For some, it’s a question of survival

By Tom Robertson

MPR News

Taxes, municipal government funding and the like aren't particularly riveting or sexy. For some the topic is kind of a bore.

But what I learned while working on the Forced to Choose project is that these days, that's simply not true. There are plenty of real life dramas playing out in large and small communities across the state.

For some it's become a question of survival.

"Small towns are, in a sense, just one disaster away... from things going bad," Floodwood Mayor Jeff Kletscher told me a few weeks ago over coffee at city hall. "Rural communities are shrinking. Things are getting tougher. Funding is getting harder to find."

Kletscher, president of the Minnesota Association of Small Towns, shared a startling prediction.

"There will be less than 854 cities in the state of Minnesota in 10 years," he said. "I'm fairly confident of that. Some of them just aren't going to make it."

When you think about it, some of that dying has been going on for many decades as rural populations shrink. But Kletscher and others worry the decline may be accelerated by shrinking state aid to small towns.

Since 2003, cities and towns have seen a cumulative loss of more than a billion dollars in state aid . The 40-year-old 'share tax dollars around the state' policy known as the "Minnesota Miracle" has been challenged.

City leaders in some towns say that is driving up local property taxes.

Ely is perhaps the poster child this year for tax increases. City leaders initially proposed a 27 percent increase in city property taxes for 2012. And although in the end they managed to cut the increase in half, some residents still worry the city is spending too much.

Ely Mayor Roger Skraba says local government aid cuts since 2003 ate away the city's reserves and prompted them to delay things like routine maintenance on roads and buildings.

Skraba says those delayed projects can no longer wait, and that, he says, is why taxes in Ely will skyrocket next year.

And when I visited with him earlier this month, Skraba talked in those same fatalistic tones as some other small town mayors I ran into.

"My community is dying," he said. "I don't like to say that, but it's a fact."

If what Skraba and others are predicting is true, then Minnesota's small towns are in for some big changes. They'll have to rethink what services are affordable.

But could it be that all of these reductions in state aid have been a good thing? That it's encouraged smart changes that make local government run better? Some lawmakers think so.

"We've got more government than we need, I believe," said Rep. Linda Runbeck, R-Circle Pines, who chairs the House property tax division.

"My position is, we see a lot of duplication," she said. "We don't know where it's being spent for important things and where it's not."

Officials in Bemidji, Grand Rapids and elsewhere say they are indeed more efficient than they once were, but they emphasize that belt-tightening can go only so far.

"OK, we're riding the storm, but what happens when we can't do that anymore?" asks Shawn Gillen, the city administrator in Grand Rapids.

"The long run is going to be the real question," Gillen said. "We can't do as many projects if we want to keep our tax rates low, and we can't buy capital equipment. You can't continue that forever. You've got to fix streets, you've got to buy new trucks and snowplows and firetrucks. Any more massive reductions [in state aid] right now and you're going to see cities really in trouble," he said.

Cities have enjoyed two years of relatively stable state aid funding. But another potential billion dollar state budget deficit looms on the horizon.

No doubt, that will mean more tough choices for everyone.

(See also what reporters Jennifer Vogel and Curtis Gilbert and editor Dave Peters take away from their Forced to Choose coverage.)

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