Category archives
State budget

As the mid-point of the legislative session approaches, it is time to take a step back and examine the overall big picture.
 
The early milestones of session have been reached. Last month, Gov. Walz proposed an ambitious state budget that raises significant revenue and funds increases in his priorities: health care, education and community prosperity. A $30.5 million Local Government Aid (LGA) increase falls under the “community prosperity” heading. In addition, the Governor proposed a big bonding bill and transportation funding package that would increase the gas tax by 20 cents a gallon (among other revenue raisers).
 
Legislators have been spending significant time over the last several weeks in their respective committees hearing bills of various natures, culminating in the first committee deadline tomorrow, March 15. For the rest of March and into the first week and half of April, the House and Senate will be compiling their budget bills. This is when all of the negotiating positions will really come into focus. The Legislature will go on its traditional Easter/Passover break in mid-April and return in late April and early May for conference committees.
 
If all goes according to plan, the Governor and legislative leaders have sketched out they will have agreement on overall spending targets for the major budget areas by May 6 and conference committees will be done with their work by May 13. The Governor and legislative leaders setting deadlines for themselves is new and admirable. Whether or not the deadline survives the heat of battle remains to be seen.
 
A tax bill (the usual home of any LGA increase) and bonding bill would likely be two of the final things completed this session, which means action on several of the CGMC’s top priorities will go down to the wire.
 
Without a doubt, there will be numerous twists and turns and all along the way — and the CGMC team will be on hand for all of the action. If you have any questions about where things stand in the legislative process, please reach out to CGMC Executive Director Bradley Peterson at bmpeterson@flaherty-hood.com.

Below is a column by CGMC President and Bemidji City Councilor Ron Johnson. It has appeared in the Star Tribune, Winona Daily News, Bemidji Pioneer and other newspapers.

“I am preaching to the choir but what I’m asking is for the choir to sing loudly for the next three months.”

Gov. Tim Walz was touting his plan to boost Local Government Aid funding when he said this at a Coalition of Greater Minnesota Cities (CGMC) event earlier this year. He told the audience of Greater Minnesota city officials that while he was planning to include a $30.5 million LGA increase in his then-unreleased budget, he was going to need our help to get the proposal across the finish line.

As a Bemidji city councilor and president of the CGMC, I am a proud member of LGA “choir.” I have been warming up my voice and now — with the halfway-point of the legislative session fast approaching — I’m ready to sing.

The average Minnesotan likely knows little about LGA, but it is a key reason why Minnesota consistently boasts a stronger economy and better quality of life than neighboring states. Created in 1971, the LGA program distributes aid to cities using a formula that compares a city’s property tax base to its needs. Its purpose is to ensure that all cities are able to provide a similar level of services regardless of the strength of their tax base. For some cities, LGA constitutes nearly half of their annual budget.

As the Legislature debates the merits of Gov. Walz’s budget proposal and the House and Senate craft budgets of their own, I urge lawmakers to keep the $30.5 million LGA increase in their plans. Here’s why:

LGA benefits all Minnesotans. Approximately 90 percent of Minnesota cities receive LGA — from tiny rural towns to the largest cities. It helps narrow disparities between communities so that every city can provide important services and amenities like public safety, libraries, parks and plowed streets. If you live, work, go to school, visit the doctor or shop in a Minnesota city, chances are you benefit from LGA.

LGA has not kept up with rising costs. The proposed $30.5 million increase would bring LGA funding back to its 2002 highpoint, not counting for inflation. In the ensuing years, costs have gone up for everything from employee health insurance to construction materials. When there is record-breaking snowfall, we can’t leave the streets unplowed. If there is a fire, we need equipment and trained firefighters to put it out. City officials make tough financial decisions every day, but needs do not go away. That struggle is even harder when LGA is underfunded.

LGA helps restrain property taxes. Without LGA, the average city receiving aid would have to increase its property tax rate by more than 65 percent in order to continue to provide the same level of services. LGA also has a proven track record of helping slow the growth of city levies. From 2013 to 2014, the last time there was a significant LGA increase, many communities kept their levies flat or even reduced them.

LGA has bipartisan support. Republican and Democrat legislators have teamed up to sponsor legislation to increase LGA, and their bills have support from rural and urban legislators on both sides of the aisle. Senate Majority Leader Paul Gazelka, a Republican, has also voiced support for LGA. In a time when nearly everything has become uber-political, lawmakers should embrace this opportunity to find common ground.

