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For immediate release
Feb. 15, 2018
Contact: Julie Liew, jlliew@flaherty-hood.com
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Legislature needs to build on progress for Greater Minnesota
LGA, infrastructure, child care among issues that demand attention this session

ST. PAUL—As the Minnesota Legislature prepares to head into session next week, Greater Minnesota city leaders are urging lawmakers to put aside the growing partisan divide and focus on the “bread and butter” issues that keep communities across the state healthy.

“The Legislature has a strong opportunity to address key issues like Local Government Aid funding, infrastructure repairs and the child care shortage. The greatest danger this session is that legislators will squander this moment of economic strength in our state,” said Bradley Peterson, executive director of the Coalition of Greater Minnesota Cities (CGMC), during a pre-session conference call with statewide media this morning.

“Legislators have a prime opportunity to build on progress made over the last couple of sessions. They can’t let partisanship or the distraction of the upcoming elections stand in the way of getting work done,” he said.

David Smiglewski, mayor of Granite Falls and president of the CGMC, added, “As city leaders and as Minnesotans, we have to demand that they stay focused, buckle down and do their jobs.”

Tax bill talks must include LGA

Leading into the session, legislators have been vocal about the need for tax bill to address issues that have sprung up due to the recent federal tax overhaul. Peterson said this focus on taxes creates an opportunity for the Legislature to address Greater Minnesota cities’ needs by passing an increase in Local Government Aid (LGA). The CGMC is seeking a permanent $30.5 million increase, the amount needed to bring LGA back to its 2002 high-water mark.

“If legislators are serious about passing a tax bill, it must include LGA,” Peterson said.

Ron Johnson has served for 18 years on the city council of Bemidji, a growing community for which LGA is particularly important because nearly half of property in the city is tax-exempt. He has seen LGA funding ebb and flow through the years and says it has a direct impact on the health of his community.

“Our city is prudent — we squeeze extra mileage out of our vehicles and try to be mindful about the amount our residents pay in fees and taxes — but we have necessary expenses. Nothing costs the same as it did in 2002 when there was more LGA to go around,” Johnson said.

The 2017 Legislature passed a modest $15 million LGA increase, which Bemidji used to hold down its property tax levy. Other communities used the extra funds on needs like fire equipment or park improvements, while numerous cities found that higher employee health insurance costs more than ate up any LGA increase.

If the Legislature passes the desired $30.5 million increase, Johnson said his city has discussed hiring a community development director — a position eliminated due to LGA cuts in the mid-2000s — to help take advantage of opportunities for economic growth. For Granite Falls, Smiglewski said an LGA increase would likely be used to replace outdated equipment.

“We have a list of needs a mile long — and we’re not talking about $100,000 waterfalls here,” Smiglewski said.

Costly water infrastructure upgrades can’t wait

Due to aging infrastructure and new water quality regulations, hundreds of cities in Greater Minnesota are currently faced with having to invest millions in expensive upgrades to their wastewater and drinking water facilities. The CGMC is requesting $167 million in bonding for state grant and loan programs that help cities meet these astronomical costs.

Little Falls is among the cities relying on a bonding bill to pass this year. The city needs to renovate its wastewater treatment plant, a project estimated to cost more than $17 million. It is currently on the list to receive a $7 million grant through the state’s Point Source Implementation Grant Program, but that money will only come into fruition if the program is funded in the bonding bill.

“If we don’t receive grant funding, our rates will nearly triple,” said City Administrator Jon Radermacher. “We have no choice but to upgrade our plant, so this funding is absolutely critical. There is no question Little Falls and other cities in our position need the Legislature to pass a bonding bill with substantial funding for water infrastructure.”

Budget constraints force cities to take a slow path on street repairs

Another infrastructure concern that has dogged cities for years is the struggle to keep up with street repairs and maintenance. The CGMC is seeking $50 million for city streets, divided equally between cities with populations greater than 5,000 and those under 5,000.

The city of Granite Falls has identified at least 27 city blocks that need be rebuilt or overlayed, a list that grows each year. Due to budget constraints, the city plans to fix only six blocks in 2018, which is estimated to cost $927,000. In contrast, the city received only $24,635 in city-street funding through the Small Cities Assistance Program, which the 2017 Legislature funded at $8 million over two years.

“Our ‘to-do list’ is long and what can actually afford to do is surprisingly short,” Smiglewski said. “We can only do a block or two here, a block or two there. It’s not very efficient.”

