ST. PAUL—It took years of advocacy by city leaders and a late-night special session to get there, but funding for the Local Government Aid (LGA) program is finally being restored to its 2002 high-water mark.
The tax bill passed by the Legislature in the wee hours of Saturday morning contains a $26 million increase in LGA for 2020, followed by an additional $4 million boost in 2021, bringing total funding for the program to $564 million. The bill is now headed to Gov. Walz’s desk. He is expected to sign it, along with other key budget bills, on Tuesday.
“Our No. 1 priority for this year was to get LGA funding back up to the 2002 level,” said Ron Johnson, who serves as president of the Coalition of Greater Minnesota Cities (CGMC) and is a member of the Bemidji City Council. “I’m ecstatic that the Legislature and Governor were able to work together to make that goal a reality. Cities all across the state, and especially in Greater Minnesota, are going to benefit from this important investment.”
This increase has been a long time coming for the nearly 90% of cities in Minnesota who rely on LGA to help pay for city services (such as public safety, street maintenance, parks and libraries) and restrain property taxes. While LGA has received occasional boosts in funding in recent years, cities have still been playing catch-up since drastic cuts to the program in the mid-2000s.
“As city officials, we work hard to keep our city budgets and property tax levies in check, but it is difficult when costs for everything from employee health insurance premiums to construction materials continue to rise,” Johnson said.
“A great thing about LGA is that it gives cities the flexibility to make investments wherever they are most needed,” he added. “With this bump in funding, some cities will be able to hire an additional firefighter or replace a beaten up old snowplow, while others might use the extra LGA to hold down their levies.”
Bradley Peterson, executive director of the CGMC, credited tenacious city leaders, Gov. Walz, House Tax Chair Rep. Paul Marquart (DFL-Dilworth) and other state lawmakers for their hard work in getting the LGA increase through the Legislature this year.
“Successes like this have many parents,” Peterson said, noting that LGA is a prime example of an issue where the divided state government was able to reach a compromise for the good of the state.
In addition to LGA, there were other bright spots for Greater Minnesota in the special session.
The Legislature approved funding to help address the child care shortage in Greater Minnesota, including $750,000 to be divided between the six Minnesota Initiative Foundations for child care provider training and business assistance and an additional $750,000 for child care grants, of which at least 60% must go to Greater Minnesota. It also passed $40 million for rural broadband, $18 million for clean water infrastructure grants, $3.5 million for the Greater Minnesota Business Development Public Infrastructure Grant Program and $1.35 million for the Greater Minnesota Job Training Incentive Program.
However, there were some major disappointments in the session as well.
After legislative leaders were unable to agree on adopting any new revenues for transportation, the Legislature passed a pared down transportation bill that included no funding for small-city streets and no additional funding for the Municipal Street Aid or Corridors of Commerce programs.
And perhaps the biggest disappointment of the session was the failure to pass a bonding bill. Johnson said city leaders were counting on a bonding bill to help pay for critical infrastructure needs such as repairs to wastewater treatment plants and other city facilities, road improvements and new or expanded child care facilities.
“In some ways this was a bittersweet legislative session for Greater Minnesota overall,” Johnson said. “We are pleased with the LGA increase, but the lack of a bonding bill or comprehensive transportation bill means many important projects will have to be pushed aside for at least another year.”
The Coalition of Greater Minnesota Cities is a nonprofit, nonpartisan advocacy organization representing 97 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.
The Legislature is back in session! Governor Walz called a special session for 10 a.m. Friday with the goal of passing the state budget. While the Governor and legislative leaders have expressed preference for a one-day special session, it remains unclear whether it will stretch into the weekend. Throughout the week committee chairs, legislative leaders and nonpartisan legislative staff were hard at work hammering out the final details on the big-ticket budget bills. By Thursday evening most of the conference committees had completed negotiations and released proposed bills that will be voted on by the full House and Senate during the special session.
Here is where things currently stand on the CGMC’s top issues:
- Local Government Aid – The proposed tax bill includes a $26 million increase in LGA for 2020, and an additional $4 million increase the following year, restoring LGA to its 2002 level starting in 2021.This document from MN House Research shows how much LGA each city would receive in 2020 under the bill. In addition, the bill includes a provision that says that no city will receive less LGA in 2020 than they received in 2019.
- Clean water infrastructure – We are waiting to see if our request for $67 million for clean water grant and loan programs will be included in the bonding bill. However, the proposed Legacy bill includes $18 million for the Point Source Implementation Grant Program, which helps cities pay for water infrastructure projects.
