First of three articles
WHEATON, MINN. — In the biggest city of the state’s least populous county, the effects of seemingly small cuts in Local Government Aid are felt in large ways.
Here in this city of 1,449 — tucked west of Alexandria and east of both Dakota borders — state funding cuts highlight the challenge for the next governor, whoever he may be. Wheaton is the county seat of Traverse County. With 3,581 residents, Traverse ranks 87th in population among Minnesota’s 87 counties.
Budget reductions at this scale provide tiny examples of a more universal problem: Local units of government have been trimmed to the bone, and budgeting for city administrators has become a painful and uncertain process.
Meanwhile, buzzwords such as “redesign” or “live within your means” might not be enough, or even apply, to places where, on a recent night, City Council members debated whether to waive a $500 fee for a homeowner seeking to demolish her property. At issue, among others, was the prospect of losing that sort of chump change, which goes straight to a small city’s bottom line.
Those bottom lines have been ravaged by LGA reductions and necessarily replaced by countervailing, and substantial, increases in property tax levies.
“Down in the cities, they think we have frills,” said Wheaton Mayor Leonard Zimmel, whose full-time job is maintenance worker for the state Department of Transportation. “We’re used to working bare-bone — that’s the way we operate in these small towns. When they do something like those cuts, there’s no fat. We don’t feel we have the fat to cut.”
It is easy in such places as Minneapolis and St. Paul to get lost in the zeroes of $20 million reductions from Gov. Tim Pawlenty and the Legislature’s budgeting, and to be turned off by the screechy politics that go along with them. But in places like Wheaton, the cuts seem so much more quaint, and, so, in some ways, much more understandable, as if the reductions are from a family budget and not an impersonal spreadsheet.
Indeed, the cuts are more personal because city leaders know just about every one of their constituent/taxpayers.
Wheaton took an $82,500 hit from LGA reduction this year. That’s about what Twins catcher Joe Mauer pockets for every game he plays.
But here’s what it has meant for a city that was expecting about $700,000 in Local Government Aid but lost about 12 percent of it: Wheaton didn’t fill a public works supervisor position; it transferred the utility billing clerk off the city payroll; the city administrator must take unpaid leave every Friday afternoon and a week furlough annually; street repaving has been delayed or abandoned; library hours were cut; some upgrades to city facilities to abide by the Americans With Disabilities Act were delayed.
Wheaton City Administrator Jamie Beyer noted that because of reduction in force in the parks department, the city has had to rely on inmates at the Traverse County Law Enforcement Center and Jail to perform some tasks. “Those inmates, they have really saved us,” she said. “It’s like, sometimes we say [to the local police], ‘Catch that one again!’ “
But, of course, that is an issue, too. Wheaton had to put off buying a new police car because of budget concerns.
Said Beyer: “I know people say [of city budget cuts], ‘It’s just a 10 percent cut,’ but 10 percent of a park, of a swimming pool, of a police department, that’s a lot,” she said.
In the innards of Wheaton budgets and policy decisions is the reality of spiking property taxes to cover the loss of LGA, a see-saw effect generally seen around the state. Since 2007, Wheaton’s city levy for public services has increased by more than 19 percent. That was necessary to keep the city’s $1.1 million budget balanced.
But if something like extending sewers to new homes or fixing the roads is on anyone’s agenda, forget about it, said Mayor Zimmel. He doesn’t want to burden his city taxpayers with more assessments, even though some Wheaton streets haven’t had an asphalt overlay for 30 years, he said.
As for LGA, it began in 1971 soon after a statewide sales tax was established. LGA was meant as a state equalization program, and its first distributions went to counties to trickle down to cities. Those who remember its inception considered LGA part of the so-called “Minnesota Miracle,” and viewed it as a commitment from the state to recognize that folks in small towns might not always shop on their own Main Street — and Main Streets were still flourishing then — but perhaps in the regional center nearby, such as Alexandria or Moorhead or Rochester.
It was “a promise made to municipalities that you would get Local Government Aid and the state would have this new revenue source called the sales tax and the state would be fair” in redistributing it to cities, said David Pederson, city clerk of Glyndon (pop. 1,176) who has been a Minnesota city administrator since 1970.
Soon, state funding went directly to cities via LGA, inflation was built in and by 2002, about $565 million was going to local units of government.
Eight years later, LGA distributions are amounting to about $430 million, or a full 24 percent cut during the administration of Gov. Tim Pawlenty. The much-talked-about LGA “formula” has gone through many complex changes. Opponents of the concept believe its uses have been abused and that, in a state that can’t use deficit spending, cities must suffer when the state’s finances do.
