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CITY FINANCES iii Seeking Property tax is just one factor affecting cities'financial future. A projection of city budgets based on current revenue and expenditure trends shows that Minnesota cities will be unable to pay their bills by 2015. By Rachel Walker ll types of cities in all regions Projected Deficit as Percent of Total Minnesotans have been seeing for the of the state will be in the red MI Revenues for all Cities past seven years. within the next five years if 2010 2015 2020 2025 City officials invited to share their ideas they continue on their current financialpath.Looking out as City officials attending the LMC Annual far as reveals that cities ia.s2i Conference participated in facilitated overall would still be broke if discussions about the issues raised by the no policy changes take place. Bassi projection.The 2010 LMC Regional In other words,by the time babies 34.75% Meetings will be additional opportuni- born this year are in first grade,cities have no choice but to make more of the ties for elected and appointed officials to of all population and tax base sizes,in painful decisions they are already making engage in discussions about the future of all parts of the state,will be in the red today—primarily,cutting services and our communities.The full report of the iif historical revenue and expenditure raising property taxes—to avoid this Humphrey Institute analysis is available trends continue.It won't matter where massive deficit.And unlike the state or on the League's website along with more a city is,how big or small its popula- federal government,cities do not have information about the Cities,Services & tion,what its tax base composition is, another level of government to shift the Funding initiative.Two videos the League uced to spur what its local economy looks like,or problem to;their options for resolving a about the has prodh future of ou oemmtionsunities are what its unique mix of revenue sources deficit of this magnitude are much more also eble.To access this information- is—all types of cities will be running a limited and will affect local residents and and find out how you can get involved, deficit if things don't change. businesses directly. visit www.linc.org/page/lkities- Let's make change happen together Tough choices ahead services-funding.jsp.t. The League of Minnesota Cities(LMC) These findings are staggering.If cities contracted with researchers at the reach the point where they are unable to Rachel Walker is policy analysis manager Hubert H.Humphrey Institute of pay the bills,agonizing choices will have with the League of Minnesota Cities.Phone: Public Affairs at the University of Min- to be made that would impact the day- (651) 281-1236.E-mail:rwalker@lmc.org. nesota to carry out an analysis of city to-day lives of Minnesota families,busi- budgets.That analysis was released in nesses,and communities across the state. KEY FINDINGS: June and serves as a foundational piece To illustrate,in a deficit situation ANALYSIS OF CITY BUDGETS of the League's new effort,Cities,Services as severe as projected,cities as a group &Funding:Broader Thinking,Better Solu- would have to eliminate a wide range types of Minnesota cities will be tions—an initiative to spur public dis- of services or double property tax levies. broke by the year 2015 if no policy cussion among the city community,the For senior citizens across the state,those changes are made.And in many kinds public,the media,and policymakers. service cuts could mean no access to a The chart above shows the extent library or a senior center.For children of communities,this is a reality today as of the deficit (as a percent of total rev- and families,there could be no baseball revenues fall short of what cities need to enues) for all cities as a group if revenue fields,hockey rinks,or swimming pools provide services. and expenditure trends continue with- for after-school and summer recreation. • By the year 2025,cities overall would see out intervening policy changes. For homeowners,property values could a deficit of 35 percent of city revenues. The fact is that this projection of the decline as sidewalks and streets crumble • Fundamental changes are needed in city Ifuture cannot be allowed to happen in into a maze of cracks and potholes.This services and funding to prevent these real life.By law,cities must balance their isn't hyperbole—it's simply the continu- projections from becoming reality. budgets.City officials will therefore ation of the slow path of degradation 6 MINNESOTA CITIES SEPTEMBER-OCTOBER 2010