- City streets – The proposed transportation bill includes no funding for small-city streets (cities under 5,000 in population) and no additional funding for the Municipal Street Aid program for cities over 5,000 in population.
- Corridors of Commerce – The transportation bill does not include any additional funding for Corridors of Commerce, but it keeps the $25 million/year ongoing appropriation for the program which had been potentially on the chopping block.
- Child care grants – The proposed omnibus jobs bill includes $750,000 to be distributed between the six Minnesota Initiative Foundations (MIFs) for child care provider training and business development assistance. The bill also includes $750,000 for the Department of Employment and Economic Development child care grant program, of which at least 60 percent must go to Greater Minnesota.
- Child care facilities grants – This issue remains up in the air as the Legislature attempts to craft a bonding bill.
- Greater Minnesota Business Development Infrastructure Grant Program (BDPI) – The BDPI program is typically funded mostly through the bonding bill, so we are still waiting to see if it will be included. However, the proposed jobs bill includes $3.574 million ($1.787 million per year for two years) for the program.
- Job training – The jobs bill includes $1.35 million for the Greater Minnesota Job Training Incentive Program.
- Broadband – The agriculture & housing finance bill includes $40 million for the Border-to-Border Broadband Development Grant Program.
Once the special session has concluded, we will provide more in-depth analysis on how Greater Minnesota priorities fared at the Legislature this year.
After blowing past their own self-imposed deadlines, Governor Walz and legislative leaders House Speaker Melissa Hortman and Senate Majority Leader Paul Gazelka finally reached an agreement on the state budget Sunday evening. See their signed agreement.
Although Monday was the final day of the regular session — per the State Constitution — a special session will be required for the Legislature to complete its work and pass bills. Governor Walz and legislative leaders have indicated preference for a one-day special session to be held this Thursday, but the exact timing and duration of the special session are still up in the air.
As all three stated during their joint press conference Sunday evening, the agreement reflects a compromise on all sides with no clear “winner.” The two major sticking points in negotiations were the gas tax (Governor and House wanted a 20 cent increase; Senate wanted no increase) and health care provider tax (Governor and House wanted to extend the 2% provider tax set to sunset this year; Senate wanted to eliminate it). Ultimately, the final agreement included no gas tax increase and a 1.8% provider tax with no sunset.
While there is an agreement on the broad budget numbers, the various conference committees were tasked with hammering out the details by 5 p.m. Monday. Reportedly most of them failed to meet that deadline. There is talk that now the bills will be pulled out of conference committee and the final details will be decided between Governor Walz, legislative leaders and the respective committee chairs.
What does it all mean for Local Government Aid (LGA)?
The prospects for an LGA increase — which, if there is one, will be included in the tax bill — are still up in the air.
The tax bill agreement includes only three specific items: a reduction in the second-tier individual income tax rate from 7.2 percent to 6.8 percent, $20 million for the Minneapolis Employees Retirement Fund and a $50 million reduction in the state general levy, which is a statewide property tax that primarily applies to commercial-industrial property. All other issues were left up the conference committee to decide.
The tax bill was given a $0 target, which means that any increase in tax revenues must be matched by an equivalent reduction in revenues or increase in tax aids and credits (e.g. LGA). Federal conformity, Minnesota’s response to the 2017 federal tax overhaul, will play a significant role in shaping what a final tax bill looks like as the plans put forth by Governor Walz, the House DFL and the Senate GOP all generate additional revenue that could be used to pay for other priorities within the tax bill, such as increases to LGA or an expansion of the Working Family Credit.
After the budget agreement was announced Sunday night, we quickly sent out a news release from CGMC President Ron Johnson reiterating that Greater Minnesota communities are counting on the Legislature to pass a $30.5 million LGA increase this year. The CGMC also sent a letter from Ron to all Greater Minnesota legislators arguing that an LGA increase is necessary to provide balance to the tax bill, because 73 percent of the property tax relief provided by cutting the state general levy will go to property located in the metro.
What about a bonding bill?
Governor Walz and the legislative leaders have agreed to a $500 million bonding bill, which includes $440 million in general obligation bonds and $60 million in housing infrastructure bonds. However, the details of what will actually be included in said bonding bill have yet to be determined. From the CGMC perspective, we are hopeful for dollars for clean water infrastructure (PFA $$$), the Greater Minnesota Business Development Infrastructure grant program and child care facilities grants. Several of our member cities also have important projects vying for funding.
It is important to note that unlike other bills, the bonding bill requires a supermajority to pass. That means that it will not pass in either the House or Senate unless some legislators in both chambers vote across party lines. In comments made to reporters following announcement of the budget deal, House Minority Leader Kurt Daudt threw some cold water on the idea of any House Republicans voting for a bonding bill. However, it is quite possible that some House Republicans may choose to break from their party in order to get funding for important projects in their districts.
