LGA & Property Taxes: Frozen Aid = Tax Increases

This year's House Omnibus Tax bill improves on reforms made last year to city Local Government Aid (LGA). In 2013, policymakers made significant improvements to the aid formula and increased the appropriation to partially replace what was lost over the preceding decade. However, that bill failed to finish the job of LGA by annually adjusting the appropriation to keep pace with inflation and population growth.

If LGA is not adjusted to keep things with growth in the cost of items that cities purchase, all of that growth in those costs will fall upon property taxpayers.  As explained in a 2013 Hindsight post, under these conditions city property taxes will grow faster than inflation, even if the total city budget grows at the rate of inflation. 

An April 22 Minnesota 2020 article demonstrated how a frozen LGA appropriation tends to push city tax rates higher, with cities with the highest rates to begin with experiencing the largest rate increases. The analysis below describes what happens to the total level of city property taxes paid when the LGA appropriation is frozen. The data, methods, and assumptions used are the same as those outlined in the April 22 article.

In the graph below, the cities examined are divided into five groups.* “Non-LGA cities” receive no LGA because their local tax base is sufficient to meet their entire expenditure need. The remaining cities are placed into four groups of equal size, with cities with the smallest aid gap (defined as a city’s need for state aid as measured by the new formula minus the amount of aid it actually received in the preceding year) as a percentage of prior year levy comprising the first quartile and cities with the largest gap comprising the fourth decile. The property tax change shown is based on the unweighted average for each group expressed in constant (i.e., inflation-adjusted) dollars.

Cities with the largest aid gap—which tend to be low property wealth communities with few resources relative to local needs—see the largest property tax increases. Taxpayers in these fourth quartile cities will see a 16 percent average increase in projected property taxes between 2014 and 2020. Taxpayers in cities within the first three quartiles see smaller but still significant tax increases.

Freezing the LGA appropriation will not impact Minnesota cities uniformly, but will drive taxes up most in those cities with the smallest tax bases and the greatest need for state assistance. The result will be an increase in statewide tax disparities. This situation can be averted simply by allowing the LGA appropriation to increase to keep pace with inflation and population growth. More on this in the second part of this series.

 

*Excluded from this analysis are 111 cities that are already receiving LGA in excess of their need for state assistance as measured by the new formula. Under current law, the aid for these cities will be gradually reduced over time until it equals their need for state assistance.  The aid levels for these cities would not be affected by an LGA appropriation adjustment.

Posted in Fiscal Policy | Related Topics: LGA  Property Tax 

Potholes: A Patch or a Real Fix?

As winter slowly melts into spring around here, the one smart transportation policy every Minnesota driver supports is Fit it First. As in: Please fill the gaping canyons along my daily commute before they wreck my shocks, struts and backbone. 

This year road crews at every level of government are straining to mitigate the effects of the state's most severe winter in 30 years. The epic outbreak of potholes has even inspired poetry. My favorite commemorates the one so big it "has a Starbucks."

But if potholes seem more prevalent and cavernous than in the past, it's not just because of the return of a "real" Minnesota winter. An underlying reason is that more and more of our motorways are aging and, like many of my Boomer generation, sorely in need of reconstructive surgery. It's expensive to dig up and rebuild a street from the ground up, about $1 million a mile, but it needs to happen every 50 years or so before Mother Nature does the demolition herself.

Guess what? Half the nearly 140,000 miles of roadways in Minnesota are past the half-century mark, and the backlog of needed work keeps growing as resources stagnate or shrink. And the older the road, the more vulnerable it is to potholes.

"We're paving streets by the shovelful right now," St. Paul city engineer Jahn Maczko told the Star Tribune this month. "And that's not effective, and it's not efficient ... Winter is not the problem. Our infrastructure is the problem."

Yes, Fix it First is a great plan, but not with a bandaid approach. As the Michigan Department of Transportation points out in a "Reality Check," it's a myth that "road crews just throw some asphalt in the potholes to fix them. They need to fix them right the first time so it lasts." Sorry, no can do. "Pothole patches are just that—a patch. A true fix will require much more."

To head off potholes before they happen, and save public and private money in the long run, we need to get serious about maintaining our constantly depreciating assets—instead of just patching them over and over.

