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5.2. SR 03-10-2003City MEMORANDUM Item 5.2. TO: Mayor and City Council FROM: DATE: Pat Klaers, City A~ator March I 0, 2003 SUBJECT: Legislative Update At this time there is not too much new to report to the City Council regarding the budget (state or local) and legislative activities since the last update was provided on February 24, 2003. Attached for your information are parts of the most recent League of Minnesota Cities - Ci~ies Bulletin, which offers some updates on current legislative activities. I have attempted to discuss our budget situation and legislative concerns with all four of our representatives but I have only been successful in talking with Senator Besty Wergin and House Representative Tom Hackbarth. It is expected that most of the final decisions on the budget, levy limit, wage freeze, etc, type of issues will not be made until sometime during the last few weeks of the legislative session. This means final decisions will not be made until May 2003 and this leaves us somewhat in "limbo" for the next eight weeks. S/council/pat/update/legislative LinC Ci ie Bul]efin Number 9 March 5, 2003 State deficit deepens slightly Gary Carlson The Minnesota Dept. of Finance released the updated state budget forecast Feb. 27, announcing that the state deficit is projected to increase by a remarkably small $11 million for the balance of the current biennium and by an additional $14 million for the 2004-05 biennium. Finance Commis- sioner McElroy suggested that the February forecast might be one of the smallest forecast adjustments in recent memory. With the revised deficit projection, the governor will now have to revise the 2004-2005 budget he proposed just two weeks ago. In the confusing world of state government finance, the governor will have to identify an additional $125 million in spending reductions--even though the deficit has only grown by $25 million. Why? The explanation is confus- ing. Essentially, the governor's proposed budget for FY 2004-2005, released Feb. 18, included most of the expected reductions in state program costs reported in last week's forecast. How- ever, his proposed budget did not include any of the revised reductions in revenues that were included in this latest forecast. The governor will release a supplemental budget within the next two weeks that will include recommen- dations on plugging the $125 million hole. Although there were no clues revealed at last week's budget forecast press conference about where the governor might turn to find the additional savings, it is certainly possible he could recommend additional cuts to city state aid programs as a way to cover the additional $125 million. Questions about the future Commissioner McElroy acknowledged that the state's economic forecasting firm currently has one of the most optimistic forecasts for economic growth among the major economic forecasting firms. He went on to stress that the economic and geopolitical uncertainty the country is now facing make this forecast a potentially more risky and volatile projection. Commissioner McElroy did not rule out the possibility that the state could prepare an additional forecast before the end of the legislative session if economic and world political circumstances indicate that the state's economic performance-and therefore the state's budget---changes substantially. Unless the governor and the Dept. of Finance decide to prepare an additional forecast, the February announcement will become the final forecast used by the governor and Legislature to craft a 2004-2005 state budget. Of course, state budget forecasts will continue to be prepared every December and February. And next year when the Legislature returns, there could be additional mid-course corrections needed to accommodate any fluctuations in those future budget forecasts. ~ THE 15-Minute dvocate IREAD · CONSIDER · TAKEACTIONI Senate schedules hearing on bill to freeze wages of public employees The League supports local decision-making authority, and opposes legislation intended to interfere in local employment-related decisions. Share your perspective on the impacts of this legislation on your city, and discover key points to consider when discussing this bill. See page 5for details. THE . 15-Minute dvocate READ · CONSIDER · TAKE ACTION Senate schedules hearing on bill to freeze wages of public employees 1. Get informed Testimony on a bill to implement a two-year freeze on wages for public and state employees will be heard Friday, March 7, in the Senate State Government Budget Division. Introduced Jan. 30, SF 214 (Neuville, P~- Northfield) would prevent local and state employers from increasing the salaries or wages of full- and part-time employees, including school district workers, from Feb. 2003 through June 2005. Fringe benefit compensation, such as health and dental benefits, also would be frozen. 