Minnesota cities are hitting the spending pedal after years of recessionary caution, a new report shows.
Among the bigger municipalities, capital spending — expenditures on long-term assets such as buildings, roads, parks and the like — leapt in 2014 by $200 million, to $1.2 billion, after remaining level for several years, according to the state auditor’s latest update on local finance.
“A lot of infrastructure is aging and in need of repair and maintenance, and that is a big driving force,” said Gary Carlson, director of intergovernmental relations for the League of Minnesota Cities.
Spending on amenities such as parks and libraries also rose, according to the report.
For example, from 2010 to 2014, annual capital spending for libraries rose from $6.7 million to $16.6 million. Much of the big-ticket spending happened through county library systems in the metro area.
The report, written and compiled by a team of 10 state staffers, contained other significant findings:
• Cities are still taking in less money than they were a decade ago. “When adjusted for inflation, 2014 revenue levels are below 2005 levels and decreased by 6.9 percent over that period of time,” said the report.
• Cities are getting less help from the federal government and other grantmakers than they once did, and are leaning harder on property taxes for revenue. Adjusted for inflation, taxes rose 21 percent over the decade, while intergovernmental transfer payments dropped by 19 percent.
• Wild variations exist in the amount of cash that cities keep on hand. While the state recommends that cities maintain reserves of 35 to 50 percent of operating revenue, a survey of cities with more than 2,500 residents found cash on hand ranging from a negative balance to holdings several times as high as the recommended sum.
At the furthest extremes were Norwood Young America, in Carver County, with a small deficit, and Bayport, in Washington County, with cash amounting to 373 percent of annual spending.
Logan Martin, Bayport’s city administrator, said the City Council had been “very conservative in wanting to pay cash for major expenditures. We’re building a fire hall and have a large cash expenditure for that and paid cash for a fire engine as well.
“So often these are just numbers on a page that don’t tell you what’s going on on the ground,” he added.
His Norwood counterpart, Steve Helget, was startled to have been singled out. “We had over a million dollars on hand,” he said.
Later, having checked with his own auditor, he added: “We come out that way because of a tax-increment district but we are sitting in a positive situation at this point, with positive audits.
“Like many communities we have challenges but we are addressing those, so I think the report was a little misleading.”
To consult the full text of the report, released last week, visit http://tinyurl.com/j3menu6/.