And CGMC’s child care proposals?
At this point there is no news to report on our two child care priorities: funding for the Minnesota Initiative Foundations (MIFs) for provider training & business assistance and bonding money to build or expand child care facilities. The MIFs proposal is still being considered as part of the omnibus jobs bill, and child care facilities grants are part of the ongoing bonding bill discussions.
Any hope for transportation?
The gas tax was one of Governor Walz’s highest profile proposals this session. He talked about the need for new transportation revenues on the campaign trail and reiterated that commitment the day after his election as governor. This session’s House transportation bill was particularly promising for CGMC priorities. It included new funding for Corridors of Commerce, significant new funding for MSA cities, and a permanent, dedicated funding stream for small cities. When the final budget deal was reached, however, all of those priorities ended up on the cutting room floor.
For cities with populations greater than 5,000, the status quo will hold. With no additional funding coming into the transportation formula, larger cities will not see increases through the municipal state aid formula.
For small cities, the jury is still out, but the path forward is difficult. Without significant new funding for transportation and a relatively small general fund target for transportation, it is difficult to see how the House and Senate come up with a compromise plan that isn’t an abject failure for small-city street funding.
Further, without new funding in the transportation system, significant investments in Corridors of Commerce may not be possible this session. Since it appears that a comprehensive transportation package is now off the table for this year, the CGMC will shift in its focus in the upcoming special session to maintaining the $25 million/year base appropriation for Corridors of Commerce, which the Senate has proposed eliminating. While the Corridors of Commerce program is not perfect and could use some tweaks in the way it scores projects for funding consideration, it remains one of the few mechanisms for funding critical highway projects in Greater Minnesota.
How will the special session play out?
The legislative leaders have hinted at holding a one-day special session on Thursday. Accomplishing that in one day would require suspending the normal procedural rules in each chamber which require action on a bill take place over multiple days. A vote to suspend the rules requires a three-fifths majority, which would require six GOP votes in the House. The House GOP caucus has threatened to vote against such a motion. Failure to suspend the rules means a special session could take several days to finish.
It’s important to note that while there is a global agreement between the Governor, Speaker Hortman and Sen. Gazelka, there are still 199 other legislators to consider — some of whom may not be happy with the terms that were agreed upon or the “cone of silence” that surrounded the negotiations. So while there are just hours until today’s midnight deadline for the regular legislative session, the Legislature’s work remains far from over.
As the special session plays out, CGMC staff will be busy following all the action at the Capitol and continuing to advocate for Greater Minnesota priorities.
If you have any questions, please contact CGMC Executive Director Bradley Peterson at email@example.com or 651-225-8840.
With just less than three weeks left in the legislative session, it is vital that we work together to keep legislators focused on Greater Minnesota priorities such as Local Government Aid (LGA), child care, clean water infrastructure and transportation. To help advocate for these and other issues, we encourage all Greater Minnesota city leaders to join us for an End-of-Session Lobby Day & Ice Cream Social on Wednesday, May 8.
The event is FREE to attend, but please RSVP by sending an email to Meghan at RSVP@flaherty-hood.com (include your name, city and position/title).
We hope to get as many city officials to attend as possible! Share this Lobby Day Flyer and encourage other city officials and staff to join us.
Parking Info – Attendees may park for free in the lot located at 525 Park Street in St. Paul, just a block from the Capitol. However, a parking permit is required. Please print this parking permit in color, write in the event date (May 8) and place it on your dashboard.
If you have any questions, please contact Julie Liew at firstname.lastname@example.org.
With the Legislature currently on hiatus for the Easter/Passover break, CGMC staff members hit the road this week to meet with editors and reporters in Greater Minnesota to provide an update on our legislative priorities and discuss our hopes heading into the final month of the legislative session. Stops included the newspapers in Hutchinson, Willmar, St. Cloud, Fargo/Moorhead, Fergus Falls and Alexandria. (Here’s an article about our visit to the Fergus Falls Daily Journal.)
At the meetings, we shared this mid-session progress chart, which shows where the Governor, House and Senate each stand on the CGMC’s top priorities including Local Government Aid (LGA), child care, transportation and clean water infrastructure. As this end-of-session handout indicates, we also reiterated that we are calling on the Governor and legislative leaders to work together over the next few weeks to do more than simply pass a “lights on” state budget. We emphasized that in order the 2019 legislative session to be considered a success for Greater Minnesota, the Legislature and Governor must:
- Pass a tax bill that includes a $30.5 million increase in LGA.
