save money selling trash bags?

Posted at 1:33 PM on August 13, 2010 by Nancy Lebens (0 Comments)
Filed under: Local government finance

Can the city of Red Wing help relieve budget pressure by selling trash bags?

That's one of the ideas residents have offered -- on the public library's white board, on the city website and by phone -- when the city asked how it could save money. The phone survey is still going on and will feed information into budget hearings at the end of the month, but at least a few interesting threads have emerged so far.

Like cities across Minnesota, Red Wing is bracing for continued squeezing as it prepares its budget and property tax levy for 2011, and it is asking residents for help.

A couple of responses from the Red Wing's web survey compiled August 5 suggest ways to reward those who those who throw less away.

Here's one that seems simplest:

One very successful method of reducing cost for consumers is to sell Red Wing Trash bags. The trash service only collect city purchased bags, low trash producing consumers benefit by paying less for trash pickup and high trash producers have a choice of either pay more or produce less.

Another several commenters--or perhaps a few really passionate ones who commented several times--asked that fire and police work more efficiently. Here's one idea:

My suggestion to reduce costs would be to eliminate Red Wing's paid-on-call firefighters and, in their place, to expand the automatic-aid agreement the Red Wing Fire Department currently has with the Ellsworth Fire Department to include all structure fires in the city of Red Wing.

And later in the same response:

The cost of training, equipment, recruitment and retirement incentives for Red Wing's paid-on-call firefighters could be better used elsewhere, as Red Wing's complement of full-time, on-duty firefighter/paramedics currently handle over 99% of emergency calls, such as medical emergencies, motor vehicle accidents, hazardous conditions, rescues and non-structural fires...

Out of the 62 responses logged so far, there were a few shout-outs to the city's newsletter, Red Wing's Current
which will shift from print to online next month.

In all, the ideas offered online ran a gamut from seeking more volunteer help in providing city services to raising taxes.

City officials are planning two public meetings later this month to discuss residents' ideas.

Even if no workable ideas result, Red Wing's approach is at least a way to spread awareness of the situation community leaders are finding themselves in these days.

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City woes: Property value burden shifts to homeowners

Posted at 2:50 PM on August 11, 2010 by Nancy Lebens (0 Comments)
Filed under: Local government finance

As if the grim budget outlooks weren't enough for cities, along comes a property tax shift toward homeowners that stands to make budget decisions this fall even tougher. And the reason is complicated.

According to an analysis of Minnesota Department of Revenue numbers that the League of Minnesota Cities prepared for Ground Level, commercial-industrial assessed property values posted a year-over-year decline in 2010 for the first time since 1993.

(Residential homestead market values continued a decline begun in 2009. Foreclosures and the deflating housing bubble are still responsible for the overall decrease in values.)

When commercial property values decline, homeowners as a group are on the hook for more of the total tax paid. But add to that shift the fact that commercial property owners pay at a higher rate. In other words, for every dollar a homeowner pays, the owner of a commercial property with the same value pays $2. So as commercial property values come down, the homeowners' share of the overall tax burden rises disproportionately.

Minnesota Taxpayers Association executive director Mark Haveman says cities are going to have a hard time explaining the effect to the public:

Cities are going to feel their hands are tied. You're going to see burden shifting to homeowners even if the levy stays constant.

Haveman says one city has contacted him to find out how to adjust the levy to account for the loss of market value.

It's at least partly a problem of perception. When property values decline people perceive that they are less wealthy even if their income hasn't changed. And they therefore are less willing to pay higher taxes. So if cities need to compensate for less revenue coming in from the state or elsewhere and they have higher expenses, increasing the total property tax levy even by 1 percent may be too much for some homeowners.

As the League of Minnesota Cities observed in 2009:

Falling homestead market values pose a serious challenge for cities. Resistance to the property tax grows as homeowners see their assessed values go down and/or perceive their homes to be worth much less, but receive bigger tax bills. Cities must balance those concerns with the pressures put on city budgets caused by sharp reductions in local government aid and market value homestead credit reimbursement as well as other stresses. (from Special Supplement to Minnesota Cities 2009)

Bigger cities saw more dramatic changes.