Posted in Transportation | Related Topics: Roads & Highways  Automobiles  Road Safety 

Video: Social Justice Needed in Marijuana Enforcement

The collateral costs to an individual from a marijuana possession arrest add up fast, and last much longer that the immediate detention or sentence. In Minnesota, these costs disproportionately fall on communities of color for a variety of reasons including over-policing in certain areas and unfair seizure laws.  

It's time we reform marijuana laws and enforcement policy, and consider full legalization. Minnesota 2020's latest report attempts to re-frame this debate so that we consider economic and social justice in our justice system. 

Posted in Economic Development | Related Topics: Racial Inequalities 

Falling Into Segregation

More and more, it looks like we can’t integrate our schools unless someone forces us to.

Exhibit A is the recent Atlantic story detailing the return to segregation, specifically in Tuscaloosa, Alabama, and throughout the Old South generally. Districts forced to adopt integration did so, and saw their academic performance gaps narrow thanks to higher scores from black students. Meanwhile, black and white students alike built relationships (or, if you prefer, “increased their social capital”) across racial lines. Of course, this was not an easy process, and the early days of integration in particular were difficult for students. Still, the net effect was positive.

These gains are being lost now that the courts have stopped requiring districts to integrate. Absent that pressure, and in an attempt to lure white students back from private schools and the suburbs, districts redrew attendance zones to resegregate their schools. The result is a gradual reversion to the bad old days, to no one’s benefit.

It would be easy and comfortable to write school segregation off as a product of Those Backwards Southerners, but it’s alive and well up here, too. Part of this is the result of heavily segregated housing, with Milwaukee, Detroit, Cleveland, New York City, and Buffalo, NY, topping the list of most segregated metropolitan areas. Chicago, St. Louis, and Reading, PA, are also in the top ten, joining Birmingham and Gadsen, AL. When housing is that segregated, it’s tougher to integrate schools.

Nor is it just housing. The way school boundaries get drawn and the roles played by private and charter schools also contribute to school segregation. This is how New York City’s schools became the most racially segregated in the country, and why observers in the Twin Cities have watched our schools grow more and more segregated as well.

The message running through all of these examples is that, left to our own devices, we in the United States segregate our schools. It isn’t always done with the blatancy of the Jim Crow era, and it’s possible to find exceptions at the individual or even (rarely) the city level. For the most part, though, we regress to segregation when not compelled to do otherwise.

To some, this may not be a problem. To others, it may be a problem to which they don’t see a solution. To others still, it’s a problem with a solution, but there’s insufficient political will to carry out that solution. Whatever your perspective, we need to name this for what it is.

Posted in Education | Related Topics: K-12 education  Education Administration  Racial Inequalities 

Demand Versus Need in Minnesota’s Oil Pipelines

The Midwest and Great Lakes are quickly becoming a hub for transporting and refining one of the world’s dirtiest and most destructive fossil fuels on the planet: tar sands oil.

Pipelines in the area are nothing new, but over the last several years the region’s infrastructure has seen a dramatic transformation: a Canadian company, Enbridge Energy Partners, is undertaking a massive expansion of its system. If successful, this expansion will expose the already threatened Great Lakes to larger and more toxic pipeline spills and lay the groundwork for increased carbon emissions that undercut our region’s efforts to reduce carbon pollution.

Enbridge wants to expand the existing pipelines because they say the refineries the company serves have increased their orders for oil. But is that demand actually a “need?” What constitutes need? Does our society “need” more oil? Or are there better, more sustainable solutions to our growing energy demands?

If expanded, the Alberta Clipper pipeline will be nearly the size of the highly controversial Keystone XL pipeline and carry 800,000 barrels per day from the tar sands oil formations of Alberta, Canada, to the Enbridge terminal in Superior, Wisconsin. That’s enough fuel flowing through a pipeline to fuel 22 million cars.

Most of the oil sent to the Superior refinery is later shipped to market further east. Even without the proposed expansions, the pipelines coming into Superior already exceed the capacity of those going out at a rate of around 400,000 barrels per day. This excess capacity has recently led to proposals to load crude oil on barges in Superior and ship them across Lake Superior and the Great Lakes.

The public speaks

This spring, the Minnesota Public Utilities Commission (PUC) held a series of public hearings on a Certificate of Need for the proposed expansion of the crude oil pipeline. The fundamental question to be answered is, does Minnesota need this pipeline?

