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Brad Peterson: Goals for upcoming legislative session

Brad Peterson

Q. Tell us about the Coalition of Greater Minnesota Cities.

We've got 86 members currently. In northwestern Minnesota, they include East Grand Forks, Moorhead, Crookston, Thief River Falls, Roseau, Warroad, Warren. Hawley and Dilworth have been in and out. So, quite a few communities in the area.

We represent communities from the size of Renville, Minn.—which is about 1,000 people—to Rochester and Duluth and everything in between.

Q. What's the situation with Local Government Aid?

A tax bill did not pass last year, so there's a conference committee that'll be trying to square the different approaches from the House and Senate.

I've met with seven or eight of the rural Republican legislators, including Deb Kiel of Crookston. And our message is: Look we need some leadership on this issue.

The Senate's bill has a $45.5 million increase in Local Government Aid over two years. But the House bill that Republicans put together has an $84 million reduction in LGA, based on cuts to Minneapolis, St. Paul and Duluth.

We've got to get these together.

Some of the other information we shared:

Sixty some cities have passed resolutions supporting LGA, and that's just since the beginning of December. Crookston and East Grand Forks are among them.

But we're really concerned that the House's proposed cut to Minneapolis, St. Paul and Duluth kind of set us back in terms of the discussion.

Q. What's the fiscal situation?

Last year, the House Republicans had almost $2 billion worth of tax reductions in their bill—but there's not that kind of money anymore. We're down to about a $1.2 billion surplus, if you take out what has to go by law into the reserves.

So, that's now the universe of discussion, which means people are reframing their priorities. What we want is for LGA to be a part of that.

We've been encouraging leaders to get out in front of it, as they set their priorities. An LGA increase should be part of that discussion.

So, our message to Rep. Kiel and other rural Republicans is, "Look, it's time to show some leadership on this, and you need to talk to your colleagues and talk to your leadership that this a priority for the communities you represent."

Q. How do rural Republicans square their party's philosophy of fiscal conservatism with LGA?

What we hear from a lot of Republican members, especially in the rural areas, is this: "Look, I support Local Government Aid, generally—but Minneapolis and St. Paul get too much."

We've actually been trying to push back against that notion. What we say is this: "Proportionately, those cities actually are not getting that much more than anybody else. Yes, they get a big sum, but that's because they're big cities with big populations."

Furthermore, if you look at what the House's LGA cut would be for the three cities: Minneapolis, they'd be losing 44 percent of their aid; St. Paul, it's almost 50 percent; and Duluth, which is a Coalition of Greater Minnesota Cities member, it would be almost 66 percent.

We're talking about a pretty sizable cut.

In East Grand Forks, if you applied the same cut, you'd be looking at a $1.5 million reduction. In the case of Crookston, it would be $2.7 million. And that's what the House Republicans were saying was manageable for these other cities.

Also, consider this: When you look at all the cities in Minnesota—and there are 850 of them—90 percent of those cities get some form of Local Government Aid. But when you're going down that list of how much people get per capita, you're into the 400s before you get to Minneapolis and St. Paul.

Q. Which cities don't get any aid?

Peterson: A lot of the second- and third-ring suburbs. Edina's a great example; Minnetonka, Eagan, Eden Prairie.

There are some cities in Greater Minnesota that don't get aid, but there's always some sort of unique factor in their tax base. For example, Becker and Monticello both have big power plants; and in the Brainerd Lakes area, you've got some very small cities with a lot of their property nice lakeshore. So, those would be the cases where cities don't get aid.

Q. Is the determination made on the basis of property tax wealth?

And need. Crookston, for example, is in the top 15 of low amount of property wealth, coupled with high need.

And that's what's frustrating: The formula is driven by facts and statistics, while this argument about Minneapolis, St. Paul and Duluth—it's all innuendo. People look and say, "Well, they have all those big shiny buildings, they must have a lot of property tax wealth."

Q. Are there other priorities for the session?

A workforce housing tax credit is one. There have been a lot of ideas, especially in the northwest part of the state, where the economic issue isn't a lack of jobs; it's not having places for people to live.

The League of Cities has recommended using tax increment financing for this. We put our thinking caps on and came up with a tax credit that lets business owners themselves invest in workforce housing programs and get a tax credit for it.

Our proposal actually is the Senate tax bill. In the House, we're not in their bill, but I think there's still a lot of energy and discussion on this issue, and hopefully we can push that over the line.

Rural broadband is another issue that we've been very "out front" on. Everybody's now talking about it; the governor wants to spend $100 million, there's a proposal from one of the leaders from the House Republicans to do $35 milion. So, we're gratified by that.

But we're also trying to make sure of this: Are the existing programs working the way we thought they would? The answer is "maybe not," so we might have some ideas on making it work better so it really does help drive economic development.

Q. For example?

For example, Lac qui Parle County in the mid-2000s got a bunch of rural broadband money from the federal government. They pretty much built up the broadband infrastructure in the township areas outside Madison, the county seat; so now, everybody outside Madison has world-beating service.

But the city of Madison itself, the county seat, has very poor service. So, we're a little afraid of creating these "donut holes."

The devil's in the details in a lot of these things. Are we encouraging businesses to locate outside the city, perhaps? There is a lot more to it than just laying a wire.

Peterson, an attorney, is a lobbyist for the Coalition of Greater Minnesota Cities. He spoke recently to the Herald editorial board.

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