Greater Minnesota cities hope for $105 million aid boost, bonding bill after ‘disappointing’ 2022 session

Water reclamation plant — The Rochester Water Reclamation Plant in 2007.

By Alex Derosier

January 09, 2023 at 4:14 PM

ST. PAUL — Local governments outside the Twin Cities metro area are hoping the Minnesota Legislature will act this year to increase local government aid and fund major public infrastructure projects.

The Minnesota Legislature wrapped up the 2022 last session without passing any significant spending legislation, including the large infrastructure borrowing bill it traditionally advances in even years. The Coalition of Greater Minnesota Cities, which represents more than 100 cities outside the metro, said last year’s session was “disappointing” and called on state leaders to use Minnesota’s record surplus to help with local aid for public projects.

MINNESOTA LEGISLATURE NEWS:

“Last month's announcement of the state's historic $17.6 billion budget surplus has provided the legislature and the governor with a once-in-a-generation opportunity to make critical investments to address pressing needs across the state,” coalition Executive Director Bradley Peterson told reporters on a call Monday, Jan. 9.

“For cities in greater Minnesota, that means investing in programs and priorities such as local government aid, a robust bonding bill that addresses needs such as water, wastewater, transportation, and items like that, as well as our needs around workforce development and supporting that workforce through child care and housing.”

The coalition said its top goal for the upcoming session is to get a $105 million increase in local government aid, a state program they say helps small communities keep property taxes lower and evens the playing field with the metro.

A big reason they want the increase? Inflation levels not seen in four decades have sent costs soaring for local governments, including on construction projects.

"As you know, inflation is not only hitting individuals and families but it's also impacting city budgets,” Peterson said. “Everything from salaries to health care benefits to the gas that goes into police cars, the materials that are used to maintain the parks and other infrastructure. All of those costs are going up.”

Thief River Falls Mayor Brian Holmer, the coalition president, said local government aid makes up about 10% of his city’s budget, allowing the city to provide the stable infrastructure it needs to support major employers like electronics component maker DigiKey and snowmobile manufacturer Arctic Cat.

One of the biggest disappointments for the coalition of cities last year was the lack of a bonding bill, which local governments often rely on for major public works projects such as water treatment plants. This year, the cities are asking lawmakers to pass a bonding bill that includes $299 million specifically for wastewater infrastructure loans and grants.

Annandale Mayor Shelly Jonas said the 2020 bonding bill helped her town of 3,500 people replace aging water infrastructure. But there are still other projects, such as a $3 million roundabout, that they won’t be able to complete without more state aid, she said, and more delays mean inflation will continue to drive up costs.

“Kicking the can down the road is a difficult proposition, as it only increased costs and creates more complications,” she said.

Lawmakers adjourned in May 2022 without passing a bonding bill, meaning many project proposals in smaller communities across the state remain on hold. Last year, the state got more than $5 billion in requests from agencies, local governments and higher education institutions for bonding requests. A bill granting more than a billion of those had started to materialize, but lawmakers never got it past the finish line.

At the opening of this session, many lawmakers of both parties expressed optimism at the prospects of getting a bonding bill passed, though it can be tough to get one to the governor's desk as they require a three-fifths super majority in both chambers.

This year, there's also a discussion of using the state's enormous surplus to pay for projects in cash. Much of the surplus is one-time money and Democratic-Farmer-Labor lawmakers, who control both the Senate and House, would be able to pass spending with simple majorities and send them to DFL Gov. Tim Walz.

Beyond the local government aid and bonding bill, the greater Minnesota cities group is hoping for $30 million for child care funding and $30 million for workforce housing in smaller communities across the state. They’re also seeking state assistance for public safety officer disability claims, with the hopes of getting the state to fully fund the Public Safety Officer Benefit Fund and guarantee all local government claims are reimbursed.