The suburbs versus the cities

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The GOP’s proposed overhaul of local government aid has the potential to splinter the state’s mayors – and unite the GOP caucus

Last week mayors from across the state emerged from a meeting with Gov. Mark Dayton expressing united support for holding the line on cuts to local government aid.

“We are one Minnesota,” St. Paul Mayor Chris Coleman told reporters afterward.

Granite Falls Mayor Dave Smiglewski expressed support for aid to St. Paul and Minneapolis, as well as to smaller municipalities like his own. “It’s really an important part for us to stand together with those central cities – to stand together as one state,” Smiglewski said.

But a proposal introduced just days later by Rep. Linda Runbeck, chairwoman of the House Property and Local Tax Division, threatens to fracture that consensus. Under the Circle Pines Republican’s plan, local government aid to cities with more than 100,000 residents – namely Minneapolis, St. Paul and Duluth – would be dramatically reduced over the next three years. Minneapolis and St. Paul would lose nearly $160 million in aid during the next biennium – or roughly half of what they are expected to receive under current statute.

At the same time, Runbeck’s proposal, which appeared to take House DFLers entirely by surprise, would make comparatively minor cuts in state aid to cities and towns in the outstate area. Those municipalities would be spared any reductions in payments during the 2011 calendar year. Then, in 2012, they would face reductions in aid that are significantly lower than their urban counterparts. Bemidji, for instance, would face a 14 percent cut from its anticipated $3.4 million in aid, while Detroit Lakes would face a 23 percent reduction to just under $700,000.

Runbeck’s proposal initially included a complete elimination of local government aid to metro-area suburbs over the next two years. But that plan was scuttled within days of being put on the table. Instead, suburbs will also see no cuts in 2011 aid. Next year their payments will be reduced to 75 percent of what they received in 2010.

Runbeck argues that the proposed reductions are a necessary overhaul to a program that’s grown out of control. “It’s a patchwork of who gets and who doesn’t,” Runbeck said. “The result is that over 40 years it has enabled spending. The state is enabling and encouraging cities to spend more. … We’re saying it’s time to have some more discipline.”

But DFLers decry the proposal as a blatant political maneuver to punish Democratic strongholds, most notably the Twin Cities and Duluth. They point out that Rochester, a key swing district, was spared significant cuts through an odd technicality. Under the proposal, first-class cities “as of 2008” are targeted for the most dramatic aid reductions. Rochester is expected to reach the 100,000 population threshold required for such a designation when the new census figures are released.

“I don’t know that I’ve ever seen something quite so blatant before,” said Rep. Alice Hausman, DFL-St. Paul.  “This is really regional warfare.”

Hausman further argues that steep reductions in aid to the Twin Cities will ripple across the entire state with negative economic repercussions. “If they want to do damage to the whole state, all they have to do is hurt the metro area,” Hausman said. “I wish for once the business community would get off its duff and speak out about this.”

Runbeck denies that politics are driving the proposal. She argues conversely that DFL strongholds have been wrongly coddled by the Legislature for too long. “I don’t think anyone can deny that those cities have had 40 years of protection under a DFL-controlled Senate,” Runbeck said. “They’ve enjoyed the bounty of that. I think they’ve been indulged. They’ve been able to come to the Capitol and pretty much get what they want.”

Keeping the caucus together

But the GOP proposal to overhaul local government aid also potentially has significant ramifications for intra-caucus dynamics. Since the start of the legislative session, it’s been clear that there is a significant fissure between suburban and rural Republican legislators over aid to cities and counties. Those in outstate districts that rely heavily on state aid are wary of angering constituents back home by voting for steep reductions. Their suburban counterparts, whose hometowns receive little if any state assistance, are more eager to swing the budget ax.

Rep. Jim Abeler, R-Anoka, for instance, says city officials in his suburban district are prepared for a future without local government aid. Anoka is currently slated to receive roughly $3 million in payments during the 2011-12 calendar years. “They’re prudent, and so they’ve been making plans to live without it,” Abeler said. “When it comes, they treat it like found money.”

This Republican split over local government aid manifested itself in the GOP-controlled Legislature’s first package of roughly $900 million in cuts that cleared the House and Senate in February, but was subsequently vetoed by Dayton. The package initially contained some $480 million in permanent cuts to local government aid, but those were subsequently changed to one-time reductions in part to allay concerns from rural legislators. Even so, freshman legislators from tough districts – like Deb Kiel, R-Crookston, and Rich Murray, R-Albert Lea – still voted against the package. By whacking the Twin Cities and Duluth, while blunting cuts to outstate municipalities, the GOP may be able to keep the caucus from splintering on votes over cuts to local aid in greater Minnesota.

“It certainly looks to me like a tax bill that’s designed to try and pick up some of their rural members,” said House Minority Leader Paul Thissen, DFL-Minneapolis. Thissen points out, however, that cuts to smaller pots of aid money, like the Market Value Credits program, will have reverberations across the state. “It’s not like the rural communities are avoiding these cuts,” he said.

Minneapolis Mayor R.T. Rybak says Republican Gov. Tim Pawlenty, who repeatedly cut local government aid, was like “match.com for mayors.” “He got a bunch of strangers to fall in love with each other,” said Rybak, a DFLer. He sees the latest GOP proposal as an effort to undermine that unity. “There’s no question this is a pretty blatant attempt to separate different portions of the state,” Rybak said. “It may or may not work.”