Without revenue reform, city services will dim

Brainerd has taken a rather symbolic approach in dealing with financial pressure – they’ve shut off the lights. The city has turned off more than 400 street lights hoping to save $91,000 (The city council just decided to turn back on 40 or 50 of those lights, but the savings plan is still in effect).

Darkened street lights are noticeable. But, as we’ve pointed out, budget constraints are pushing cities across the nation to shut down even more essential services.

Minnesota cities may soon face those same tougher choices.

We wrote about the effort Willmar is making to survey residents on those choices.

And leaders have begun weighing on the topic at MPR’s website for discussing issues, Insight Now.

Regional planner and professional engineer Chuck Marohn, said cities now face dwindling state aid “with much deeper liabilities in terms of infrastructure to maintain and bureaucracies to support.”

Knowing what we know today – that LGA (local government aid from the state) is going to end – it would have been better in most instances had it never happened.

Some city officials who joined the Insight Now conversation also had little use for the state aid program as it is today. One of them, Jason Benzing, a Dassel city councilmember, said the state ought to eliminate LGA entirely and let cities “be freed to raise funding as they see fit.”

State policy does indeed restrict how cities can tax their residents. Minnesota has imposed a property tax cap for cities. And the LGA program not only provides state aid, but also bars city governments from enacting sales and income taxes.

Dan Erkkila, a college administrator who just stepped down as a Grand Rapids city council member, said this creates fiscal instability for cities.

“Multi-year labor (agreements) and other contracts necessitate stability in resources for efficient and effective operations. The current system appears to have broken down, if for no other reason than the fact that many small cities cannot plan well enough in advance to know what the state may or may not provide.”

Unless the state increases city funding or alters city revenue policies, the only recourse for city councils will be cutting or even shutting down services. How those decisions get made will be the discussion across the state in the months to come.

Insight Now plans on being part of those discussions on city financing. Please have a look and join the conversation.

Comments are closed.