2.0. SR 12-02-2002 - Laserfiche WebLink

Home Browse Search

State crisis could ' ., Minnesota's biggeSt local government aid recipients JiE ' .;'"iMiN N ES 0 TX i screws to big cities Aid programs may be targets in budget cuts BY TIM NELSON Pioneer Press Double-digit property tax hikes were landing with a thud on front porches all over St. Paul and Minneapolis last week. And that's the good news. There may be even tougher times on the horizon because of shifting state politics and Min- nesota's looming budget gap. Local officials say they're wor- ried that the state's central cities may wind up being in the cross hairs as the Legislature tries to solve its financial prob- lems next year. Here's why: · Minnesota's biggest cities are heavily dependent on aid from the state the 20 largest get more than $800 million in subsidies a year. St. Paul, for ..... ~'i i..[~. ~ ~,~' 1. Minneapo s$111,567,143 39.4 Moe !. ....... ~: ~...~ .j 3. Du uth $29 635 152 76 6 Moe i:i:/::: i::;'::;~ 5. R'0~t~este~ ..... $i0 ~00 664. 32 2 paw en['~ localg ore rnment a 'd ........... 9 Austin $7 567 420 76 7 Penny Source: League of Minnesota Cities, Minnesota secretaw of state's office JANET ROBERTS. PIONEER PRE55 instance, gets 15 percent more in state aid than it collects in property taxes. Minneapolis got $111 million this year alone. · The state is facing a $3 bil- lion deficit, and Gov.-elect Tim Pawlenty has committed to pro- tecting K-12 education, the biggest-ticket item in Minnesota. It's more than a third of what BUDGET CRISIS, 1SA BUdget crisis (con tinued) Director Matt Smith, who was the state revenue commissioner until last month. And that money is a key ele- ment of municipal finance. In St. Paul, it amounts to a quarter of the general-fund budget, and the only real alternatives city officials have are layoffs or steep tax increases. ff the state simply passed down its approximately 10 per- cent budget deficit to St. Paul, for instance, the cut could translate into a 12 percent property tax hike on the city portion of prop- erty taxes or scores of layoffs. Such a hike, with market- value increases, ~echnical changes to property taxes, the mayor's proposed right-of-way assessments and about $5 mil- lion in annual inflation, could easily combine to push the city's charges to homeowners up by nearly 40 percent for 2004 if state-mandated levy limits don't cap the increase. But it isn't just a matter of dollars and cents. As telling as Minnesota's sagging balance sheet are the results of the Nov. 5 elections: Of the 185 cities in the metro area, Pawlenty won more than 90 per- cent of them -- and most of them were suburbs that get less than 5 percent of their revenue from the state, according to League of Minnesota Cities financial data. In fact, a Pioneer Press study of 2002 election returns shows that the cities Pawlenty won got less than half the direct state subsidy that goes to the cities that Democratic-Farmer-Labor Sen. Roger Moe won in his bid for governor. And while no one is suggest- ing an electoral quid pro quo when it comes time to balance the state budget, there is no mistaking the political changes afoot in Minnesota: The sub: urbs, where state subsidies are lowest, delivered the election to the Republican governor-elect on Nov. 5.-Moe won Minneapolis sor and proponent of so-called "smart growth." "I think there's a notion out there in the suburbs a false one -- that every ship floats on its own bottom, or at least ought to," Adams adds. "I think that promises real trouble to core cities that rely on state aid to local government." But Rep. Dan McElroy, a for- mer suburban mayor and Paw- lenty's choice to be the new director of state finance, sound- ed a cautious tone Wednesday: "It's still way too early to be talking about outcomes," he said. Many cities count on local government aid, he points out, and some of them, like Rochester and Moorhead, are Republican · strongholds important [o haft of the GOP House majority that hails from outstate. In addition the sub- urbs aren't as unified as the gubernatorial results might make them appear, and Also, changes to intergov- ernmental aid, whatever their aim, aren't easy. Gev. Arne Carlson faced a ,$1.1 billion deficit when he took office in 1991 and repeatedly proposed cuts to local govern- ment aid. He couldn't get them through the DFL-controlled Legislature. Gev. Jesse Ventura took up the cause last spring, proposing targeted trims to local govern- ment aid about $10 million for Minneapolis and $4 million for St. Paul as part of his "Big Fix" plan. But even with a sub- urban Republican majority leader in the House -- Pawlenty -- cities were mostly spared. But the political landscape has changed even since then: Minneapolis and Duluth both lost ~ House seat to redistrict- ing, while the edges of the Twin Cities, like W0odbury and Cot- tage Grove, plcked up seats. The suburbs are stronger than ever. And the fiscal landscape has changed as well: the state is facing a i~large shortfall, the easy cuts were made at the and St. Paul by 'about '80,000 Capitol last session and Paw- votes; Pawlenty took outstate by lenty's campaign pledges make about the same margin, but he a sales tax hike -- or any other won the seven-county Twin Cities suburbs -- and the elec- tion by more than 170,000 votes. "With Minneapolis and St. Paul making up less than 10 per- cent of the population, it's get, ting harder and harder to make a politically potent argument," says John Adams, a University of Minnesota geography profes- - tax hike -- a hard sell· A half- cent "local option" sales tax is what spared cities during the Carlson administration. y Gary Carlson, a lobbyist with the League of Minnesota Cities, says cutting a different 'subsidy like the so-called "homestead market value credit" could dis- tribute cuts more evenly across the state. "There can be a balanced perspective here, and I believe there is every incentive for either party to try and make gains in the future and not be retributionist," Carlson said. "I also think (House Speaker) Steve Sviggum takes a very broad perspective on this, and even Pawlenty emphasized that he wasn't just a Republican gov- ernor, but a governor for the whole state." St. Paul Ma~,or Randy Kelly says he has worked with Paw- lenty in the Legislature and believes the new governor will try to be fair and hear all sides. But Kelly is stiff apprehensive about the fiscal reality ahead, saying St. Paul needs to keep a tight lid on its budget. , ,,~a--.~ .... ~.~mntinrr to Tim Nelson can be reached at tnelson@pioneerpress.com or (651) 292-1159. ll-21-oz_