LMC policy analyst Lena Gould shared more on the trends in homestead market valuations. Larger cities saw more of a dramatic drop in values, but smaller cities showed declines earlier. Another comparison shows 52 percent of Greater Minnesota cities experienced a decline in property values in 2009 - 2010. Almost all metro cities, or 94%, lost residential market value.

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Amid the angst, are there good ideas?

Posted at 1:37 PM on August 10, 2010 by Dave Peters (0 Comments)
Filed under: Local government finance

The crescendo of stories about belt-tightening cities, which I noted a few weeks ago, continues.

The New York Times weighed in again on Friday and then Times columnist Paul Krugman sounded apochryphal yesterday. Check out the reader comments, including one from Steve in Las Vegas, who says

"I don't care if every street light stays off, I don't care if public employee rolls get cut in half, I don't care if unemployment goes to 15 percent. Not a penny more in higher taxes. . . My Conservative brothers and I will vote this nation into austerity one way or another."

If that sentiment is very widely held, then the angst city leaders have been feeling the past couple of years is only a beginning. But perhaps there's a way to have more of a conversation than Steve appears to be seeking.

A lot of the reporting on this topic this summer has been about austerity -- streetlights going dark, police departments getting cut, streets not getting repaired. Where are the tales of good ideas? Of collaborations, perhaps, that save money but also give better service? Or of choices to cut X in order to add service to Y? Of revenue-raising ideas that residents find palatable?

Not to put a gloss on real pain, but are there imaginative ideas that some have tried and others should learn from?

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Should Minnesota end LGA funding now?

Posted at 10:00 AM on July 30, 2010 by Michael Caputo (2 Comments)
Filed under: Local government finance

Minnesota's unique way of giving state aid to cities - the Local Government Aid or LGA program - has been dwindling. Should LGA just end?

State leaders developed LGA back in the 1960s to keep local property taxes down and provide essential funding for cities (a good history can be found here).

But over the last two years, state budgets have cut LGA to cities. The state faces a deficit in the coming budget cycle of $5.8 billion. LGA seems poised to be slashed again. Meanwhile, cities shut off street lights or reach out to citizens for help balancing budgets. A League of Minnesota Cities report talks about the dire financial circumstances facing cities.

Insight Now has experimented with its space to hold live online discussions. Now we have a new experiment to try - we call it InContext. I try to explain the format of this debate at the bottom of this page. But, the short version is... we need you to make the conversation work.

Today at noon we put this position on the table: Minnesota must end the LGA program.

Arguing for this position is Chuck Marohn, planner and president of Community Growth Institute in Baxter and author of the Strong Towns blog. Arguing against the position is Don Reeder, communications manager for the League of Minnesota Cities and co-author of the Cities Matter blog.

Join this first attempt at putting a debate InContext:

Explaining the online debate format - InContext

These debates can be held on any number of issues discussed here. And the goal is to put them InContext.

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Willmar residents: Taxes no, fees maybe. Public works top the priority list.

Posted at 5:43 PM on July 27, 2010 by Nancy Lebens (0 Comments)
Filed under: Local government finance

An online survey of government services and how to pay for them suggests more people favor fee increases to balance the budget over taxes. There were 356 responses to the survey, or about 2 percent of the population of Willmar, which appears to fall short of the response the finance committee of the city council was hoping for.

When asked whether taxes should be increased to support current municipal services, 48.9% said no, and 41.6 % said yes. About 10% did not respond. On the question of whether fees should increase to balance the budget, 54.6% said yes and 36.2% said no.
And when asked whether they support a cut in city services, 53.9% said no, 37.4% said yes.

The city surveyed residents as they prepare for what officials expect to be a lean budget year. Willmar and cities across the nation are dealing with tighter budgets and decisions about what they can't afford or about how to raise more revenue.

City administrator Mike Schmit says it's hard to make a budget decision based on relatively few responses. But there were enough to draw broad conclusions. Public works: -- plowing, repairing streets and general maintenance -- are the most important. "You see public works at the top, so that has to be our focus. We have to be more guarded about the rest that ranked lower."

"For every person who wanted something saved, there was someone who didn't want it cut back."

In general, Willmar's survey of what city government ought to be doing or cutting yielded very few surprises. The responses favored public works and public safety on a list of services that also included parks and recreation, transit and festivals. At the bottom of the list were lobbying and fire safety education. Survey respondents also didn't care for charging for fire calls.

