Friday Debate on MPR's Insight
Friday, July 30, 2010 Minnesota Public Radio has asked me to participate in an online debate about whether or not Minnesota should end local government aid now. Strong Towns released a report here earlier this year on local government aid and the impact of its eventual phasing out, which seems inevitable given its relative priority compared to other budget items. I've agreed to argue the "yes" side in this debate, which starts at noon today. You can follow it here live - and participate if you choose - or you can read the recap any time after we are done. Don Reeder with the League of Minnesota Cities will be arguing the other side and Michael Caputo of MPR will be moderating. They are both good guys and so this should be fun and hopefully informative.
I'm going to use the following as my opening statement for this discussion:
Whether or not we should end local government aid (LGA), it is going away. The state's budget problems are too big and stretch too far into the future for aid to cities to survive for much longer. Ending it now, or at least acknowledging that we need to think post-LGA, frees us up to have a deeper discussion on what is going on financially with our cities.
Most of them are long-term financially insolvent; that is they have more liabilities and obligations for things like infrastructure maintenance than revenue is created from those investments. Our cities today are not very strong, which is a function of the inefficient way in which they have developed. Instead of pinning our hopes to a volatile and dwindling funding source, our cities need to look at ways to shore up their balance sheets by getting a higher return off of their public investments; growing more efficiently and investing in growth more strategically.
LGA in its current form only postpones this discussion. It is doing more harm than good and should go away.
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Reader Comments (1)
The MPR debate, and the ongoing discussion re: the relevance and effectiveness of LGA, focuses largely on the concept of "need" - e.g. there are core needs of every city and LGA is intended to help ensure all cities can meet these needs.
Top three needs, for which there would likely be very little debate: Public safety (fire, police), public health (water, sewer) and roads in good repair. Let's agree these are the core needs.
The Strong Towns message is largely that the cost of meeting these needs depends significantly (not entirely, but very significantly) on the community's pattern of development.
Example: City A and City B both have the same population. Both cities have the same amount of city streets, sewer and water. Both have the same tax capacity (i.e. they both can raise the same amount of money from property taxes). From this simple analysis, they both would likely have the same "need".
But what if one city's streets are 4 feet wider than the other and are that much more expensive to build and maintain? Are they now more needy? Or should they reduce their road width standards?
What if one city's road system is full of dead-end cul-de-sacs that increase fire/police response times? Are they in need of more police and fire stations? Or should they consider finding ways to make their streets more interconnected?
What if one city decides to run sewer/water to a recently annexed neighborhood of 1 acre lots while the other city decides that such an investment would not be financially prudent? Is the city that spent all of the money extending sewer/water more needy now because of those additional costs? Or should they reconsider whether to annex at all?
The current LGA system does not ask these questions. Most state and federal grant and loan programs don't ask these questions.
Maybe the question for debate should be - does LGA (and other state and federal aid programs) serve to make MN cities more resilient and strong in the long run? Or vulnerable and weak?