The PUC hearings were well-attended. In Duluth, approximately 60 people spoke. The divide between supporters and opponents could hardly have been more clear. Virtually everyone who spoke in favor of the pipeline had some sort of potential economic gain from the project moving forward, for example a contractor to Enbridge, a vendor for construction services, or an Enbridge business partner. Virtually everyone who spoke against the project spoke on behalf of the greater public benefit: clean water and clean energy, in addition to the personal losses they would experience.

The opponents to the project outnumbered supporters 3:2.

Since the goal of the hearings was to guide the determination of whether the project was actually “needed,” one quiet voice said something that has stuck in my mind ever since. Jane, from Duluth, spoke at length about her own struggles with defining “need.” She lives simply, travels Duluth by bus and by foot. She spoke about need versus demand. Just because Enbridge’s customers ask for more oil doesn’t mean they need it.

“Demand is not need,” Jane testified. She just booked a cheap flight to visit friends, but “I don’t need to do that, I just wanted to.”

Demand is not need

Demand is our consumer society looking for the best possible deal to sate our consumptive appetites. What if that pipeline were not expanded? Market forces would make us pay more for the gas to power our trips to the shopping mall, or to heat our McMansions.

Minnesotans need clean water. Minnesotans need clean air.

Minnesotans do not need increased threats of toxic spills and increased greenhouse gas emissions that come with oil pipelines.

Enbridge may be able to demonstrate to the PUC, in the language of business and economics and markets, that the Alberta Clipper expansion is “demanded.”

But that doesn’t mean it’s needed.

Posted in Energy & Environment | Related Topics: Energy  Environment 

“Big Doings” at School Builds Community

Bill Holm, the late poet, author, musician and English professor, used to tell rural Minnesota audiences about how strong communities often maintained strength by supporting and enjoying events at their schools.

“There’s ‘big doings’ at the school,” Holm would say in mimicking a rural Minnesota conversation. “I suppose we better go.”

Such was the case a week ago when 60 student actors, crew and musicians at Kerkhoven-Murdock-Sunburg (KMS) high school performed Beauty and the Beast for their spring musical. The public – the community – came. There were four general public performances plus a day matinee for KMS elementary students and another for 150 first graders on a field trip from nearby Willmar.

The public performances had mostly full houses, said Kerkhoven Banner publisher Ted Almen. The community supports the arts in this three-town school district and perhaps not surprisingly, voters in the districts overwhelmingly approved two school referenda in the past year.

The participation of 60 students meant that approximately one-third of the ninth through 12 graders in the school were involved in the production. I will defer to colleague Michael Diedrich, our education fellow, and educators on how such school participation inspires learning and enriches lives for students and people in the community. From an economic development perspective, there is no doubt that a vibrant school district is a foundation on which to sustain and build communities.

Communities such as Kerkhoven, Murdock and Sunburg do combine into a singular community around the school district. Active schools create school events that entertain area residents, not just proud parents. Active students develop leadership skills for the next generation. While the majority of KMS graduates will go off to college, some, like Ted Almen, do return home and provide community leadership.

Real estate people – urban and rural – point to quality schools as being tremendously important for maintaining area home values. For many potential entrepreneurs and employers, a strong school district is an attraction for locating investments and expansion.

There is community pride when the flashy KMS marching band comes down the street in community parades around Minnesota each year, and in the Washington, D.C. Fourth of July parade and at Gettysburg Battlefield where they performed this past year.

Regional demographic trends of aging rural populations don’t do many favors for the united three communities. Quality education that includes strong music programs bucks the trends and gives KMS communities reason to be optimistic about the future.

Bill Holm was right about the ‘doings’ at the schools.

Posted in News & Notes | Related Topics: Minnesota Cities  Arts & Music  Youth Programs 

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Full-Service Community Schools 101

At a recent Minneapolis school board candidate forum, hosted by the Coalition for Quality Schools, several candidates committed to the “full-service community schools” model. That phrase gets a lot of use, it risks becoming a vague buzzword. For context, the only Minnesota schools currently recognized by the Coalition for Community Schools are the Brooklyn Center school district and Saint Paul’s Achievement Plus schools.

So what constitutes a true full-service community school? Here’s a starting point, with much more at the Coalition for Community Schools web site.

1) Keep the buildings open.
Schools need to be available to the community during more than the school day, and for more than school-related activities like athletics or concerts. Offering a range of services to students, families, and community members outside normal school hours, and even on the weekends, greatly increases the usefulness of these public buildings.