Beyond the simple voting, a number of people took the opportunity talk about what they liked and didn't about Willmar. And as you might expect, there was venting as well; notably about immigration.

Here's a sample of comments on the wider budget dilemma Willmar faces:

*There never seems to be a shortage of areas where people would like improvements. If the City is facing an economic challenge then so are the people. I don't see this as a good time to force any further pressure on anyones' economic condition. Most people would rather contribute to & raise funds for the areas they feel are a good cause. I feel this is a better solution versus charging everyone for projects where only some may benefit.

*I would support an increase if we could see the older parts of town taken care of. I think we focus on the newer parts of town and forget about the older parts that make the history of Willmar.

*MAYBE THE CITY SHOULD CONCENTRATE ON MAINTENANCE ISSUES FIRST. ITS IS HARD TO IMPRESS POTENTIAL NEW BUSINESS TO A COMMUNITY WHERE THE INFRASTRUCTURE (IE: STREETS, CURBS, GUTTERS, ETC.) ARE FALLING APART.

And despite many entries telling the city to cut back on employees and salaries, the majority of respondents answered good or excellent when asked how well Willmar's city government delivered services.

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Without revenue reform, city services will dim

Posted at 3:26 PM on July 20, 2010 by Michael Caputo (0 Comments)
Filed under: Brainerd, Local government finance

Brainerd has taken a rather symbolic approach in dealing with financial pressure - they've shut off the lights. The city has turned off more than 400 street lights hoping to save $91,000 (The city council just decided to turn back on 40 or 50 of those lights, but the savings plan is still in effect).

Darkened street lights are noticeable. But, as we've pointed out, budget constraints are pushing cities across the nation to shut down even more essential services.

Minnesota cities may soon face those same tougher choices.

We wrote about the effort Willmar is making to survey residents on those choices.

And leaders have begun weighing on the topic at MPR's website for discussing issues, Insight Now.

Regional planner and professional engineer Chuck Marohn, said cities now face dwindling state aid "with much deeper liabilities in terms of infrastructure to maintain and bureaucracies to support."

Knowing what we know today - that LGA (local government aid from the state) is going to end - it would have been better in most instances had it never happened.

State policy does indeed restrict how cities can tax their residents. Minnesota has imposed a property tax cap for cities. And the LGA program not only provides state aid, but also bars city governments from enacting sales and income taxes.

Dan Erkkila, a college administrator who just stepped down as a Grand Rapids city council member, said this creates fiscal instability for cities.

"Multi-year labor (agreements) and other contracts necessitate stability in resources for efficient and effective operations. The current system appears to have broken down, if for no other reason than the fact that many small cities cannot plan well enough in advance to know what the state may or may not provide."

Insight Now plans on being part of those discussions on city financing. Please have a look and join the conversation.

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"I'd rather my kids drive on gravel roads than stick them with a big tax bill"

Posted at 7:30 AM on July 20, 2010 by Dave Peters (0 Comments)
Filed under: Local government finance

I've started collecting links from around the country about people coming to grips with the notion that government services they rely on might cost more than they would like to pay.

The quote in this post's headline comes from the Wall Street Journal and sums it up pretty nicely.

The man who uttered that line was sitting in a bar in Spiritwood, N.D., where workers have been busy tearing up asphalt to build gravel roads that are less expensive to maintain than paved roads, at least in the short term.

The Journal story quotes experts pointing out that gravel roads aren't free either (MPR's News Cut also deals with that issue), but this kind of choice is popping up in a lot of places.

They're laying off police officers in Oakland.

They're closing pools and shutting off street lights in Colorado Springs.

A California city has cut its staff to zero. UPDATE: An account of the same from today's New York Times.

Look for some version of this debate to crank up in Minnesota in coming months as city officials set their property tax levies and budgets for the coming year. As we noted here earlier, Willmar is asking residents to rank their favorite services.

It all puts me in mind of what I have to decide to tell my barber each time I go in for a haircut. Do I just want a little off the top and around the ears, or should I just shave it all off and start over? What exactly do Minnesota communities want to do collectively and what not?