LGA is a small investment with a big payoff. LGA currently represents less than 3 percent of the state budget. The proposed $30.5 million increase is just a fraction of the Governor’s budget proposal. It is a relatively small price to pay to boost a program that has a tremendous impact on cities across the state.

City officials in the 758 Minnesota cities that receive LGA can attest to the integral role it plays in keeping our communities afloat and our state strong. As legislators and the Governor continue the daunting task of creating the state budget, I hope they keep the health and prosperity of our cities in mind by including the $30.5 million LGA increase in the final product.

Minnesota has a projected $1 billion budget surplus for the coming biennium (fiscal years 2020-2021), according to the February Budget and Economic Forecast released today by Minnesota Management and Budget (MMB). This amount is $492 million lower than originally forecast in November.
 
The reduction, which did not come as a surprise to those around the Capitol, is the result of lower revenue collections and a slowing economy. The lowered expectations for economic growth are driven primarily by an aging population and tight labor market that has left Minnesota employers struggling to fill open positions. The forecast projects further long-term headwinds with an estimated $11 million deficit for the 2022-23 biennium.
 
These updated numbers do not change the CGMC’s legislative priorities, and the forecast appears to have done little to change the conversation in St. Paul. Gov. Tim Walz defended the investments laid out in his proposed budget and bonding plans. Gov. Walz said the prospect of slower economic growth validates his call for $2 billion in additional spending and rejected the idea that tax cuts are needed to fix the key issues confronting the state. The Governor said he will be reviewing his budget proposal line-by-line for potential changes, but given that his budget plan leaves $782 million unspent, he will not have to make any dramatic revisions.
 
Much like the Governor, neither the House DFL or Senate Republicans hinted at dramatic changes in their approach as a result of the updated forecast. House Speaker Melissa Hortman (DFL-Brooklyn Park) reiterated the DFL’s commitment to investments in programs like paid family leave and child care funding, which she argued can help ease the state’s labor shortage by moving Minnesotans currently not participating in the labor force off the sidelines as well as attract more workers to the state. Senate Majority Leader Paul Gazelka (R-Nisswa) released a statement saying that the budget forecast underscores the need to reject tax increases and permanent spending commitments, which mirrors what GOP lawmakers said after Gov. Walz released his budget last week.
 
You can find all the details on the February Forecast on MMB’s website.

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 sazahrt@flaherty-hood.com.

Gov. Tim Walz made good on his promise to support Local Government Aid (LGA) when he unveiled his budget recommendations today. The Governor’s budget proposal includes a $30.5 million increase in LGA, which is the amount needed to bring the program back to its 2002 level. Restoring LGA to the 2002 funding level is the top priority for the CGMC this session, so we are excited to have the Governor’s support.

The Governor’s budget proposal for LGA is encouraging, but there is still a long ways to go until the state budget is finalized. It is vital that we let the Governor know we appreciate his efforts and encourage him to keep up the momentum on LGA.

Take action now! Contact Governor Walz as soon as possible and let him know how important LGA is to your community and thank him for including the $30.5 million LGA increase in his budget recommendations.

Contact info for Gov. Walz

  • Send an email using this online contact form
  • Call the Governor’s Office’s at 651-201-3400 or toll-free at 800-657-3717
  • Mail a letter to:
    Office of Governor Tim Walz 
    130 State Capitol
    75 Rev Dr. Martin Luther King Jr. Blvd.
    St. Paul, MN 55155

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.

For Immediate Release
Contact: Julie Liew, jlliew@flaherty-hood.com
PDF version

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.”

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For Immediate Release
Contact: Julie Liew, jlliew@flaherty-hood.com
PDF version

ST. PAUL—City officials are hopeful that bipartisan legislation introduced today in the Minnesota Legislature will give a long-awaited boost to the state’s Local Government Aid (LGA) program.

SF 1304/HF 1102, led by chief authors Sen. Bill Weber (R-Luverne) and Rep. Dave Lislegard (DFL-Aurora), aims to increase LGA funding by $30.5 million, the amount needed to bring the program back up to its 2002 high-water mark. The proposal has generated strong bipartisan support from numerous Republican and Democrat co-authors who represent rural and metro districts.

