Wednesday, May 6, 2009

Sign of the times -- more on Minnesota city finances
Some additional data from the recently-released League of Minnesota Cities 2009 State of the Cities Report.

-- The current economic struggles of individuals, families, and businesses in Minnesota are translating into financial challenges for city governments. About 34 percent of cities have reported an increase in requests for deferred payment of property taxes and/or bills over the last year.

-- More than 80 percent of cities anticipate having trouble meeting debt service payments; late payment or non-payment of taxes and/or utility bills are common reasons for this trend.

-- About 41 percent of cities indicated that they have seen development projects delayed or canceled. Cities are often left struggling to pay for the new infrastructure in which they invested in anticipation of development that never came, or was not completed.

-- Cities continue to see declines in building permit revenues and other revenue streams associated with new development. In Minnesota, the number of single-familybuilding permits issued fell 58 percent between January 2008 and 2009.

Given these fiscal circumstances, it follows that anticipated cuts in local government aid (LGA) and market value homestead credit reimbursements (MVHC) will be the straws-that-break-the-camel's-back, and will likely result in significant service cuts in a number of Minnesota communities. Other communities are looking at fee-for-service options to generate revenue.