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Facing a squeeze, Willmar asks residents for a top 10 list

Posted at 7:30 AM on July 8, 2010 by Dave Peters (0 Comments)
Filed under: Local government finance

One of the purposes of the Ground Level blog is to throw light on communities that have both challenges and residents who are trying to figure them out. Quickly moving into focus this summer as a prime issue in many Minnesota cities is the coming squeeze on local government finances being driven by the recession and the tax climate.

It will be interesting to see how communities have the conversation about this as they head toward budget time in the fall. MPR News reporter Nancy Lebens, who has joined the Ground Level project, provided the following after talking with Willmar leaders about how they're doing it:

Willmar's budget writers want the public to get specific: which services do you need? And which are more of a luxury in this difficult economic climate?

A new survey on the city's website encourages residents to choose Willmar's top 10 budget priorities from a list of 32. Ice arena programming, airport maintenance, Willmar Fests, storm water management are on the list, as are some more general government activities such as land-use and zoning . There's also a category for "other". Survey respondents also may say how to pay for services: higher fees, taxes, or what can be cut.

Willmar councilman and finance committee chair Denis Anderson hopes 20 to 25 percent of city residents respond. The responses won't be binding, but will help guide the council as it makes its budget this summer.

"The last thing we would want to cut is police and fire. We have the pride of plowing all of our streets in eight hours. Well, maybe we can't have that luxury. We might need to take longer," Anderson notes.

Like most cities, Willmar is looking at its budget and coming to terms with how much it relies on Local Government Aid from the Minnesota state government. Willmar's LGA funding makes up about 28 percent of its general operating revenue. The city is looking at cuts this fiscal year of about $1.5 million. Previous LGA cuts have so far been absorbed into the budget, according to city administrator Michael Schmit. But no one really expects LGA to continue at previous amounts, nor is there a lot of stomach for increased property taxes.

A recent report by the League of Minnesota Cities and the Humphrey Institute projected most cities will be in debt by 2015 if they make no changes in how much they spend or bring in from government, taxes or fees. The report lists what it sees as the painful options: more money spent in taxes or goodbye to senior centers or ice rinks. Some cities are asking, are those the only options?

This isn't only a Minnesota problem. Here's a Denver Post story from Sunday on the bus services cut, street lights turned off, and pools closed in Colorado Springs. Note this comment from a former Minnesotan:

"I came from Minnesota -- from the overtaxed to the undertaxed," said Gary Kulbitski, 43, playing with his kids at the Julie Penrose Fountain, a sculptural wading pool that no longer receives city money. A nonprofit has kept it flowing.

"I'm a conservative, but I think shutting down parks and stuff is a mistake," he said. "I don't think people understood their kids wouldn't be able to go swimming."

During the next several months, we'll be looking how cities of various sizes are trying to hold on to the quality of life or even re-defining what that quality of life looks like when the overall economy is so tough.

What do you think of Willmar's survey? Have you suggested ways your city can cut back or improve services? What's the best idea you've seen to do more with less?

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Another warning bell on cities and their money

Posted at 10:09 AM on June 25, 2010 by Dave Peters (2 Comments)
Filed under: Local government finance

Different set of numbers, same warning bell for Minnesota cities.

The League of Minneseota Cities on Thursday trotted out a Humphrey Institute analysis it commissioned, declaring that cities all over Minnesota will be broke in five years. The analysts took recent trends in city revenue and spending, extended them into the future and concluded that by 2015, cities of all sizes and locations will be in the red.

Since that can't happen under statute, what it means, of course, is a round of tax-raising or expense-cutting between now and then.

The Strong Towns blog did a related analysis recently looking simply at what would happen to city budgets it the state's local government aid goes away.

The league's analysis leans heavily on the expected continuation of lower local government aid but also notes that regardless of what happens to that LGA aid, all cities see community pressure for spending and service increases -- driven by an aging population, for example -- and tax cuts -- driven by residents struggling in a weak economy.

The league's report, at four pages almost a back-of-the-envelope calculation, notes that pain will be felt across the board, from Minneapolis to regional centers to towns under 1,000. It doesn't analyze how cities differ on how they tax and spend or how well they deliver service, and it stops short of framing how residents might come to grips with the looming dilemma.

It's pretty easy to imagine scenes of shouting in city council chambers and frustration or even desperation at the mailbox when tax statements come out. Likewise doctrinaire positions staked out by elected officials and city residents.