“As former city officials turned state legislators, Sen. Weber and Rep. Lislegard have first-hand knowledge of the important role LGA plays in keeping Minnesota’s communities strong.” said Ron Johnson, a member of the Bemidji City Council and president of the Coalition of Greater Minnesota Cities (CGMC). “I want to thank them, as well as the powerful group of co-authors from both parties, for taking on this critical issue.”

Rep. Lislegard, who served as mayor of Aurora until getting elected to the Legislature in 2018, said he is proud to author the LGA bill as one of his first pieces of legislation.

“This legislation is key to helping cities all across the state keep up with maintenance and infrastructure, and provide public safety and other critical services Minnesotans count on while keeping property taxes in check,” Rep. Lislegard said. “Funding from LGA isn’t a want, but is a need for communities like those I represent, and I look forward to working with my colleagues and city leaders to deliver this much-needed boost.”

A former mayor of Luverne, Sen. Weber has long been one of the most active and vocal LGA supporters in the Legislature, having previously authored similar legislation to increase funding for the program.  

“I’m proud to stand with Greater Minnesota communities and take the lead on this important legislation in the Senate,” he said.

The $30.5 million LGA increase is the CGMC’s top priority this legislative session. While LGA has had modest bumps in funding in recent years, Greater Minnesota city officials are optimistic that 2019 will finally be the year that the program is restored to its 2002 high point, before it was plagued by a decade of cuts and stagnant funding.

One reason for the renewed enthusiasm is that Gov. Tim Walz has frequently pledged his support for LGA, both on the campaign trail and since taking office. Speaking at a CGMC event last month, Gov. Walz said he plans to include a $30 million LGA increase in his budget plan, which is anticipated to be unveiled next week.

“LGA really embodies the ‘one Minnesota’ vision that the Governor often mentions,” said CGMC President Johnson, noting that nearly 90 percent of Minnesota cities receive LGA. “Whether you live in the heart of downtown Minneapolis or on the edge of Ortonville, LGA truly is a program that benefits the entire state.”

In addition to the funding appropriation bill, the CGMC is advocating for SF 1305/HF 1101, authored by Sen. Kent Eken (DFL-Twin Valley) and Rep. Jeff Brand (DFL-St. Peter), which would increase LGA funding each year to account for inflation and population growth. Despite the program’s recent appropriation increases, LGA funding is still well below where it should be if it kept up with inflation and population growth.

Rep. Brand, a former St. Peter City Council member, said the bill will help communities stay on top of their growing needs.

“Health insurance premiums, construction materials and — as we’ve sure seen this winter — costs for essential services like snow removal and salting continue to go up year after year,” he said. “Cities are pretty adept at trying to do more with less, but it gets more difficult as LGA fails to keep pace with rising costs.”

Sen. Eken added, “While LGA funding growth has stalled, city costs and service pressures continue to rise. Without adjusting the program for these realities, cities that depend on LGA will struggle to continue making the investments that create a high standard of living and quality of life in Minnesota.”

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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.

While speaking to CGMC members during our Legislative Action Day luncheon on Wednesday, Gov. Tim Walz pledged his support for a $30 million increase to the Local Government Aid program. He said he intends to include the boost in his budget proposal, which is slated to be unveiled Feb. 19.
 
The full video of the Governor’s Legislative Action Day speech can be viewed on our CGMC YouTube channel here.
 
Gov. Walz told the crowd of more than 50 city leaders who braved the frigid temperatures to attend the Legislative Action Day festivities that “community prosperity” will be one of his top three budget priorities, along with education and health care. Noting that he trusts city officials to make the decisions that are best for their communities, Gov. Walz said that restoring LGA to it 2002 funding level is an important element in ensuring that all parts of our state thrive.
 
In addition to LGA, Gov. Walz emphasized that he wants to pass a comprehensive transportation package this session that focuses on highways and bridges in Greater Minnesota. He reiterated his push to increase the gas tax to help pay for transportation needs. He also expressed the need for better broadband statewide, adding that “we don’t have time to wait until 2025” for improved access.
 
Several media outlets covered the Governor’s remarks to our members. You can read their articles at the links below:

In addition, the Mankato Free Press published an editorial in support of Gov. Walz’s plan to increase LGA funding.

