St. Paul's sales tax: Minnesota Miracle 2.0?

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Fellow journalists: Wanna feel old? Sit down for an interview with the grandson of a guy you used to cover.

Worse yet, make it an exit interview. Chris Tolbert is stepping away from representing the Third Ward on the St. Paul City Council.

Tolbert, who is also an assistant Hennepin County attorney, has been a City Hall stalwart for 12 years. I called to wish him well. But I also called because his grandfather was Gerald Christenson, who as State Planning Agency director in 1971 was a leading architect of the big change in state and local government financing now known as the Minnesota Miracle.

At the heart of Christenson's 1971 handiwork was an idea that still steers state and local governance in this state. It's that the quality of public schools and city services available to Minnesotans ought not solely depend on a locale's property wealth or — more today's point — its retail muscle.

So what does someone with the Minnesota Miracle in his genes think of the question on St. Paul ballots this fall — the one that would add another 1% to the sales tax on retail purchases in that city alone, for the sake of improved streets and parks?

"I'm supporting it," Tolbert said without hesitation. "We just haven't kept up our investment in the streets."

He got no argument from me about the dire condition of St. Paul streets. Several spans in my Merriam Park neighborhood were literally undrivable for months this year. They've now been patched or "skim paved" sufficiently to spare unsuspecting vehicles a repair bill — for a while.

"That will get us through the winter," Tolbert said.

What really needs doing is a total reconstruction that replaces degraded street foundations in much of the city. That work is recommended every 60 years on a well-traveled city street. In St. Paul, road reconstruction is on a 124-year cycle.

The result is more than just driver irritation and vehicle damage. Deteriorating roads discourage investment. They drag a city down psychologically, socially and economically.

Tolbert acknowledged that St. Paul's own decisions are part of the reason the streets got so bad. Opting for "no new taxes" two decades ago turned out to have long-term negative consequences for infrastructure.

But the main villain in his telling is the erosion of Local Government Aid (LGA), a state-local revenue sharing program that was created as part of the 1971 Minnesota Miracle.

LGA is a needs-based program, though the formulas that measure need have changed through the years. It uses state income and sales tax revenue to keep property taxes affordable in places with a large need for city services. Despite occasional GOP claims to the contrary, it was intended from the get-go to flow to Minneapolis and St. Paul as well as to greater Minnesota hubs.

LGA took a big hit when the state was in money trouble 20 years ago. It's been achingly slow to rebound. By the numbers: In 2002, St. Paul received $73.5 million in LGA. Next year, it will get $81.6 million. That's up from $72.8 million this year, but still $69.4 million less than the allocation would be if the program had kept pace with inflation in the past 20 years.

That gap is especially burdensome in St. Paul, he added, because under the current LGA formula, it has the state's largest gap — $143.8 million per year — between its need for basic city services and its ability to pay via the property tax. St. Paul has a lot of property off the tax rolls.

City Hall's response is the proposal that's on St. Paul ballots this fall — a 1% sales tax for the next 20 years, dedicated to street and park improvements.

St. Paul had to go to the Legislature for permission to take the matter to the voters. Many legislators didn't like the idea, for varied reasons. Sales taxes are regressive, falling harder on low-income people than others. (So are property taxes and auto repairs.) Sales taxes aren't a realistic option for retail-poor communities. The whole idea of cities going it alone rather than relying on state aid seems inconsistent with the Minnesota Miracle.

But legislators also drive on St. Paul streets. Reluctantly, they gave the city's sales tax referendum a green light.

Tolbert said he thinks his grandpa, who died in 2005, would agree that 20 years is long enough to wait for the state to bring LGA back to its former glory. He would note that St. Paul isn't alone: 50 cities were at the Legislature this year asking for permission for local sales tax referendums; 37 of them were allowed to proceed.

In one key respect, Tolbert said, a sales tax increase for St. Paul streets would be in keeping with what Christenson accomplished in 1971. Both seek to reduce reliance on property taxes to fund basic services.

"If we were to fund the street repairs that are now urgent with property taxes alone, the tax increase we would need would be massive. No one could afford to live here," Tolbert said.

The Minnesota Miracle applied the financial muscle of income and sales taxes to local government needs. The proposed St. Paul sales tax increase would do a version of that too. One might even think of it as Miracle 2.0.

Lori Sturdevant is a retired Star Tribune editorial writer. She is at lsturdevant@startribune.com.