2) Locate services on-site.
Offering a variety of services -- both academic and not -- during these additional hours is critical. Co-locating services on school grounds also increases service providers’ abilities to coordinate services and provide quick and easy referrals.

2a) Match services to community needs and strengths.
It’s common sense that services offered through the school should align with community needs, but it’s also important to identify community strengths and build on those in the schools.

2b) Plan to increase health services.
One of the most common needs is easy access to on-site health care. Consider a hypothetical student with needs outside the purview of the school nurse. If there’s a clinic built into the school, the nurse can immediately refer the child. Even with a community clinic a few blocks away, co-locating at the school is a much more direct route to access. (If, like Brooklyn Center, you also make health services available to staff, the district can wind up saving money through better health insurance deals and lower substitute costs.)

3) Invite, recruit, and sustain community partnerships.
Critical to all of this is the school’s ongoing work to build partnerships in the community and with service providers. This opens the door to increased community input in the school, as well as shared responsibility for the well-being of students, the school, and the community as a whole.

It’s far too common for great educational ideas to transform into meaningless catchprases. The full realization of the community schools model requires a broad, sustained commitment to several key ideas. The preceding list is a good starting point for interested school and district leaders, with much more to come if we want schools to be truly transformative.
 

Posted in Education | Related Topics: K-12 education  Education Administration 

Preferring Death Over Taxes?

A recent Center of the American Experiment blog post warned us to beware of the “Ides of April,” a reference to Shakespeare’s Julius Caesar. In the play, Caesar was stabbed to death in the Roman Senate by Brutus and other conspirators during the Ides of March. The blog post contends that “most of us have more reason to rue the ‘Ides of April’”—or more specifically, April 15, tax day.

It’s not clear who the “us” is in this blog post, but I assume it’s referring to upper income Minnesotans who absorbed a 2% increase in the tax rate on income in excess of $250,000 (married joint filers) as a result of the 2013 tax act. It speaks volumes of the right’s hatred of taxation that they think that a tax increase is more loathsome than being bludgeoned to death with multiple dagger wounds. In a choice between “your money or your life,” this crowd would apparently choose their money.

Setting aside the conservative ire over the 2013 tax act, let’s look at the facts. After the tax increases imposed through that act, Minnesota’s tax system is still regressive, meaning that high income households pay a smaller portion of their income in state and local taxes than do other less well off Minnesotans. Based on a Revenue Department analysis, the top one percent and the top five percent of all Minnesota households by income will continue to enjoy a state and local effective tax rate that is less than that paid by any other income group in the state—even after passage of the 2013 tax act.

Nationally, the share of wealth concentrated in the hands of high income households is greater today than at any time in the post-WW II era, while effective tax rates borne by the rich are near their nadir. Extremely high income households are enjoying a degree of affluence rarely enjoyed by any other group. In fact, the least civic minded and most narcissistic of the über rich can afford to hire armies of lobbyists and fund right wing spin tanks to foster the myth that they are somehow persecuted.

Based largely on anecdotal evidence, conservatives claim that the high income households—the alleged job creators—are fleeing Minnesota because of high taxes. (Weather is probably a much larger factor driving migration. Beware the Ides of January.) Claims of massive tax flight are contradicted by the fact that job creation, income, and GDP growth in Minnesota are comfortably outpacing the national average. In fact, progressive Minnesota is currently outperforming conservative Wisconsin in economic growth. The economic growth gained through smart investment in education, infrastructure, and other public assets seems to be sufficient to more than offset the impact of an unquantified number of high income households leaving the state due to taxes.

Fortunately, not all high income households are so deluded as to think that reduction in the degree of tax regressivity is tantamount to “class warfare.”  For example, consider the impressive list of “Patriotic Millionaires” who support smart public investments funded through progressive taxation. These individuals, along with the late Paul Wellstone, know that “we all do better when we all do better.”

Posted in Fiscal Policy | Related Topics: Income Tax  Tax Fairness 

Friday Reads

As we do every week, I asked our MN2020 staff, "What's making you happy this week?" Following, are their responses -- a list of recommended reads that we're hoping will make your Friday a little brighter.

From Michael:
Looking for Tom Lehrer, Comedy's Mysterious Genius (Buzzfeed)— While Buzzfeed may be better known for its lists and quick-hit pieces, this longer article is an interesting look at the history and current situation of Tom Lehrer, the man responsible for "The Elements Song," "Poisoning Pigeons in the Park," "New Math," and many other sharp and quirky songs.

