Minnesota State Auditor Julie Blaha began her offices’ listening tour in Thief River Falls on Wednesday, Jan. 15, a meeting that drew a small group of local officials to discuss financial trends in the state. The state auditor expressed some surprise at how some towns in Greater Minnesota fund their operations with help of state or federal grants.

The State of Main Street Listening Tour 2020, a rare event for the office of state auditor, is, according to Blaha, an opportunity to listen to local officials’ concerns and provide context to the data her office provides municipalities in Minnesota. The event drew a small group of around 20 people, mostly county, city and township officials to interact with the state auditor. The size of the crowd possibly was affected by wintry conditions.

“What we want to do is pull together so people can make good decisions in local government,” Blaha said in her introduction to the meeting. “Because we know that when y’all make good decisions, good things happen. Our communities are stronger.”

Data compiled from the state auditor’s office and distributed to the panelists in a handout showed that over the past 20 years, intergovernmental revenue, funds provided to local governments from the state or federal government has declined, while property taxes increased, as a percent of the total budget. This has led some local governments to turn to grants to fund projects.

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Steven Narverud, a Thief River Falls city councilor at-large, said the only way to fund a flashing crosswalk in his city was through a Safe Routes to School grant.

“Without it, I guarantee you that wouldn’t be there,” Narverud said. “There is no way.”

Calvin Larson, mayor of Shevlin, Minn., a small town on Highway 2 between Bagley and Bemidji, said his town received a $26,000 grant through Blue Cross Blue Shield for playground equipment. Blaha asked the panel how applying for grants affected their budgeting process.

“Nice try,” said Larson. “Unless you are successful in the grant, you don’t expend the dollars. You have to plan for after you are successful, you can’t plan before. Because you never know.”

Blaha wondered if the reliance on grants meant grant-making entities have a say in how a local government decides to spend its money.

“It seems like that would have an impact on your local control, in a sense,” she said. “Making choices based on what you can get a grant for .... that’s an unusual impact.”

Panelists at the listening tour told the Herald they felt the state government was not providing enough funding to locations in Greater Minnesota.

"We’re still the taxpayer,” said Narverud. “We pay taxes to the state. ... We just don’t get that back from the state.”

Pennington County Commissioner Bruce Lawrence, another panelist at the listening tour, agreed.

“Those charts, you can see how the tax keeps going up,” he said.

As of 2017, according to the state auditor’s data, property taxes make up nearly 50% of Minnesota counties’ budgets, down from less than 40% in 1998. Intergovernmental revenue makes up less than 40% of county budgets, down from a high of 46% in 2001.

The gap widens for cities, where property taxes account for more than 40% of the total budgets, up from just over 20% in 1998. Funds from the government sit at less than 25%, down from the high of 35% in 2002.

Speaking to the Herald after the meeting, Blaha wondered how the budgeting process for some communities works, with officials having to search for available grants and “reverse engineer” their budgets.

“I don’t think that’s an ideal way of funding local government,” she said.

When asked what was behind the trend of declining intergovernmental revenue, Blaha replied: “I think that’s a great question for legislators, because they are the people ultimately making that decision.”

The next stops on the Listening Tour are St. Cloud on Jan. 16, at St. Cloud City Hall, Duluth on Jan. 22, at Duluth City Hall, Twin Cities Metro, at St. Paul City Hall on Jan. 24, Marshall on Jan. 28 at the Marshall-Lyon County Library and Albert Lea, on Jan 29, at Albert Lea City Hall.