For a city like Wheaton, with population under 2,500, factors for LGA are: the age of the housing stock, the population decline in the past 10 years, the commercial/industrial property market value and population.
The basic concept of LGA is to determine a city’s expenditure needs versus its ability to pay. Among the factors in Wheaton’s “ability to pay” is its revenue-raising capacity, or, property taxes. As Wheaton’s LGA funding has decreased, its city residents have paid more property taxes. This is an economic and political issue.
Many of Wheaton and Traverse County’s residents are on fixed incomes. While the agricultural economy remains strong and even gives Wheaton and the county a leg up on some other small counties, the demographics of the area are turning grayer by the minute. Traverse County’s population has decreased in every U.S. Census since 1950. There are more people 75 or older in Traverse County than there are children under 14.
In 2009, 38 children were born to Traverse County residents, the same number of kids born at Hennepin County Medical Center every five days.
This year so far, 16 children have been born in the county, but 35 people have died. By 2020, 25 percent of the county will be 65 or older, and the county’s population is expected to decline by 10 percent.
Still, because of county aid cuts and a policy decision by the Traverse County Board not to raise property taxes county-wide, a human services satellite office in Browns Valley, about 24 miles south of Wheaton, was shuttered. Clients must get to Wheaton, but County Coordinator Janet Raguse told MinnPost in an email that “at times transportation is a hardship for citizens.”
There’s another contradiction: While the population ages and declines, the size of farms grows larger and larger. Although that has brought some prosperity to Wheaton’s service businesses — such as physicians, the drugstore and, certainly, the grain elevator — the county, according to Raguse, “has had difficulty maintaining roads in the manner necessary to accommodate the ever-increasing demands of the larger farming operations.”
Progress and pain
Wheaton is a progressive community and working hard to fight the trends of population loss in Greater Minnesota while preserving a friendly, if quiet, quality of life. The health of the current agricultural economy has aided the city, even if the business district on Broadway is a bit frayed, and Dueber’s, the local department store, recently shut its doors, unable to compete with the Fargo mall an hour and 15 minute drive away.
Wheaton has its own Economic Development Authority. Its director, Harold Bruce, aggressively courts manufacturing companies with low-interest loans and other creative financing structures to fill industrial sites within the city. Bruce, who has been Wheaton’s economic development cheerleader for 20 years, recently showed City Council members two new homes built in town that were each sold instantly for $135,000 to senior citizens moving off a farm.
The downturn in the general state and national economy has smothered Bruce’s ability to fill some industrial properties that lost tenants to bankruptcy or out-of-U.S. locales. But he’s hopeful.
“In my heart, I’d like to see Wheaton stand where it is, and see some growth in manufacturing, and work to bring the kids back,” he said. Or even jobs that would appeal to others outside of the region.
That heartfelt hope lives within Jamie Beyer, too, who grew up in Wheaton and returned there after her college and post-graduate years to become her hometown’s city administrator four years ago.
At 32, Beyer, the mother of three small children, oversees all of the city’s business operations, supports the city council, manages the city’s relation to the county and now, because of cutbacks, also supervises the public works department. Her salary is supposed to be $57,867 a year, but she has taken a $2,600 pay cut as part of a furlough program established to reduce city spending.
She’s a hardened public employee, but in a small city, all politics are personal. As someone who grew up in this city — her father, a plumbing and heating worker; her mom, a substitute teacher — Beyer knows everyone. The cuts hurt.
“It’s terrible,” she said of her need to keep trimming the budget and services. The city librarian was the librarian at the school when Beyer was a girl. “I’ve known her all my life.” But hours had to be cut.
“You want your home town to stay this little, sweet haven that you remember when things get tough. You don’t want to tarnish those memories. You want your kids to have the same access to things that you had.”
But she and city leaders have had to put off buying new snow-removal equipment. Only a handful of streets Mayor Zimmel wanted paved this year could be paid for. Basic capital improvements are being put off.
“In 10 years, this is going to be an issue,” said Beyer. She was talking about a list of matters, from water and sewer extension to landfill issues to the city airport to full-time police protection. But she was also talking about the future of Wheaton, the future of Minnesota’s small cities, the future of counties with dwindling and dying residents, the future of state aid.
She was talking about the funding of Greater Minnesota’s future.
Thursday: Redesigning services in Greater Minnesota