From Julia:
Glow-in-the-Dark 'Smart Highways' Replace Street Lights in the Netherlands (Inhabit) — I really enjoyed this short video because it enhances the importance of artists and thinking outside of the box. This shows examples of how smart highways in the future will function as well as possible routes to reduce our ecological footprint in regards to light energy. The ideas presented give me hope for the future of clean energy approaches for our environment.

From John:
The Nutritional Quality of Donated Food (Center for Urban and Regional Affairs) — Focusing on food shelf nutritional quality makes a big difference. From the University of Minnesota's Center for Urban and Regional Affairs, one of our state's great public policy research resources.

From Conrad:
The Political Economy of Sprawl (Smart Growth for Conservatives) — Virginia blogger James A. Bacon describes himself as "one of the world’s few conservatives who supports the broader vision of the Smart Growth movement." Here he lists all the dirty reasons why red-state voters love sprawl:

From Nicole:
U.S. Views of Technology and the Future (Pew Research) — Driverless cars? Personal robot servants? The ability to control the weather? Our ideas about how technology could – and should – impact our lives over the next 50 years are documented in a new study by the Pew Research Foundation. Does the extent to which these ideas differ by gender, age, education level, and income tell us something about the present?

From Lee:
I'm reading Pulitzer Prize winning journalist Hedrick Smith's 2012 book Who Stole the American Dream and recommend it to everyone no longer pleased with the status quo and is interested in studying how we got to where we're at in hopes of bringing about change.

From Shruthi:
There's More to Life Than Being Happy (The Atlantic) — This article details what happiness is and how one can pursue happiness, and their life purpose.

Posted in News & Notes | Related Topics: Friday Reads 

Putting a Cap on Urban Redevelopment

The Green Line LRT has brought many redevelopment projects to St. Paul. One such project site involves a parcel of land on Snelling Ave., just north of I-94, known as the Bus Barn site.

The Bus Barn is part of a larger site, called Snelling Area Station. Future plans there include significant transit-oriented development, a mixed-use urban village, green space, and better leveraging retail and job opportunities. It's a solid start for developing the area.

I look forward to a final site plan and community engagement on this project. But it is missing an opportunity to be truly innovative. I want the community, the city and the developers to think about something else. Freeway Caps (or lids). What if we added these along I-94? 

I-94 divides many communities up and down its corridor. In Saint Paul, there is a clear divide from those who live on the north side of 94 from those who live on its south side. You're not likely to cross the freeway by foot or bike, unless you absolutely have to. As someone who lives south of 94, I can attest to this. Crossing the freeway, with the exception of the Griggs and Chatsworth bridges, is a pretty daunting task—narrow sidewalks, speeding traffic, windy, dirty and generally unfriendly to pedestrian and bike traffic.

As Saint Paul works on its mission to be the most ‘Livable City in America’, we need to look at other cities for inspiration: how about Florence, Italy?

Ok, ok, a little too far away? How about something closer to home? How about Dallas, TX? Columbus, Ohio? or Chicago, Illinois? Or even Minneapolis?

Freeway caps/lids are based on the Ponte Vecchio in Florence, Italy. Most freeway caps are usually turned into parks, but many cities are starting to use them for added office, retail and restaurant space.

Columbus constructed its freeway cap over I-670 to connect it’s downtown with the Short North neighborhood. Chicago is looking at covering three blocks of the Kennedy Expressway and building an office complex and a park. There are many other cities that are looking at doing this or have already done a cap. Recently, students at the ‘U’ came up with a plan to cover I-35 that would include business, retail and park space.

Saint Paul should look at building a freeway cap or lid over 94 at Snelling Ave to Pascal St. This would link the north and south side of 94, connecting a residential neighborhood with mixed use and business areas. State, local and private partnership financing could also be on the table because of the project's transformative economic potential. 

With new development on Snelling and Selby underway and the eventual redevelopment north of 94 toward University, freeway caps would help ensure more foot-powered traffic through a much longer stretch of Snelling, maximizing economic and environmental impacts. 

Is the City ready to be that innovative?

Posted in Transportation | Related Topics: City Management  Minneapolis / St Paul  Roads & Highways  Infrastructure 

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