Cities with populations over 5,000 receive some funding through the Municipal State Aid Street (MSAS) system, but Johnson says larger cities — particularly regional centers like Bemidji, whose daytime population nearly doubles — need more resources.

“At our rate, we aren’t keeping up,” Johnson said, noting that his city is able to budget for about one mile of street repairs a year. “We try to repair the worst, but we should be doing much more.”

Child care shortage needs attention

In addition to advocating for funding for LGA and infrastructure, the CGMC also wants legislators to pay closer attention to the growing child care shortage in Greater Minnesota. For many communities, the lack of child care has become a serious barrier to economic growth.

As a father of a 3-year-old with another child on the way, Radermacher has first-hand knowledge of the problem. When he was offered the city administrator job a couple years ago, he said the “very first question” he asked was if there child care was available in Little Falls. Ultimately, he had to live away from his wife and child for three months until they were able to obtain child care in the city.

According to a needs assessment performed by First Children’s Finance, Little Falls currently has a need for 144 more child care spots, a number that jumps to 475 when counting the adjoining zip codes. Other cities in Greater Minnesota have reported similar deficits.

“We are on the cusp of a real critical issue here,” Radermacher said. “I know people who won’t take a job because they can’t find child care. Businesses want to come here or expand, but it’s hard to do that when the workforce has child care needs.”

The CGMC is supporting legislation that provides funding to the state’s initiative foundations to encourage more in-home child care providers. It also hopes the Legislature will further explore the causes of the shortage and review whether there are any onerous or unnecessary regulations that may be preventing people from entering into the child care businesses.

“The child care shortage is a complex issue and it’s not going to be solved in one session,” Peterson said. “Legislators need to know that this is not just a family issue, it’s also an economic development issue.”

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The Coalition of Greater Minnesota Cities is a nonprofit, nonpartisan advocacy organization representing 96 cities outside of the Twin Cities metropolitan area. The Coalition educates legislators about issues important to Greater Minnesota. Visit the CGMC online at greatermncities.org and follow us on Twitter @greatermncities.

 

Below is statement from CGMC President and Granite Falls Mayor Dave Smiglewski regarding Gov. Dayton’s $1.5 billion public works proposal, which was unveiled this morning. A PDF version of this statement is available here.

“It is promising to see that Governor Dayton’s bonding proposal includes $167 million for clean water infrastructure programs. Clean water is a vital part of a healthy community, yet wastewater and drinking water facilities throughout the state are aging and in dire need of expensive repairs and upgrades. Cities are facing astronomical costs and many simply cannot afford to make these needed infrastructure improvements without assistance from the state. We are pleased to see that Gov. Dayton’s bonding plan recognizes this need.

Clean water infrastructure grant and loan programs have consistently received bipartisan support at the Legislature, and we are hopeful that will continue in 2018. As we move into the legislative session, we hope the Governor and Legislature will be able to put their other squabbles aside and pass a bonding bill that promotes economic development, strong infrastructure and thriving communities.”

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The November budget forecast released this week by Minnesota Management and Budget (MMB) shows a small deficit in the current biennium ($188 million for FY 2018-19) and a larger deficit for the following biennium ($586 million for FY 2020-21). In addition, MMB does not include the cost of inflation in its long-term forecasts; it estimates the cost of inflation for FY 2020-21 to be approximately $1.3 billion.

There are significant unknowns at the federal level, including whether tax reform or funding for the Children’s Health Insurance Program (CHIP) will pass, and whether the economy continues its historic expansion. The state’s previous February forecast included assumptions regarding federal legislation that were overly positive ‒ and was higher than the average of 50 other forecasts. This newest November forecast changed those assumptions.

House Speaker Kurt Daudt (R-Crown) indicated that changes in this November forecast were made for political purposes. Senate Majority Leader Paul Gazelka (R-Nisswa) called the report “obsolete on arrival” due to the pending actions at the federal level. Gov. Dayton urged caution and noted that he would not use any budget reserves for what, in his opinion, could be solved with sound budgeting this session.

The Legislative-Citizens Commission on Minnesota Resources (LCCMR) is responsible for recommending how $45.7 million from the Environmental Trust Fund should be spent. The LCCMR received a total of 217 proposals requesting approximately $183 million in funding, and narrowed it down to 101 projects requesting $120.4 million for proposals to present over the next two weeks.