This seems like a ripe conversation in the making. Do people start by talking about what services are most important? About what level of sacrifice is called for? About how well service is delivered by cities? About who is successful and why? I keep thinking about gravel roads.

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Gut-check time for Minnesota towns

Posted at 10:11 AM on June 9, 2010 by Dave Peters (0 Comments)
Filed under: Community Development, Local government finance

Amid a squeezed economy, inexorable demographics and declining state and federal help for local governments, some 200 people are gathering in Morris, Minn., tonight and Thursday to talk about small towns and the future.

The University of Minnesota's Center for Small Towns, housed on the Morris campus, is combining with Minnesota Rural Partners Inc., to host the gathering, titled "Finding Solutions and Redefining Communities."

Highlights:

--Minnesota Rural Partners is hosting a gathering at 6:30 this evening at the Prairie Inn in Morris to focus on the creation of a council that would find ways to form rural-urban partnerships, focusing especially on education, workforce and entrepreneurship.

--Minnesota governor candidates will participate in a forum on public policy and small towns. MPR News' Kate Smith is hosting.

--Colleen Landkamer, Minnesota State Director for USDA Rural Development and former President of the National Association of Counties is speaking.

--People from a variety of small towns will talk about how they have tackled housing, jobs, immigration and other challenges and opportunities.

The session this evening is free. You can register for the daylong symposium Thursday for $65.

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Who's in the toughest shape when local aid vanishes?

Posted at 3:31 PM on June 1, 2010 by Dave Peters (4 Comments)
Filed under: Baldwin Township, Community Development, Local government finance

Who in Minnesota should worry most as state and federal officials put the squeeze on money that goes to local governments?

To name names:

That's the conclusion of Chuck Marohn, who in March joined our MPR News Ground Level public forum panel on Baldwin Township and whose planning and consulting group has now ranked Minnesota's cities on how vulnerable they will be if and when local government aid continues to shrink.

That's a prospect that is becoming an assumption among leaders around the state and nation, by the way.

Marohn's group simply calculated how much of a local property tax increase Minnesota cities would have to levy to replace the money coming from state and federal governments.

As the top of the list indicates, some small towns are clearly in the toughest shape, by his analysis. In the Top 50, only eight have populations over 1,000. The biggest of those is Chisholm, on the Iron Range, where Marohn figures the elimination of state and federal help would force a property tax increase of more than $2,400 on a house worth $100,000, unless spending dropped or revenue was found elsewhere.

Marohn's conclusion in the report Vulnerable Cities:

State funding of local government activities has waned, placing intense pressure on cities to reduce services and raise revenue using their primary source of local funding: Property taxes.

He goes on to analyze the tax-and-spend divide this way:

• It's a revenue problem because property taxes are clumsy, regressive mechanisms that create a direct disincentive to more efficient land use. It's a spending problem because we as citizens are accustomed to consuming local police protection, clean water and well-maintained streets which we do not fully fund through local property taxation.




• It's also a productivity problem. The most vulnerable Minnesota places produce local tax revenues that are less than what voters there demand. Using state and federal subsidy to meet core public needs is a way of addressing inequities, perceived or real. It also effectively tables discussion of how communities need to redesign their physical layout, infrastructure, or human capital to fund a higher percentage of total public services consumed.

In a phone conversation this morning, he went so far as to suggest that one way to interpret the problem facing rural towns is that an inability to cope without state and federal help is an indication that metro areas are now subsidizing the small town life so many people (including him) cherish.

On the other hand, he offers more creative ideas than simply whacking away at the budget and saying sorry to residents. Local sales taxes and better comprehensive planning are two. But in the end, he says, the reality is some cities just won't be viable in the 21st Century.

Maybe, he said, it's a choice between hospice care and a new model based on smaller scale economies, not big infrastructure.

If that's true, what principles will determine who lives and dies? Proximity to regional centers? Strong leadership? Tax base upheld by some large corporation? An entrepreneurial spirit? More cooperatives?

Marohn writes the Strong Towns blog about small town issues. You can find the city ranking here and if you want to look up a specific city, use this list.

Is there another way to interpret this analysis? Is there a role in some small towns for the big infrastructure approach to entice a big company?

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