- Pass a bonding bill that includes $67 million for Public Facilities Authority clean water grant and loan programs, as well as funding for child care facilities, the BDPI program and other infrastructure investments.
- Pass a comprehensive transportation bill that raises new revenues and provides funding for city streets and the Corridors of Commerce program.
We would like to extend a special thank-you to the local city officials who joined us for some of the media visits: Willmar City Councilor Audrey Nelsen, St. Joseph Mayor Rick Schultz, Moorhead City Manager Chris Volkers and Alexandria City Administrator Marty Schultz.
Although this year’s legislative session is five months long, it’s no secret that the final two weeks of session are especially critical. This is when negotiations really heat up and final decisions are made. As we countdown to the Legislature’s May 20 deadline, it is vital that that you continue to speak up about important CGMC issues such as Local Government Aid, wastewater infrastructure, child care and transportation. To help keep legislators’ attention focused on our top priorities, we invite all Greater Minnesota city leaders to join us for an End-of-Session Lobby Day & Ice Cream Social on Wednesday, May 8.
The tentative schedule for the day is as follows:
- 10:30 a.m. – Legislative update and messaging (Room 500 North in the State Office Building, located across the street from the State Capitol)
- Lunch on your own
- Afternoon – Meetings with legislators (attendees should make appointments with their own legislators; we may also ask some attendees to participate in additional meetings with key legislators)
- 2-3 p.m. – Ice cream social with legislators and legislative staff (L’etoile du Nord Vault Room in the Basement of the State Capitol)
Lobby Day is FREE to attend, but we ask that you register by sending an email to Meghan at RSVP@flaherty-hood.com (please include your name, city and position/title).
We hope to get as many city officials to attend as possible! Please share this Lobby Day Flyer and encourage other city officials and staff to join us.
If you have any questions, please contact Julie Liew at email@example.com or 651-259-1917.
Gov. Tim Walz unveiled a $1.27 billion bonding proposal this week. The package of capital improvements includes $350 million for transportation, $300 million for projects at the University of Minnesota and Minnesota State, and $150 million for housing. You can read the full list of proposed projects here.
While various CGMC priorities receive funding in the proposal — including the Greater Minnesota Business Development Public Infrastructure (BDPI) Grant Program, wastewater infrastructure programs, and grants to local governments for road and bridge improvements — many of the proposals fall short of what is needed to address the various infrastructure challenges in Greater Minnesota.
The Governor proposed $67 million for Public Facilities Authority (PFA) programs: $40 million for the Water Infrastructure Fund, $22 million for Point Source Implementation Grants, and $5 million for the Clean Water and Drinking Water Revolving Funds. In making this proposal, the Governor has assumed that the $59 million in PFA funding which was included in last year’s bonding bill but is currently tied up in a lawsuit will be resolved before this bill moves forward. The CGMC is advocating for legislation that would provide $128 million in funding for the PFA water programs. If the Legislature is able to resolve the dispute over the money that is being held up from last year’s bonding bill, then the Governor’s PFA proposal is only $2 million less than the CGMC’s request.
The Governor’s bonding proposal of $3 million for BDPI would likely not be enough to fund the program through FY2021 due to the program’s popularity and high demand for the funds. In order to ensure cities can continue to access this successful program, the CGMC is seeking $20 million in BDPI funding.
Gov. Walz’s bonding plan also includes $100 million each for the Local Bridge Replacement Program and the Local Road Improvement Program. While this funding could help cities in Greater Minnesota address critical transportation infrastructure needs, these two programs have often been used to earmark projects in the metro area, leaving little for communities outside the Twin Cities.
Following the release of the Governor’s bonding proposal, Senate Capital Investment Committee Chair Dave Senjem (R-Rochester), who has not held a committee meeting this session, said if the Senate were to pursue a bonding bill at all, it would be closer to the $265 million amount included in the state’s November budget forecast. In the House, Speaker Melissa Hortman (DFL-Brooklyn Park) commented that she would prefer a $3 billion bonding bill, but will put a proposal together closer to half that.
Gov. Walz has talked openly about his intention to propose a comprehensive transportation package that includes a gas tax increase, tab fee increase and other new revenues for transportation. His administration made good on those promises in Tuesday’s budget release by proposing a package that would result in a net increase in funding by more than $8.5 billion over the next 10 years from a variety of sources. The proposal would undo past statutory dedications of general fund revenues to transportation and replaces them with constitutionally dedicated funding sources.
