Bart Fischer, Senior Public Administrator, WSB & Gary Carlson, Intergovernmental Relations Director, League of Minnesota Cities (LMC)
The Minnesota Legislative Session is well underway and as usual, there is a lot of ground to cover. I recently spoke with Gary Carlson, Intergovernmental Relationship Director at LMC, to discuss the current session and the top issues communities should be paying attention to.
BF: Thanks for taking the time out of what I imagine is a busy schedule right now to dive into this topic with me, Gary. There are many ideas being discussed right now at the Capital, but what are some of the most current issues communities should be paying attention to?
GC: This is an exciting and busy session and as you know, the League works on a variety of issues, but I think there are a few topics that should be front of mind for both cities, counties and even private developers. Let’s first discuss the status of the state budget.
BF: Great! A new budget forecast was released recently. What are the takeaways?
GC: It was a relatively positive forecast. The state’s projected outlook went from a deficit to a positive budgetary balance meaning the state will have some money available for projects, although the bulk of the improvement is considered to be one-time resources, which raises concerns about long-term spending commitments. However, one-time resources increase the chances of a bonding bill, which is positive for our communities as it relates to funding sources for capital projects.
BF: That’s good news, especially with the uncertainty over the past year caused by the pandemic. What else should we be paying attention to?
GC: Good transition – the American Rescue Plan Act was just approved by the Senate and the House. This $1.9 trillion stimulus package means a lot of funding for Minnesota that can be used for a wide array for purposes. Minnesota is expected to receive approximately $4.8 billion total. Of that $4.8 billion, the state will receive $2.6 billion, and cities and counties will each receive a little more than $1 billion. It appears this funding will be fairly flexible, and communities should start thinking about any one-time improvements or projects that can be completed using this funding.
BF: That certainly could have a large effect on our communities. Anything at a more local level occurring?
GC: Yes, sales tax authority. Currently, there are 22 cities and counties seeking local sales tax authority. These are being proposed for projects ranging from libraries, road infrastructure, ice arena upgrades, public safety facilities, etc. This is a growing trend, and more and more cities are looking for a dedicated sales tax to fund capital projects that they feel have significance in their communities.
BF: Yes, it seems more communities are taking that approach in recent years. I’ve heard some talk surrounding the sales tax exemption process. Can you speak to what’s happening there?
GC: The sales tax exemption process for local government projects has been a focus for nearly six years. Most cities and counties are forgoing the sales tax exemption process when working with a contractor for a local project because of its cumbersome nature. It also can be financially risky to pre-purchase materials, etc. We have a bill in to do a general simplification of the process. This is really important and could save cities and counties a lot of money. The legislature is considering a general law to streamline the process however, in the past several years, they have opted to only grant project-specific exemptions. I would encourage cities to put a request in for this and watch how things develop at the capital in the next year. If we’re not successful in securing a general law change, cities should consider mounting an effort to work with their legislators to position those bills.
BF: Any high-level takeaways from the pandemic or lasting effects communities should be prepared for?
GC: The housing market is crazy and that is great news – it means a larger tax base, but there is a countervailing force creating significant uncertainty for retail and business properties and it is unclear just how deep the long-term effects of the pandemic will be on that sector of the tax base. There are conversations occurring that the effects of the pandemic will hit communities in 2022 as more commercial and industrial properties seek an appeal of their property taxes or struggle to continue operations. This is a long-term topic to be thinking about and something to keep in mind as communities plan their budgets in the future.
BF: Thank you, Gary. This is all really great information. Is there a place we can watch the action unfold and go to for updates?
GC: The League’s government relations staff provide weekly updates on legislative activity impacting cities. Information can be found at: https://www.lmc.org/news-publications/news/news-types/legislative-news/
Bart Fischer
Bart Fischer has over two decades of experience in public administration. Throughout his tenure, he’s worked in five Minnesota communities as the city or assistant city administrator. Bart joined our firm in 2019 as a senior public administrator and focuses on lending his public service expertise to our clients.
Gary Carlson
Gary Carlson has 37 years of experience in government affairs. As the Intergovernmental Relations Director at the League of Minnesota Cities, Gary leads the League’s legislative efforts that matter to cities including aid to cities, economic development, employment and human resources, pensions and retirement, public finance, taxes, tax increment financing (TIF) and workers’ compensation.