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

Below is statement from CGMC President and Bemidji City Council Member Ron Johnson regarding today’s announcement that Minnesota’s budget surplus has increased to $1.5 billion:

“With the state clearly on solid financial footing, I’m hopeful that Governor-elect Walz and the new Legislature will seize this opportunity to strengthen communities across the state by increasing Local Government Aid. City leaders in Greater Minnesota were encouraged that Walz frequently campaigned on the idea of boosting LGA, and this new budget forecast will allow him to make good on that promise.

“The CGMC’s top priority for the upcoming legislative session is a $30.5 million LGA increase, which is the amount needed to bring the program back up to its 2002 high-water mark. LGA is the most important state program to help cities restrain property taxes and afford essential services like public safety, libraries and snow removal. As city officials, we try our best to craft responsible budgets, but it has been a struggle in recent years as LGA funding has failed to keep pace with rising costs. We are eager to work with Walz and the new Legislature to make an LGA increase a reality this session.”

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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.

Thank you to everyone who attended the CGMC Fall Conference last week at Arrowwood Resort & Conference Center. More than 100 city leaders representing 50 cities attended the conference — setting an attendance record for the second straight year!

The conference kicked off Thursday afternoon with a presentation by Minnesota Management and Budget Commissioner Myron Frans, who shared insights into his past eight years as a member of Gov. Dayton’s administration and the ups and downs our state budget faced during that time. He also provided information on the state’s current economic outlook and what could be in store for the budget in the near future. You can read Frans’ presentation here.
 
Following Frans’ presentation, we delved into a panel discussion on the rural/urban divide and the role city leaders can play in helping to bridge the gaps between the various and diverse communities in Minnesota. Panelists included Ben Schierer, mayor of Fergus Falls; Suzanne Hilgert, mayor of Olivia; Peter Lindstrom, mayor of Falcon Heights, and Brad Tabke, former mayor of Shakopee and a newly elected state representative. The panelists shared examples of ways they have learned from leaders in other parts of the state and discussed the issues in which they wish there was better understanding between rural and urban communities. Conference attendees also participated in small group discussions where they brainstormed ideas on steps they can take within their cities to help bridge the rural/urban divide.
 
With the conference being held just a little over a week after the midterm elections, it would not have been complete with a good ‘ole CGMC election recap. CGMC Executive Director Bradley Peterson provided in-depth analysis of the 2018 election results — particularly the race for governor and the Minnesota House — and what they could mean for CGMC priorities and other issues in the upcoming legislative session. You can read Bradley’s presentation here.  
 
After the election analysis, we welcomed several legislators for a panel discussion on one of the most critical issues currently impacting Greater Minnesota: the child care shortage. Nicole Griensewic Mickelson, executive director of Region Nine Development Commission and president of the Greater Minnesota Partnership, moderated the discussion featuring Sen. Kent Eken (DFL-Twin Valley), Sen. Mark Johnson (R-East Grand Forks), Sen. Erik Simonson (DFL-Duluth) and Rep. Joe Schomacker (R-Luverne). You can watch video of the discussion here.
 
Annexation is another important topic explored at the conference. CGMC lobbyist Elizabeth Wefel informed attendees about some looming concerns, particularly the possibility that the CGMC and cities may need to play defense on legislation being proposed by township groups that could thwart cities’ ability to pursue annexations. You can read Elizabeth’s Power Point presentation here.
 
In the evening, attendees enjoyed a cocktail reception and dinner followed by an excellent presentation by Emmy-award winning reporter Tom Hauser of ABC 5 Eyewitness News. A veteran political reporter, Hauser shared his take on the national and state election results and some of the issues that could be on the horizon in the future.
 
Friday morning kicked off with a presentation/discussion led by Brandon Fitzsimmons, a labor and employment attorney with Flaherty & Hood, on how to effectively evaluate the performance of city administrators and managers. Waite Park City Administrator Shaunna Johnson and Mayor Rick Miller shared their stories on this issue and provided advice on how to help performance evaluations run smoothly. You can read Brandon’s Power Point presentation here.

In addition to speakers and presentations, the conference also included a membership meeting Friday morning during which members discussed and adopted the CGMC’s 2019 legislative policy positions. To review the adopted positions, click on the following subject areas:

Members also discussed the CGMC’s legislative priorities for 2019 and learned about our initial messaging and strategy plans for the upcoming legislative session.

Thanks again to everyone who attended our 2018 Fall Conference. We look forward to seeing you again at our next CGMC event – Legislative Action Day on Jan. 30 in St. Paul. We will send out registration information for Legislative Action Day soon!