Minnesota's cities are well aware that something's missing

DULUTH — Conversation at the annual conference of the Coalition of Greater Minnesota Cities — aka the Local Government Aid (LGA) Fan Club — turned easily Thursday to complaints about the 2015 Legislature's failure to increase state aid to municipalities.

I asked three or four mayors at my table about the local consequences of that inaction. Before long, another mayor or two, then three, joined our circle to share a tale of woe.

Ely Mayor Chuck Novak said his city had planned to cut property taxes for next year, to bring some relief to property owners in a part of the state that's struggling this summer. That plan died with the Legislature's tax bill, which contained LGA provisions.

Rochester's stalwart Mayor Ardell Brede said plans to hire a few more police officers in his fast-growing city were quashed. Same goes for Alexandria, said Mayor Sara Carlson. Fergus Falls is still trying to get back to the staffing levels it had before the first round of LGA cuts back in 2003, Mayor Hal Leland said. With no LGA increase, that won't happen next year, he said.

I was about to observe that I'd heard a lot worse from Greater Minnesota mayors not long ago. The unallotment/retrenchment years of 2002 to 2012 brought police and fire layoffs; reduced library, park and city office hours, and higher property taxes. This year's troubles are a summer squall compared to that fiscal hurricane.

The mayors beat me to it. They acknowledged that receiving no LGA increase this year is not a crushing blow.

Still, they said, this year's LGA flatline stings. It was one thing to face unallotment in 2008 and 2009 and deep cuts in 2003. Those were hard times, and every budget, public and private, was squeezed. Cities may have grumbled about disproportionate impacts, but they knew they could not be spared.

What's to misunderstand about city budgets and state aid? Judging from comments and themes at the Coalition of Greater Minnesota Cities confab, plenty:

• City governments haven't yet recovered from the Big Squeeze years, and say they won't until LGA climbs back to at least its 2002 level. Even with an $80 million increase in 2013, total LGA outlays are still $45 million short of their 2002 high-water mark.

• One reason cities are so eager to see that state aid restored is that many of them got through the lean times by postponing expenses, not by permanently reducing them. And postponement does not just delay spending. It also increases costs.

For example, the price of a new fire tanker truck climbed by $150,000 during the few years Granite Falls postponed a purchase, Mayor Dave Smiglewski said. Alexandria diverted street repair funds to general operations to get through the downturn. The result is that some streets that might have been repaired now must be rebuilt at much more expense, Mayor Carlson said.

• Those postponements made it difficult for cities to reduce property taxes when LGA started flowing again — to the irritation of DFL Gov. Mark Dayton and DFL legislators who had hoped that the 2013 LGA increase would translate into politically useful property tax cuts. Dayton omitted an LGA increase in his initial recommendation to the 2015 Legislature. That left the mayors questioning the sincerity of his commitment to a city/state partnership.

That's ironic, since the modern version of LGA was created in 1971 at the insistence of big-city legislators who sought relief from rising municipal service costs — or so relates former state Rep. Tom Berg in his 2012 book "Minnesota's Miracle." It was intended to mitigate "municipal overburden" — Capitolspeak for municipal costs that exceed amounts that local property owners can reasonably be expected to bear. A city's property wealth and service needs drive the LGA formula, not population.

Three-term GOP Rep. Deb Kiel of Crookston, a conference panelist, confessed that "my understanding of local government aid was a little sketchy" as her caucus crafted its proposal this spring. She'd been led to believe that LGA was intended to aid Greater Minnesota, and that "the metropolitan area didn't need it."

Since then, she said, "I've learned that the metropolitan area has as many needs as the rural area does. … I've learned that we need to have some other conversations about it."

I took those as conciliatory words and a hint that an LGA compromise may be possible in 2016. Same goes for House DFL Minority Leader Paul Thissen's call to stop judging LGA's worth by its effectiveness in suppressing property taxes. And for Lt. Gov. Tina Smith's vow to "take back to the governor" the mayors' concern about LGA.

But coalition members didn't strike me as easily soothed. They seemed to prefer the rallying cry that came from state Sen. Kent Eken, DFL-Twin Valley:

It was the only time all afternoon that a speaker was rewarded with spontaneous applause.