Here are the major highlights, courtesy of MnDOT:
- Initiates a 20-cent gas tax increase (phased-in over two years) and indexing the gas tax to inflation (beginning in FY 2023) to raise approximately $6.5 billion over 10 years
- Increases the registration tax (increased tax rate from 1.25 percent to 1.5 percent and base tax fee from $10 to $45; change the depreciation schedule) to raise approximately $4 billion over 10 years
- Increases the motor vehicle sales tax from 6.5 percent to 6.875 percent to raise approximately $300 million for roads and bridges over 10 years, with additional funds raised for transit purposes
- Authorizes $2 billion in trunk highway bonds over eight years starting in 2022
- Proposes an increase to the Working Family Credit of $100 for each single or head of household recipient and $200 for each married filing jointly recipient to offset gas tax increases for low-income Minnesotans
More information can be found at dot.state.mn.us/transportationfunding/.
What the Walz plan means for city streets
The large increase in revenues flowing through the constitutionally dedicated system will have immediate benefits for Municipal State Aid (MSA) cities—those with a population over 5,000. Cities over 5,000 can find what the budget proposal would mean for them by clicking HERE.
For cities under 5,000, the answer is a little more nuanced. The bill does not currently include funding for the Small Cities Assistance Program, but the administration has communicated to us that they would like to work actively with the Legislature and stakeholders to find a sustainable, dedicated funding source for all cities. The primary reason small cities don’t appear in this proposal is that the Walz Administration chose to avoid putting general fund dollars toward transportation purposes, opting to rely on existing dedicated sources instead. There is not currently a constitutionally dedicated source for small city streets.
What the Walz plan means for highway expansions
While the Walz plan does not mention Corridors of Commerce by name, the total transportation funding package would fund the state’s transportation system at a level that would allow for expansion projects to be addressed in MnDOT’s regular program, not a special program like Corridors. In fact, shortly after the budget release, MnDOT released a list of projects—including some expansion projects—that the agency would intend to add to its 10-year construction plans if this full package is adopted. You can find that project list HERE.
If you have any questions about the Governor’s transportation plan and how it could impact Greater Minnesota communities, please contact CGMC transportation lobbyist Shane Zahrt at firstname.lastname@example.org.
Below is a statement from CGMC President and Bemidji City Council Member Ron Johnson on Governor Tim Walz’s budget proposal:
“The Governor’s budget proposal makes key investments that will go a long way toward strengthening Greater Minnesota communities.
“City leaders have long been seeking to bring the LGA program back up to its 2002 high-water mark, and the Governor’s proposal would finally get us there. We’re grateful that Gov. Walz recognizes the vital role LGA plays in making sure that all Minnesota communities can continue to provide the same great opportunities to work, raise a family and start a business. We’re hopeful the Legislature will follow the Governor’s lead to restore funding for this critical program.
“I also want to thank the Governor for acknowledging other important issues that impact Greater Minnesota. Not a day goes by when I don’t hear from a constituent about the need for better roads, so it’s encouraging that Gov. Walz is exploring ways to put additional revenue into our state transportation system. Child care is another issue that in recent years has emerged as one of the top impediments to economic growth in rural communities. I’m glad to see that the Governor’s budget plan includes funding to help address this need.
“I look forward to joining other city officials to work with Gov. Walz, legislative leaders and our local legislators to make sure that Greater Minnesota’s priorities continue to be a major focal point of discussions and are hopefully included the final budget.”
Although many people understandably canceled their registrations due to the subzero temperatures and icy road conditions, more than 50 city leaders from across the state still made the trek to St. Paul for Legislative Action Day on Wednesday. Thank you to everyone who helped make our annual “day at the Capitol” a success!
The day kicked off with a welcome from CGMC President and Bemidji City Councilor Ron Johnson and a legislative update from CGMC Executive Director Bradley Peterson, followed by presentations on our top issues (LGA, water infrastructure, child care, the Greater Minnesota Business Development Public Infrastructure Grant Program and transportation) by CGMC staff.
After the crowd enjoyed lunch and listened to Gov. Walz’s speech, they spent the rest of the afternoon meeting with legislators. Although much of the state was shut down due to the weather, offices at the State Capitol remained open. The cancellation of most of the legislative committee hearings that day ended up working out in our favor as CGMC members were able to get more time than usual to talk to their legislators about important issues. A copy of the lobbying packet that was given to CGMC members and shared with legislators can be found here.
As is CGMC tradition, the day was capped off with a legislative reception and dinner at Mancini’s, where a bipartisan mix of more than 70 legislators representing both rural and urban districts mingled with CGMC members over a meal of steak or walleye.
You can see more photos from Legislative Action Day here.