What's the Best Possible Scenario for Minnesota Cities Under a DFL Legislature?

[The "golden horses" quadriga looking out over St Paul, c. 1915.]
Just two years ago, Minnesota cities had a near-death experience. The Republican party came within a grey hair's breadth of having a Scott Walker-esque sleeper hold on the State Capitol. But for a couple thousand votes of people with fond memories of shopping at Dayton's when they were younger, we would have had an unimpeded Governor Emmer making draconian cuts to local governments, transit, and probably a whole host of other Koch-addled things too terrible for my imagination.There would have been sit-ins in St Paul, light rail trains burned at the stake, and all kinds of redistrcited mayhem.

Instead, we can now sit back and celebrate exactly the opposite scenario. Next year, Minnesota will be looking at something it hasn't seen for over twenty years: a DFL trifecta. It's hard to say exactly what the consequences of the Democratic sweep will be, but one thing's for sure: Minnesota's core cities will come out ahead. The Speaker of the House is from Minneapolis. The new Majority Leader is from Saint Paul. The Senate Leader will be from somewhere up north. (Somewhere roughly near where Duluth is located? It's all a mystery to me.)

For the first time in my living memory, the state's core cities will have the ability to see their agenda enacted. For the first time in my living memory, instead of the last day of the legislative session turning into a giant game of policy chicken between the two parties, each of them holding out until the very last second, throwing symbolic tantrums by throwing stacks of papers into the air, and compromising at the last second in a back-room deal that nobody in either party has had a chance to glance at, the DFL will get a chance to see if it can run the state government in a sensible, non-ridiculous way. (Of course, whether or not it can accomplish this feat remains to be seen. A lot depends on newly-elected swing districts.) My hopes are high, and Mayors and City Council members across the state should be as giddy as a young Taggart Romney on the night before Mormon Christmas (whenever that is).

So, the next two years should be a turning point for Minneapolis, Saint Paul, and the other cities of Minnesota (I can't think of any names just now).

Since the election last week, though, one question has been bouncing around my head. No, it isn't, "How much will I have to pay for my new personalized Vikings Seat License?"  It's not even, "What can we expect from the new DFL legislature?" Rather, I want to let my fantasies fly free. I want to feel a liberal wind beneath my urban wings. I want to look out my window over the Mississippi River valley and see the State Capitol leading the way, shining like a State Fair skylight over the understatedly beige Saint Paul skyline. I want to think big. I want to dream a thousand impossible dreams, the ones where William Shatner comes back to Earth and pitches a no-hitter for the Twins. I want to ask this:

What is the absolute best case scenario for Minnesota cities with a DFL legislature?

To put it another way: What would be the most astoundingly amazing thing that the State could do to strengthen Minneapolis, St Paul, and those other cities (can't think of any right now) for the rapidly changing, probably uncertain future? What flavor is the pie in the sky?

I've been chatting with a few people about this over the past week, and here are some rudimentary thoughts.


What's likely to happen: Obviously, the first thing on the legislative agenda is to mess with taxes, the hottest of political hot buttons. The DFL (and the Governor) have long pushed raising the top income tax bracket (which was cut back in the Pothole Pawlenty / Jesse the Body days). So, we can expect tax rates to go up for the top earners.

It's probably also true that some of the accounting gimmick style "revenue enhancements" of the past decades are going to be reversed. For the first time in years, we won't see any cuts to Local Government Aid (LGA). There won't be any "school funding shifts." The State budget will actually be paid by taxing people earning money, like it's supposed to be done.

The best case scenario: Already, we're talking about some big strides. Not cutting LGA is a big deal, and means that Minnesota cities won't have to make Hobson's choices with their local priorities, no longer having to choose whether to cut fire fighters or libraries. The LGA system shifts Minnesota local government funding away from the property tax system (which fosters stark inequality) toward the income tax system (far more progressive). That's a big deal.  Maybe the best case scenario is actually re-funding LGA, increasing the payments back to where they used to be. That would be a huge step forward, back to where we were in the 80s.

But what's beyond that? What is the 'pie in the sky' for the state tax code? Ideally, that would be some sort of broad policy that gives cities more flexibility to figure out their own approach to revenue. My colleague Chuck at Strong Towns has mentioned a few times that local governments should be freed up to find their own creative approaches to funding their local obligations. Currently, Minnesota cities can't levy local taxes without (rarely granted) legislative approval. The only choice they have is the property tax, and, as far as I'm aware (not far), the property tax can only be used according to certain lines.

Why not give local governments the license to raise their own revenue (within reason), and try to figure out how to pay for roads and infrastructure using the (Strong Towns) value capture approach?

