For Immediate Release
Contact: Julie Liew
CGMC leaders: Now is the time to invest in key priorities that will bolster Greater Minnesota communities
Local Government Aid, water infrastructure, child care and housing among coalition’s top legislative priorities for 2022
ST. PAUL—As lawmakers begin to shape their plans for how to utilize the state’s historic $7.7 billion budget surplus, leaders from the Coalition of Greater Minnesota Cities (CGMC) are calling on Governor Walz and the Legislature to invest in fundamental programs and priorities that address critical needs in rural communities.
“The Governor and legislators have a once-in-a-generation opportunity to make investments that will benefit our state now and well into the future,” said CGMC Executive Director Bradley Peterson during a virtual meeting with statewide media this morning.
Peterson, who was joined on the call by Luverne Mayor and CGMC President Pat Baustian and Owatonna Mayor Tom Kuntz, said for Greater Minnesota, that means investing in critical issues like Local Government Aid (LGA), wastewater and drinking water infrastructure, and workforce needs like child care and housing.
“None of these issues are new; city leaders have been talking about them since well before the pandemic,” Peterson said. “However, the last two years have amplified these challenges and highlighted the need for long-term solutions. Now is the time for the Legislature and Governor take advantage of the state’s strong financial footing and finally address these lingering concerns.”
LGA hasn’t kept up with rising expenses, inflation
As its top legislative priority for 2022, CGMC is seeking a $90 million increase in LGA, a statewide program that is vital to restraining property taxes, reducing inequities between communities, and making sure all cities are able to provide high-quality services and quality-of-life amenities to their residents and businesses.
“LGA is the lifeline for Greater Minnesota cities. Without it, rural Minnesota would crumble,” said Baustian.
Baustian noted that in Luverne, a city of just under 5,000 residents located in the southwestern corner of the state, LGA makes up about 28% of the city’s annual budget. He said Greater Minnesota city leaders are strategic when planning their budgets, but increasing expenses and inflation continue to put a strain on city finances.
“Like other cities, our costs have increased a lot in recent years,” Baustian said. “Construction costs have gone up 35 to 50% over the last four years. We have an aging workforce, which drives up costs. But LGA has not kept pace with rising costs and inflation.”
Peterson added that while local governments received pandemic relief from the federal government, that money is not a substitute for LGA.
“The federal money cities received is one-time funding that can only be used for a narrow list of purposes and must be spent in a specific window of time,” Peterson said. “LGA is consistent funding with flexible uses that allows cities to better plan for the future as they set their budgets.”
Water infrastructure should be cornerstone of bonding bill
CGMC is also urging the Legislature to pass a large capital investment bill (a.k.a. “bonding bill”) that includes $299 million for water and wastewater infrastructure grant and loan programs.
“With low interest rates, a hefty budget surplus and federal money to leverage, now is the time for a transformational investment in Minnesota’s water infrastructure,” Peterson said. “This funding is needed to make progress in addressing the backlog of water infrastructure projects across the state.”
Peterson noted that the costs to upgrade or build a new water treatment facility are enormous, often well into the tens of the millions of dollars — and the majority of these costs fall on the individual communities and their ratepayers.
“Cities are willing to pay their fair share, but it is incredibly difficult to pay for these massive projects without a grant or loan from the state,” he added.
Owatonna Mayor Tom Kuntz is well aware of the costs related to water infrastructure. His city has been working on a wastewater treatment plant expansion since 2017, a project that is needed to keep up with Owatonna’s rapid industrial and residential growth. Delays in permitting and other setbacks have caused the project to drag on longer than expected. During that time, the total cost estimate swelled from $20-$25 million in 2017 to $57-$59 million today.
“Obviously, this is a very expensive project for our community. We are seeking any help we can get from the state and other sources so that we don’t have to put the full cost burden on our local ratepayers,” Kuntz said.
Owatonna is one of 26 cities seeking a Point Source Implementation Grant (PSIG) from the state this year to help offset the costs of wastewater projects. However, the current cap on PSIG is $7 million. Peterson said that along with seeking additional funding for water infrastructure programs, CGMC also plans to introduce legislation that would eliminate the cap on this program.
Child care, housing play major role in addressing workforce shortage
In addition to advocating for more funding for LGA and water infrastructure, CGMC is calling for state investments in programs that address the child care and housing shortages have long been obstacles to economic growth in Greater Minnesota.
“It’s no secret that the workforce shortage is hitting businesses and communities across the state. In Greater Minnesota, businesses of all sizes are scrambling to fill open positions,” said Peterson. “Simply put, employers can’t get workers if there is nowhere for them to live and no one to look after their children while they are at work.”
Baustian said child care is the number one economic development priority in Luverne, a sentiment shared by many community leaders across Greater Minnesota.
“When we talk to our local businesses, all we hear is ‘what are you going to do about child care?’” Baustian said.
According to First Children’s Finance, Greater Minnesota needs to add 40,000 new child care slots to keep up with demand. Unlike in the metro area, Greater Minnesota communities rely heavily on in-home providers, many of whom have chosen to leave to the profession in recent years. Some cities like Luverne have decided address this need by purchasing buildings to turn into city-owned child care centers.
This session, CGMC is requesting $20 million for a child care capital grant program, which provides grants of up to $500,000 to local governments in Greater Minnesota to fund up to 50% of the costs to build, upgrade or expand child care facilities. In addition, CGMC is seeking $5 million for the DEED child care grant program, which has proven successful at helping to create new and retain existing child providers.
The shortage of housing, particularly market-rate rate housing for middle-income families and workers, is also a major concern across Greater Minnesota.
“In rural Minnesota, there aren’t enough developers that have the cash and are willing to build in our communities,” Baustian said. “We are also dealing with the issue of aging housing stock. When housing is already hard to come by, it is critical we are able to preserve and maintain the existing homes in our community.”
CGMC is pursuing several legislative proposals to encourage construction and increase availability of housing across Greater Minnesota. Proposals include the creation of a new “fix up fund” grant program to help cities rehabilitate dilapidated homes, state funding for public infrastructure such as sewer connections and streets needed for new housing developments, and additional funding for the existing Workforce Development Grant Program.
###
The Coalition of Greater Minnesota Cities is a nonprofit, nonpartisan advocacy organization representing cities outside of the Twin Cities metropolitan area. The Coalition educates legislators about issues important to Greater Minnesota. Visit the CGMC at greatermncities.org and follow us on Twitter @greatermncities.
