What if you had to pay a fee to have a police officer respond to your car accident? Or if your children had to buy admission tickets for the library or for entrance to the playground?
It sounds crazy, but for the City of Bemidji, increasing fees for services may be the only way to protect jobs, maintain the current level and quality of services residents are accustomed to, and keep property taxes low. According to the Bemidji Pioneer, the city council is currently struggling to find ways to fill a $265,455 hole in its budget, which would result from the governor’s proposed LGA cuts for 2010. Filling this gap may require the city to pair down its fire department “from an all-day, every-day fire and medical response unit to one that responds to fire calls and injury accidents, but does not respond to medical calls.” Implementing an emergency response fee may be the only way to maintain the full fire department services and staffing without raising taxes.
Under the Pawlenty administration, service fees have jumped due to several factors, but primarily because of repeated cuts to LGA. In 2002, LGA accounted for 4.4% of the state’s general fund; in 2008, LGA accounted for only 2.8%. That may not seem like a significant reduction, but over the years, it has cost cities hundreds of millions of dollars and has forced cities to operate as leanly as possible. However, because the items cities purchase—such as health insurance for employees, concrete for roads, fire engines, fuel for vehicles, etc.—have increased in price significantly since 2002 (so has inflation), revenue increases have been unavoidable. According to the the governor’s own administration, property taxes across the state have risen 60% between 2002 and 2008—the same period in which LGA has seen drastic cuts. Even these property tax increases haven’t been enough to account for lost LGA, which has forced cities to turn to fee increases.
The problem with fee increases is that they are regressive, meaning that they hit middle-class and lower-income families harder than wealthy families. Fees also impact lower-wealth communities more negatively than higher-wealth communities, whereas LGA ensures that residents in Waseca can receive the same essential services as the residents in Eagan at an affordable price. For a full report on the true impact of increased fees, check out “New Fees in the Era of No New Taxes”, which was prepared by Minnesota 2020.
Like the governor, cities want to protect jobs, maintain essential services for residents, and keep taxes low. But the simple truth is that Minnesotans can’t have it all ways if LGA is cut. The governor may be okay with forcing cities to make up the difference in increased fees, but this approach will only aggravate the disparities between communities across the state and lead Minnesota down a path many of us don’t want to take.