Duluth's Financial Issues - Thoughts? (Minneapolis, St. Paul: property taxes, budget, maintenance)

[aluminumpork]

Reading the Tribune this morning and the story about the newly discovered $5 million dollar city deficit, I couldn't help but wonder what other people thought about it and what, if anything, the community as whole can do to help.

What do you think the best plan of attack to get out of this mess is? How can the city adjust it's priorities (more than it already has) to ride this out.

I'm not looking for Duluth bash here, I love this city to death. Just looking for some honest discussion and opinion.

[roneb]

I'll be reading this with great interest. I predict a huge number of posters bashing "tax and spend liberals" and "hippies" putting Duluth in the mess it is in today. They'll conveniently ignore the facts of losing major industries a few decades back, or any of the potential positives for growth in Duluth. They'll say "we need a fiscal conservative" to straighten out this mess. Hey, don't we have a conservative for president right now? The nation's economy is right on track isn't it? No deficits at all, right?

[aluminumpork]

Originally Posted by roneb

No deficits at all, right?

I wonder how many other cities of our size are in similar situations right now. Local news and the Tribune make it sound like we're one of a kind, like our problems are unique.

[newcastle]

We are not in a unique situation at all. Othe rmunicipalities and counties are struggling nationwide. NPR just aired a story about Jefferson County, Alabama-Birmingham is the county seat. The county is $5 billion in the hole as a result of EPA sewer overflow problems and mandated upgrades. Sound familiar? The city and county issued bonds to pay for the upgrades and now the bonds are out of control as they were adjustable and people are getting $600 monthly sewer and water bills. The county may have to declare bankruptcy.

St. Paul is trying to get the legislature to wipe out $35 million it owes on the Riverside Center. St. Cloud is preparing to lose their local government aid and has issued a hiring freeze. I think local governement aid dissapearing is one of the main reasons that cities like St. Paul, Duluth, Minneapolis, and St. Cloud have budget problems. Older communities that have aged infastructure and older neighborhoods have trouble attracting business and housing to the central part of the city to raise the tax base.

Duluth can only plan for in-fill housing in some neighboorhoods or expand into green space which causes huge controversy. The area has not actually declined that much versus old census figures because Hermantown, Lakewood, and other "suburbs" have grown. These communities were really small 20-30- years ago with about 500 people. Now Hermantown has about 8,000 and Lakewood 1500 or so, and Duluth and the region are at about 94,000 not counting Proctor and Midway.

[aluminumpork]

Originally Posted by newcastle

The area has not actually declined that much versus old census figures because Hermantown, Lakewood, and other "suburbs" have grown. These communities were really small 20-30- years ago with about 500 people. Now Hermantown has about 8,000 and Lakewood 1500 or so, and Duluth and the region are at about 94,000 not counting Proctor and Midway.

So part of the problem is that Duluth has slowly lost it's tax base that it so heavily relies on. Taxes rise to account for the loss, and more people leave. Sounds like a vicious cycle to me.

I certainly think more people would stay in town, or move to town if side walks, roads, etc were up to 21st century standards in more areas. Nice roads and sidewalks will do wonders for a community, even if the area is lower income. But, yet again, road and sidewalk repair require money.

I think city government underestimate the power of solid, up to date infrastructure.

[roneb]

City governments are notorious for lack of long range planning to maintain infrastructure. It's no different out here in Portland. I think elected officials assume that people can only get excited about long range goals if it produces something big and grand and shiny. Thus Duluth gets the DECC instead of decent roads and sewers; Portland gets another lightrail project instead of decent roads and maintained parks/greenspaces. True story, many of the bathrooms at Portland parks are closed. In their place are porta-potties that the local soccer or other clubs have to pay fees on to keep serviced. Don't get me wrong, I think Portland will benefit from the lightrail expansion in the long run, and Duluth probably will benefit from the revamped DECC and new skywalks. But I also believe most citizens would rather know the infrastructure is solid for the long haul (including schools). It's a matter of priorities. And before anyone accuses me of sounding like a conservative I'll point out a difference: I willing to pay taxes to see those things get done!

[aluminumpork]

It just seems like something is fundamentally broken. Things aren't supposed to work like this. School districts aren't supposed to have a yearly deficit as large as ours does, cities are supposed to keep up with repairs and maintenance, but don't.

People are so afraid of raising taxes, but yet expect everything to continue running. All of your city's services cost more and more every year to run, and people expect taxes to stay the same or even drop.

Whether or not the Duluth School District's RED plan is appropriate or not (a whole other issue altogether), people seem against paying for any school improvements at their core.

I guess I may be too young and inexperienced (don't own a home yet) to truly appreciate the price of property taxes, but even so, I don't understand how people expect things to get done. The money has to come from somewhere, whether it be federal, state or local money, it all comes from the taxpayers at some point.

Of course, there's the whole other issue of handling the money we do have properly and responsibly. The job ISD709 has done is questionable at best.

[newcastle]

Another issue is that Duluth's population on average is older and many of the residents are on fixed incomes and cannot afford to remain in their homes, make repairs, or absorb continued increases in their taxes.

Duluth has relied upn the Fond du luth casino agreement in part to finance road construction. They tapped that money for other projects and now can only afford 1.5 miles of road work a year. My street is not scheduled until 2009. I have to pay $2300 for my road and sidewalk to be fixed.

Duluth has also relied heavily on TIF (Tax Increment Financing) districts in order to spur new development in older areas of town. This system can remove taxes as an incentive to the developer to redevelop or build, but it can remove taxes for over ten years. The city then does not collect those taxes for a long period of time until the TIF district expires.

The city of Duluth does have a AAA bond rating the last i heard, which is the g=highest rating it can receive which is good, because that means the city can borrow money at lower rates to complete large projetcs.

If local governemnt aid is returned (thank you Pawlenty) then the city will be in a better financial picture.

[aluminumpork]

What did local government aid actually do, other than the obvious (aiding local government)?

[brandy77]

Iraqi oil revenue.