CGMC leaders: Now is the time to invest in key priorities that will bolster Greater Minnesota communities | News

ST. PAUL — As lawmakers begin to shape their plans for how to utilize the state’s historic $17.6 billion budget surplus, leaders from the Coalition of Greater Minnesota Cities (CGMC) are calling on Gov. Tim Walz and the Legislature to invest in fundamental programs and priorities that address pressing issues in communities throughout Minnesota.

“The Governor and legislators have a once-in-a-generation opportunity to make key investments to address critical needs across the state,” said CGMC Executive Director Bradley Peterson during a virtual meeting with statewide media this morning.

Peterson, who was joined on the call by Thief River Falls Mayor and CGMC President Brian Holmer, Annandale Mayor Shelly Jonas, and Waite Park City Administrator Shaunna Johnson, said for Greater Minnesota, that means investing in urgent issues like Local Government Aid (LGA), wastewater and drinking water infrastructure, workforce needs like child care and housing, and addressing the effects duty disability claims have had on cities.

“These issues have been building for years and were further exacerbated by the disappointing and unacceptable 2022 legislative session,” Peterson said. “The Legislature and Governor must take advantage of the state’s remarkable financial footing and finally address these pressing concerns affecting cities across the state.”

LGA has not kept up with inflation, and cities are feeling the effects

As its top legislative priority for 2023, the CGMC is seeking a $105 million increase in LGA, a statewide program that is vital to restraining property taxes, reducing inequities between communities, and making sure all cities are able to provide high-quality services and quality-of-life amenities to their residents and businesses.

“Local Government Aid means everything to the health of Greater Minnesota cities,” said Holmer. “It means being able to afford the basic services our residents expect, like police, fire, sidewalks, and well-maintained streets, and it enables us to provide the kind of quality of life that our residents want and deserve with amenities like parks, libraries, and swimming pools.”

Holmer noted that in Thief River Falls, a city of just over 8,500 residents located in the northwest corner of the state, LGA makes up about 10 percent of the city’s annual budget. He said Greater Minnesota city leaders are strategic when planning their budgets, but increasing expenses and inflation continue to put a strain on city finances.

“Like other cities, our costs have increased a lot in recent years,” Holmer said. “For example, construction costs have increased by over 14 percent in 2022 alone.”

Peterson added that city expenses have risen in almost every category. From the increased cost of fuel needed to run snowplows to the soaring price of construction material, and higher wages for city employees, communities across the state are feeling the financial strain.

Water infrastructure needs major investment

The CGMC is also urging the Legislature to pass a large capital investment bill (a.k.a. a “bonding bill”) that includes $299 million for water and wastewater infrastructure grant and loan programs.

“With a hefty budget surplus and federal money to leverage, now is the time for a transformational investment in Minnesota’s water infrastructure,” Peterson said. “This funding is needed to make progress in addressing the backlog of water infrastructure projects across the state.”

“Cities are willing to pay their fair share, but it is incredibly difficult to pay for these sometimes massive projects without assistance from the state,” he added.

Annandale Mayor Shelly Jonas is well aware of the costs related to water infrastructure. Her city has been working to upgrade and repair their sewer and water infrastructure in tandem with two large-scale highway projects that the Minnesota Department of Transportation has mandated they complete.

“Our project is estimated to cost approximately $3 million, which is a lot to put on our community of 3,500,” Jonas said. “If Annandale must finance 100 percent of the cost without state help, it will result in dramatic increases to our local taxes and fees. PFA programs and bonding programs are critical to help us cover these costs.”

Annandale is one of seven cities that were awarded funding from the Point Source Implementation Grant Program (PSIG) from the state last year to help offset the costs of wastewater projects. This year, another 22 cities submitted an application for PSIG funds – totaling over $180 million in grant requests for this year alone.

Child care, housing play major role in addressing workforce shortage

The CGMC is also calling for state investments in programs that address the child care and housing shortages that have long been obstacles to economic growth in Greater Minnesota.

“The lack of child care and workforce housing throughout Greater Minnesota significantly stunts our economic development,” said Peterson. “Employers can’t fill open positions if there is nowhere for their workers to live and nowhere for their children to go during the day.”

Holmer stated that Thief River Falls is experiencing a critical child care and housing shortage, a sentiment shared by many community leaders across Greater Minnesota. His city’s largest employer, Digi-Key, recently completed a 2.2 million square foot expansion that will generate 1,000 new jobs.

“Our city is full of economic opportunities, but the lack of housing and child care is a barrier for many people who work in or hope to work in our community,” Holmer said.

According to First Children’s Finance, Greater Minnesota needs to add 40,000 new child care slots to keep up with demand. Many communities in rural Minnesota have no child care centers at all, relying on in-home providers, who are leaving the field at a much faster rate than people entering it.

This session, the CGMC is requesting $20 million for the Greater Minnesota Child Care Facilities Capital Grant Program, which provides grants of up to $500,000 to local governments in Greater Minnesota to fund up to 50 percent of the costs to build, upgrade or expand child care facilities. In addition, the CGMC is seeking $10 million for the DEED child care grant program, which has proven successful at helping to create new and retain existing child providers, and $6 million for the six Minnesota Initiative Foundations to expand child care provider and community support programs.

As for housing initiatives, the CGMC is pursuing legislative proposals to encourage construction and increase availability of workforce housing across Greater Minnesota. Proposals include $10 million for a new housing public infrastructure grant program and $20 million for the Greater Minnesota Housing Development Fund.

Duty disability claims are becoming an enormous financial burden on cities

The CGMC has added a new area of focus to their legislative agenda this year – public safety officer duty disability claims. In Minnesota, the number of public safety personnel claiming duty disability continues to increase. When a public employee receives a duty disability pension, Minnesota law requires cities continue paying for the employee and their dependents’ health insurance until age 65. The resulting health insurance liability for employers is often hundreds of thousands of dollars per employee.

“The state’s Public Safety Officer Benefit Fund is intended to reimburse local governments for these costs, but it is woefully underfunded,” said Peterson.

Since 2010, the fund has remained flat at $1.36 million per year. However, $10.69 million requests were made to the fund last year. In 2022, 87 percent of claims were not reimbursed.

Waite Park City Administrator Shaunna Johnson highlighted the financial toll these cases can have on cities.

“In our city, we are currently dealing with three duty disability claims that we are responsible for paying for decades. The total liability for our city for just these three cases will be $2.2 million over time,” Johnson shared. “These employee payouts are untenable for cities like ours.”

The CGMC is also asking for procedural changes to the duty disability claim process. Between 2019 and 2021, the Public Employee Retirement Association, or PERA, received 666 applications for injuries caused in the line of duty submitted by public safety workers. 80 percent of these applications were claims of post-traumatic stress disorder (PTSD). Last year, PERA initially approved 97 percent of these claims, and 100 percent were subsequently approved.

“The system is extremely exploitable,” said Johnson. “We had no opportunity to appeal or challenge the claim without enduring costly litigation. The process needs to be critically analyzed to avoid burdening our communities.”

This session, the CGMC is asking the state to fully fund the Public Safety Officer Benefit Fund, guaranteeing 100 percent of claims from local governments are reimbursed, and for administrative policy reforms to ensure proper benefit continuance.