Rarely in recent decades has the word growth — as in population growth and tax-base growth — been heard around Minneapolis City Hall. But in his 2011 budget address on Monday, Mayor R. T. Rybak suggested that the city cannot hope to withstand a stagnant national economy and overcome the financial burdens placed on it by the state and by its own pension problems without substantial growth.
While Minneapolis has outperformed most U.S. cities, even in hard times, and while the city can still deliver basic services to residents and businesses, it must grow to achieve its full potential, the mayor said. “The more new people and business we attract, the more they share the cost of running a great city. The bigger the tax base, the more we can do, and less falls on each of us. The long-term financial health of Minneapolis depends on us growing,” he told a crowd packed into the City Council Chambers.
In most cities this would sound like an ordinary political and economic strategy. But Minneapolis and St. Paul have taken such a back seat to suburban expansion over the past 60 years that talk of population growth in the central cities sounds almost radical. For starters, established neighborhoods have been wary of the “density” associated with larger populations. Then too, the cities have become, well, demoralized is too melodramatic a term. Let’s say they’ve become accustomed to declining populations and resigned to losing job and retail share to the suburbs. In 1950, seven of every 10 metro residents lived in Minneapolis or St. Paul. Now, barely 20 percent of the metro’s 3.2 million people live in the central cities.
But on Monday Rybak dismissed the popular belief that Minneapolis, locked in by other municipalities on all sides, is fully developed. He listed a dozen areas capable of extensive growth, including the Basset Creek Valley just west of downtown, the Upper River on the North Side, Shoreham Yards in Northeast, the West Bank, South Lyndale Avenue near the Crosstown, Hiawatha Avenue near 38th Street and Nicollet-Lake near a new freeway interchange on Interstate Hwy. 35W.
Growing along transit corridors
The key to growth is to maximize housing and jobs along current and future transit lines, Rybak said. To that end, he proposed a new director of transit-oriented development whose responsibilities would blend transportation and land redevelopment for the purpose of growing the population and the economy.
Parks are another possible catalyst, he said, proposing a new park just north of the downtown library as a way to attract jobs and residents to the empty intersection of Washington and Hennepin avenues.
After his speech, Rybak told me that “the pendulum has swung too far” against urban redevelopment incentives like tax increment financing. A revived form of TIF, among other tools, might now be needed, he said. He considered setting population goals but decided not to until he better understands trends in the immigrant communities. The 2010 Census results should provide a good baseline from which to start, he said, adding that he sees no reason why Minneapolis cannot regain the population it has lost over the last six decades.
Minneapolis’ population peaked after 1950 at roughly 525,000, then declined by nearly one-third over the next several decades as the suburbs boomed. Minneapolis’ current population is thought to be about 383,000; St. Paul’s about 280,000. Those figures haven’t changed much since 1980.
In contrast, other land-locked cities surrounded by healthy suburbs have figured out how to grow. Atlanta grew from 393,000 in 1990 to 540,000 today; Denver from 467,000 in 1990 to 560,000; Seattle from 493,000 in 1980 to 617,000; Portland from 366,000 in 1980 to 582,000.
State cuts and pension problems push taxes higher
In his speech, Rybak took more than a few pokes at state government’s “roller coaster” fiscal policies. “It’s clear that the state is not going to be in a position to be an aggressive partner,” he said.
In 2008, for example, Minneapolis sent $503 million in sales and property tax revenue to the state. In return, it got $69 million in local government aid. Since 2003, the city has received $290 million less in state aid than promised. In spite of that, the city has paid down its debts by $130 million, restored its AAA bond rating, and maintained police, fire and other core services. Streets and other infrastructure have taken a beating, Rybak said, but he outlined a program to accelerate street maintenance in the years ahead.
Property taxes would be declining next year if it were not for pensions, he said. Irresponsible decisions decades ago allowed the mismanagement of police and firefighter pension funds to point that they are consuming ever larger chunks of the budget — 13.2 percent next year. While the city won a key court case and worked with the Legislature to shift some pensions to the state system, the $17.1 million jump in pension obligations next year will push the city’s tax levy 6.5 percent higher.
St. Paul holds the line on taxes
St. Paul, with no such pension problems, will be able to hold steady on property taxes next year, Mayor Chris Coleman said in his budget address last Wednesday. Speaking at the city’s impressive new fire station/community center on West Seventh Street, the mayor hailed the start of construction on the Central Corridor light rail line, calling it “the most important public works project in the city’s history.” Coleman also lauded new collaborative efforts among St. Paul’s schools, parks and libraries. “We want our children to be surrounded by learning opportunities, no matter where they are,” he said.
Rybak’s budget speech was more dramatic. He drew inspiration, he said, from Earl Bakken, who launched the company that became Medtronic from a garage in northeast Minneapolis in the early days of the Second World War. Bakken didn’t lower his vision in tough times, the mayor said, and the city shouldn’t either. “The greatest ideas, the greatest innovations and the greatest reforms,” he said, “have come out of times of great challenge.”