A number of the projects in the running for funding could benefit Greater Minnesota. Proposal 201-G would provide $3 million for local parks, trails and natural areas grants. These grant programs provide funding to projects that do not qualify for Legacy funds and they are a top priority for the Greater Minnesota Parks and Trails organization to which many CGMC cities belong. 

In another proposal, the Minnesota Pollution Control Agency (MPCA) is seeking funding for a wastewater treatment plant optimization pilot program (proposal 035-B) that would seek ways to help facilities perform better and meet stricter standards without costly facility upgrades. CGMC cities would be eligible to apply for the pilot if it is funded.

You can review these projects and others selected here (the projects that will present to the LCCMR are marked with an X).

Please consider reaching out to LCCMR members and ask them to support projects that benefit Greater Minnesota, particularly the two mentioned above. You can find the members’ contact information here.

On Tuesday, Gov. Dayton announced he would sign all of the budget bills passed by the Legislature, as well as the bonding and tax bills. Nonetheless, significant controversy continues. Here’s a play-by-play of the final days of the special session, including the CGMC perspective on what may come:

Special session marked by frustration
Before the Legislature had even sent Gov. Dayton all of its budget bills, loud protests rang through the Capitol urging the Governor to “veto everything.” Activists were angered by the perception that Republican leadership in the Legislature had sneaked controversial provisions into a number of bills after reaching an agreement with Gov. Dayton.

Late in the week, it seemed that the tax bill (which includes a $15 million LGA increase) was a possible veto target. Gov. Dayton and other Democrats, including Senate Minority Leader Tom Bakk, expressed concern over the high cost of the GOP’s tax bill, which comes in at $650 million in the first biennium and grows substantially thereafter. Sen. Bakk urged Gov. Dayton to veto the bill to avoid future deficits.

Legislature tries to tie Dayton’s hands
To pressure Gov. Dayton into signing the tax bill, legislators inserted a provision into a state government funding bill without the Governor’s knowledge. The provision would have withheld all funding for the operation of the Department of Revenue unless Gov. Dayton signed the tax bill. On Tuesday, House Speaker Kurt Daudt acknowledged to reporters the provision was placed in the bill behind Gov. Dayton’s back. When asked if the Governor knew about the provision in advance, Speaker Daudt replied, “He found it eventually.”

Dayton signs budget bills, but responds with his own maneuvers
In response to the Legislature’s maneuver, Gov. Dayton wrote to leaders, “I consider this provision … to be a reprehensible sneak attack, which shatters whatever trust we achieved.” Angered by the perceived slight, Gov. Dayton signed all of the budget bills, but used his line-item veto power to strike any new funding for the operation of the Legislature itself. Gov. Dayton indicated that vetoing the Legislature’s funding was a move to bring legislators back to the negotiating table. Arguing they had not negotiated in good faith, the Governor wants to re-open negotiations on items in the tax bill including tax freezes on cigarettes and the state commercial/industrial property tax.

Rather than return to the negotiating table, the Legislature is likely to sue the Governor on constitutional grounds. The courts will be asked to determine whether the Governor in fact has the authority to use his veto pen to eliminate funding for another, co-equal branch of government.
 
The CGMC perspective
Regardless of how the controversy plays out, provisions in the tax bill that benefit CGMC members cities, such as the $15 million LGA increase and LGA formula fixes, are not likely to be impacted. A lawsuit between branches of government would be on the narrow issue of the Legislature’s funding. In the unlikely scenario that negotiations do restart, they will likely be limited to just a few controversial items. The CGMC will continue to monitor developments.

Final outcome of CGMC priorities
For a brief overview of how the CGMC’s top legislative priorities fared this session, please see this 2017 Outcomes Chart.

The House and Senate, purportedly in agreement with Gov. Dayton, passed a tax bill today that comes in around $648 million for the 2018-19 biennium. The bill includes a permanent $15 million increase in Local Government Aid. To see a preliminary estimate of how your city will do with this increase, click HERE for the CGMC’s updated LGA run.

We want to extend a sincere THANK YOU to everyone who responded to our numerous Action Alerts by contacting your legislators and the Governor about the need for an increase in LGA funding. We were hoping for a larger increase, and we will continue the fight, but it was thanks to your help that this final number is higher than previous proposals from both the House and Senate.
 
