U.S. Rep. Dean Phillips sees need to help cities lacking state funding

U.S. Rep. Dean Phillips says the most common topic that came up on recent visits with municipal officials in his suburban congressional district was the lack of state funding to improve aging infrastructure.

So in an effort to bridge the gap left by cuts in state aid to local governments, Phillips, a Democrat, is sponsoring a bill seeking federal funding for a suburban water treatment center.

Only eight of his district's 36 cities this year received a cut of the $560 million Local Government Aid (LGA) funding approved by the Legislature. Most of the cities with goose eggs are in western Hennepin County.

"In my district, most of the cities aren't near core cities and they aren't rural. It's a distinct challenge," said Phillips. "Moving bills through Congress is no easy task, but I've been in sales my entire life. Selling legislation is very similar to building relationships."

Federal funding in Phillips' bill could help Dayton and several nearby cities consider construction of a $20 million regional water treatment center. While mayors and city administrators raised concerns about wastewater and stormwater treatment upgrades, they also told Phillips that transit issues were a priority, he said.

Cities that don't qualify for LGA aren't unique to Phillips' district. Nearly 100 of the state's 853 cities have to plan future budgets without LGA, said Gary Carlson, a lobbyist for the League of Minnesota Cities. Those nonfunded cities account for 20% of the state's population.

In Phillips' west metro district, LGA funding this year ranged from $31,000 for Loretto to $1.3 million for Brooklyn Park. Phillips said he laughed when Excelsior received just $300 in LGA last year, not enough to paint a crosswalk. In comparison, Minneapolis received $79 million.

The LGA formula hasn't been significantly changed since the early 1990s, but legislators did increase the funding pool by a historic $26 million this year. The money comes mostly from sales and income tax, and $30 million will be added to the LGA money pool in upcoming years.

The state LGA program distributes money to cities using a formula comparing generated property taxes to needs, in an effort to ensure that cities can provide a similar level of service regardless of their tax base. Key factors in the formula include population growth, number of employees and age of housing stock.

During this year's legislative session, Rep. Jerry Hertaus, R-Greenfield, unsuccessfully pushed for a bill to create a new formula for cities that had fallen off the list, using 2%, or $11.2 million, from the total LGA pool. He said he appreciated Phillips' federal bill but didn't think a government with a $22 trillion debt had a lot of money to hand out.

Though Rogers is one of the state's fastest-growing cities, Mayor Rick Ihli said it had received LGA just once in 20 years. He said he has a bit of a chip on his shoulder about the lack of funding because the city's population has risen from 800 to 13,000 in the past two decades.

"The life of most roads is 20 years, and they need repair," he said. "We have Hwys. 101, 94, 81 and 169 running throughout our city, all arteries that lead to major vacation and weekend spots. We just don't think about getting LGA anymore because the formula never changes."

Independence also hasn't seen LGA in years, said Mayor Marvin Johnson. Funding would help pay for road equipment and repairs, as well as park paths and equipment, he said.

He recalled attending a mayor's conference years ago and hearing that the city of Virginia had gotten a large LGA payout.

"They used some of the money to pay for gardeners, something we would have never dreamed of having," said Johnson.

Osseo is one of the smaller Hennepin County cities consistently on the LGA list. The city has used the approximately $625,000 it has collected for each of the past several years for fire equipment, squad cars, plows, lawn mowers and a heating and cooling system at City Hall. Because of the taxes Osseo can raise, it devotes all its LGA to capital projects, and LGA accounts for one-third of the city's budget, said Mayor Duane Poppe.

But there is a Catch-22 for cities like Dayton, where officials raise taxes for infrastructure in hopes they might get some back in LGA, said Mayor Tim McNeil. His city often ends up footing the bill for state-mandated services, highways shared with the county and a regional park visited by thousands of people.

"I question who is making the political decisions," McNeil said. "Dayton is in a conservative area of the metro, and liberals run the metro. It appears those legislators aren't happy about us getting money back."