Alternately, why not allow cities to shift their property taxes from a property value to a land value basis? Currently, there's a great incentive NOT to improve one's urban property. Any improvements only increase the property value, increasing the taxes. That's one of the reasons why so much of our central cities and downtowns are composed of surface parking lots. If we taxed the potential value of the land (what it could be, a mixed-use building) instead of the actual value of the land (what it is, a parking lot), we'd have a system that actually encouraged people to develop urban infill. I'd say that would be a best case scenario for Minnesota cities.

Transit and (non-motorized) Transportation

What's likely to happen:
Well, this is the place where we're likely to see the most obvious change from the Republican to the DFL state government. Last biennium, the Republican legislature left the Southwest Light Rail line unfunded. This year, particularly since a few of the seats along the route switched parties, it will be funded.

Furthermore, the huge cuts to Metro Transit will be un-cut. And, maybe just maybe, the Bottineau Light Rail will get some initial money. Maybe the Gateway corridor out to Hudson, if it's far enough along. It's probably safe to say that the transit system will be a lot more solvent, its future brighter, two years from now.

The best case scenario: But what's the best case scenario? Well, the first thing might be a more stable source of everyday maintenance revenue for Metro Transit. If there was a better pot of money that would keep them from having to desperately beg the legislature every two years (like there is with the state gas tax), that would take a lot of political pressure off groups like the Met Council. We'd actually be able to count on a stable transit system. (I remember this being a political issue a few years ago. I'm not sure how it got resolved back then.) In the best of all possible worlds, this funding stream would allow Metro Transit to actually cut fares in half, to levels that poor people can actually afford, and that would make taking transit as appealing as apple pie (in the sky).

What more could we hope for? A pot of state funding for new projects, both transit and non-motorized transportation, that each city or project could competitively apply for, that would be used to guarantee things like LRT, BRT, commuter rail, and streetcar systems as they apply for Federal money. To give but one example, a few years ago Minneapolis completed a streetcar study that recommended a new line along Nicollet and Central Avenues. Saint Paul is working on a similar study right now. Hell, Duluth and Rochester might as well look at this too. (Imagine a line along Superior Street from Fitger's down to West Duluth.) If there was a reliable source of revenue for State dollars, local governments would be moving at light speed toward developing good local transit that would catalyze inner city development like a lightning rod.

Urban Policy

What's likely to happen: A policy perspective is a bit harder to predict. Who knows how many interesting ideas legislators have had nesting in their craws since 1980. At the very least, we can count on the legislature to pass Minneapolis's suggested slate of bicycle-friendly laws.

The best case scenario: They'd pass Phyllis Kahn's bill creating an "Idaho stop" rule for bicycles at stop signs. This is how 95% of people actually ride around the city anyway.  They'd change the state mandated 30 mph minimum speed limit, allowing cities to set their own minimums. Smart cities would quickly lower speed limits down to 25 (or even 20) mph on quiet residential streets.

But beyond that? Maybe it's time for thinking about the Metro Council. There's long been talk of shifting it to an elected structure, so that the Council doesn't change completely each time the governor's chair switches parties. (That is not a recipe for long-term policy making.) An elected Met Council would also be more accountable to the public, have a more direct relationship with its cities and citizens.

Apart from that, who knows? What other ideas are out there? Do you have ideas? Think big! Who's been dreaming in City Hall?

The world is your oyster, urban Minnesota. Break out the food trucks, and start cooking.


Janne said...

Tax-wise, the best possible scenario is the state phases out their piggybacking of the mortgage interest tax deduction. That would be of minimal impact to homeowners, and bit a GIANT REVENUE GENERATOR for the state. Plenty to pay back the schools, without even a blink.

Alex said...

I would like to see, at the very least, a rescinding of last year's law allowing more municipalities to opt out of the MTC. When I dare to dream, I have a vision of a Twin Cities with a unified regional transit provider - no more transit agency turf wars! Also, potentially an expansion of CTIB allowing the funds to be used on Arterial Transitways. I don't really think any of those are likely, and since the new opt-out period was authored by a DFLer (Bev Scalze), it seems unlikely that the party change will affect it.

Alex said...

I thought of a couple more - septic systems and regional planning.

Septic regulations and licensing should be tightened and permit costs raised. There is a verifiable environmental reason for doing so (septic systems are heinous for our waterways) but the back door benefit is that it becomes much harder to built the exurban sprawl that defined the last two decades. If the prairie populists squeal too much, it could be a two-tiered system - the tighter regs and higher fees only apply within x number of miles of a city sewer system.

The other is more far-fetched - would love to see the Met Council jurisdiction expanded to exclude the collar counties. I think there is a policy basis for doing so, as urban sprawl has largely caught up with the boundaries in which it was supposed to have been contained according to the reasoning of the '67 Met Council enabling act. Obviously that wouldn't be popular politically. Then how bout a mandate on the collar counties to do the sort of growth management that the Met Council does? That may be more palatable and will have close to the same effect.

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