Here are links to the SPREADSHEET and BILL LANGUAGE for the tax bill.

Last night’s legislative deadline sailed by without action on several key bills, including the tax bill (which includes Local Government Aid funding). Governor Dayton immediately called a special session at 12:01 a.m. this morning, which means legislators are continuing their work to pass budget bills. There is still hope for an LGA increase, but we need your help!

Take action now!
If we are going to secure an LGA increase, it is imperative that you contact Governor Dayton, House Speaker Kurt Daudt and Senate Majority Leader Paul Gazelka by 3 p.m. TODAY. Tell them that the final tax bill must include a permanent $20 million increase in LGA per year over the next two years.

Contact info

Questions?
If you have any questions about LGA or the legislative session, please contact Bradley Peterson at bmpeterson@flaherty-hood.com or 651-259-1911.

With mere hours to go until tonight’s midnight deadline, the Minnesota Legislature is hard at work trying to negotiate and pass a state budget and other key pieces of legislation. At this point it appears we are likely headed for a short special session to complete the state budget.

Legislators were holed up in St. Paul over the weekend and managed to pass a few budget bills out of the House and Senate, including the environment and jobs bills. A number of bills are still on the agenda for today including taxes, transportation and bonding.

Since most of the negotiations have been going on behind closed doors – leaving the public, the media and lobbyists out of the legislative process — we have little indication of what will be included in the final bills.

If you have not done so already, now would be an excellent time to respond to this CGMC Action Alert by contacting your legislators and Gov. Dayton to urge them to include a significant increase in Local Government Aid in the final tax bill.

The environmental bill is one of the few bills that passed on Sunday and is now expected to be signed into law by the Governor. Unfortunately, due to continuing opposition from the Governor and the Minnesota Pollution Control Agency, many of the significant environmental reforms sought by the CGMC were stripped from the final bill, including our call for independent peer review of proposed rules and a prohibition against the enforcement of unadopted rules. On the plus side, the bill includes our request to extend the public comment period for new city permits to 60 days (up from 30 days) and also includes some policy changes regarding the Impaired Waters List.

As for the jobs bills, which passed early this morning and is also expected to be signed by the Governor, it contains several priorities that are important to rural communities:

  • The Job Training Incentive Program is funded at $2.7 million per biennium for 218-19 and 2020-21
  • The Border-to-Border Broadband Broadband Development Grant Program is funded at $20 million
  • A workforce housing grant program within the Minnesota Housing Finance Authority will receive $4 million per biennium for 2018-19 and 2020-21
  • The Greater Minnesota Business Development Public Infrastructure program (BDPI) gets $1 million for the 2018-19 biennium (excluding a $1.6 million earmark in FY 18) and approximately $3.6 million for the 2020-21 biennium. The BDPI program is funded in the proposed bonding bill as well.
  • The Minnesota Investment Fund is funded at $25 million per biennium for 2018-19 and 2020-21
  • The Job Creation Fund receives $17 million for the 2018-19 biennium and $16 million for the 2020-21 biennium

For updates as this final day of session proceeds, please follow us on Twitter (@greatermncities), Facebook and our website (greatermncities.org.)

One week from today is the constitutional deadline for the state Legislature to wrap up its regular session, so you can expect a lot of movement this week on a number of CGMC proposals. For starters, the House is prepared to increase the amount of its bonding proposal from $600 million to $800 million through an amendment in the Ways & Means Committee tomorrow.

CLICK HERE for a spreadsheet of the projects included in the House proposal. Below are a couple of the priorities the CGMC is focusing on. 

Wastewater Infrastructure

The CGMC has been advocating this session for $167 million in bonding funds to go toward wastewater infrastructure funding in three categories: Point Source Implementation Grants; Wastewater Infrastructure Funding; and State Matching for USEPA Capitalization Grants.

Currently, the Senate’s bonding bill has a total of $133.5 million allocated for wastewater, but the House version comes in much lower at $105.3 million. The CGMC will be advocating this week for the House to move closer to the Senate’s position. Our priority will be that the bulk of this increase be in the category of Point Source Implementation Grants. These grants are the most direct way to get funding to our CGMC cities for wastewater projects.

Greater Minnesota Business Development Public Infrastructure Grant Program (BDPI)

BDPI is a popular grant program for Greater Minnesota cities that has been beneficial to a number of our members. Due to its popularity, however, the fund will be depleted if no bonding bill passes this year. This session, the CGMC sought to replenish the program with a $15 million bonding allocation.

Currently, both the Senate and House versions of the bonding bill contain $12 million for the program. While we will continue to advocate for a higher number, $12 million is a good amount that will provide funds for much needed projects around the state. The CGMC will be lobbying to ensure this number either grows or goes no lower than it currently is as the bill heads toward final passage.

Stay tuned!

CGMC updates and Action Alerts will come more frequently now that the Legislature is in the home stretch. To stay up to date on all the action at the legislature, follow the CGMC on Twitter and check out the CGMC website regularly.

If you have any questions, please email us at CGMC_Communications@flaherty-hood.com.

For Immediate Release: May 11, 2017
Contact: Julie Liew, jlliew@flaherty-hood.com

A PDF version of this press release is available here.

ST. PAUL—With the session deadline looming and little progress thus far on key legislative priorities for rural communities, Greater Minnesota city leaders held a press conference today to caution legislators against repeating last year’s failures on taxes, bonding and transportation.

“Exactly one year ago today, we held a press conference urging legislators to pass an increase in Local Government Aid, a fair and balanced bonding bill and a transportation bill that funds city streets and the Corridors of Commerce program,” said Sara Carlson, Mayor of Alexandria and President of the Coalition of Greater Minnesota Cities (CGMC). “Here we are 365 days later and we are still asking for the same things. What does it take for Greater Minnesota’s needs to be addressed?”

Carlson said that rural Minnesota voters sent a strong message in the November election that their needs and concerns had been ignored for too long. At the start of the session, many city leaders were hopeful that Greater Minnesota issues would get more attention this year since rural legislators make up the majority of the Republican caucus in both the House and Senate. However, with less than two weeks left in the session, serious questions remain about the Legislature’s willingness to invest in rural priorities.

At the top of that list is an increase in Local Government Aid (LGA), the state program that provides property tax relief and allows cities of all sizes to have a similar level of services regardless of their wealth. Nearly 96 percent of Greater Minnesota cities, and 89 percent of cities statewide, receive LGA.

The CGMC is seeking a permanent $45.5 million increase in LGA funding, the amount needed to bring the program back to its 2002 level. The joint House and Senate tax bill doesn’t come close to this benchmark — it includes just a $6 million one-time increase for 2018. Under the bill, LGA would revert back to the 2017 funding level the following year.

“The Legislature’s tax bill fails on LGA,” Carlson said. “No state program does more to improve the quality of life and economic competitiveness of Greater Minnesota communities than LGA. I am perplexed as to why our legislators are not investing more into the program.”

Carlson noted that Gov. Dayton has already pledged to veto the tax bill, a decision the CGMC supports. “The Governor should demand a significant and permanent LGA increase in the final tax bill,” she said.

City leaders are also united in their support for a bonding bill this session. For Greater Minnesota cities, the most critical item in this bill is additional money for grant and loan programs that provide funding for wastewater infrastructure.

There is broad bipartisan support for this funding: the Governor’s bonding proposal includes $167 million, while the Senate bill has $133 million and the House bill has $105 million. However, with vastly different ideas about the overall size of the bonding bill — the House bill totals only $600 million, while the Governor’s plan is nearly $1.5 billion — passing a bill could be difficult.

“We cannot wait another year for a bonding bill,” said Austin City Administrator Craig Clark.  “Like many cities in Greater Minnesota, we are facing massive costs to repair and upgrade our water treatment facilities. If we don’t receive more financial help, cities have no choice but to pass those costs onto our residents and businesses.”

Another long-standing area of concern is transportation. Although city officials want the state to invest more in transportation — particularly city streets and the Corridors of Commerce program — they cautioned the Legislature and Governor against relying too heavily on the general fund.

“Taking too much general fund money for transportation could have a harmful effect on other important priorities like LGA, education and public safety,” said Granite Falls Mayor Dave Smiglewski. “A smart transportation plan that looks out for the long-term success of our state should include a mix of new revenue along with a modest amount of general fund dollars.”

In the waning days of session, the city leaders said they plan to be in frequent contact with their local legislators and other key lawmakers to encourage them to take action on key Greater Minnesota priorities.

“No one wants a repeat of last year,” Smiglewski said, referring to the last-minute failure of several key bills. “Luckily, there is still time for our legislators to make this session a ‘win’ for Greater Minnesota.”

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