2. Take action Call your state legislator to share your perspective on the impacts of this legislation on your city. Legislative directories and contact information are on the Minnesota State Legislature's web site at: www. leg.state.mn.us. The League supports local decision-making authority, and opposes legislation intended to interfere in local employment-related decisions. Here are some points to consider when discussing this bill: · Local units of government are in the best position to decide how to manage proposed cuts for their cities. Local officials have the tools and authority to implement wage freezes, if they decide freezes are in the best interest of the city and taxpayers. · Local officials may choose other manners of wage and benefit reduction for their cities. For example, some are considering voluntary unpaid leave, early retirement, voluntary work hour reductions, and other wage and benefit cost savings. · The bill would give union employees an advantage. It could also create situations in which a substantial portion of employees receives wage increases in 2003-2004, while a small portion of employees would experience wage freezes. Employees are likely to perceive this as very unfair. · The bill does not address the potential for lawsuits by employees who believe they had an expectation and promise of wage increases based on the city's compensation plan at time of hire, or from union employees who believe it is a violation of their right to collective bargaining. There are costs to defend such suits, whether successful or not. · The bill penalizes employees in their "High 5" years of public employment. Public employment pension benefits for city employees are based on the highest five years of earnings. Those who are unfortunate enough to be in their final five years of employment during the wage freeze will have pension benefits permanently affected. Money is not saved, in the long run, by wage freezes. Wages inevitably need to be "caught up" to the market so that cities can attract and retain qualified employees. The wage freeze penalizes cities that have taken prudent fiscal measures to prepare for local aid cuts and have budgeted appropriate funds to pay for employee wage increases. The wage freeze creates severe recruitment and retention problems for certain classes of employees that are in high demand such as registered nurses for city hospitals. 3. Stay involved You can follow the progress of this piece of legislation by visiting the Minnesota Legislature web site at: www. leg.state.mn.us. The 15-Minute Advocate, through information and action by member cities and League staff, is designed to increase understanding among legislators, media, and residents about the impacts of public policy on Minnesota's residents and the cities in which they live. March 5, 2003 Page 5 Tools for all cities on grassroots communications on state budget deficit proposals Mary-Margaret Zindren Next week the League will launch the first portion of an action toolkit for cities to use in communicating with their local businesses and residents about the implications of legislative proposals related to the state budget deficit. The toolkit will focus on the following issues: · Impacts of cuts in local government aid and market value homestead credit. · Levy limits/levy freezes. · P~everse referendums. · Restrictions on the ability of cities to issue debt. Member cities will be able to access this latest action toolkit, as well as other LMC advocacy tools, by visiting the "Take Action Now" page of the League web site at: www. lmn¢.org (click on "Legislative," then click on "Take Action Now"). The information can also be mailed to members upon request. Our goal is to ensure that all cities--regardless of their reliance on state aid--find these tools useful. Proposals related to levy limits, reverse referendums, and debt restrictions would impact all Minnesota cities. The League believes it is impor- tant for businesses and residents to understand and become active on issues affecting city government and community priorities. The more that businesses understand that levy limits and debt restrictions are likely to reduce city investment in economic development efforts, construction, and basic products and services, the more likely that those businesses will speak up in favor of the city position on these legislative proposals. Similarly, the more that residents understand that major cuts in state aid to cities could result in longer response times 13om emergency services, longer turnaround times in fixing potholes, and the reduction or elimination of the "non-essential" services they count on (such as transportation and programming for seniors and recreation opportunities for youth), the more likely that those residents will support the city's efforts to minimize such cuts. Watch future issues of the Cities Bulletin newsletter and the LMC web site for announcements as each set of tools related to this action toolkit becomes available. 117 Committees continue budget reviews Laura Offerdahl This week, legislative committees continue to review state agency budgets and Gov. Pawlenty's recom- mended reductiom to agency programs and grants. Committees are taking testimony from agency heads, nonprofits, local oflqcials, advocates, and citizens about the budget cuts and the impact on services. With the new budget forecast predicting a $125 million gap between revenues and expenditures in the governor's plan, legislators and Capitol observers are awaiting revised budget recommendations from the adminis- tration. Finance Commissioner Dan McElroy said the governor will release updated budget recommendations by the end of this week or early next week. In the meantime, the House and Senate are collecting feedback in community meetings around the state to gauge the public's reaction to the governor's budget cuts before assem- bling their own budget packages. The Legislature set April 29 as the deadline for the Senate Finance Committee and House Ways and Means Commit- tee to approve their omnibus appro- priation bills. For more information on com- mittee hearings, visit the Minnesota Legislature web site at: www. leg. state.mn.us (click on the "Sched- ules'' icon). ~- March 5, 2003 Page 3 Conceal and carry bill moves forward in House Anne Finn The House Committee on Judiciary Policy and Finance last week passed a bill that would remove the authority of police chief~ to issue concealed firearm permits and would allow eligible individuals to obtain permits without demonstrating a safety need. HF 261 (Boudreau, R.-Faribault), also known as the Minnesota Citizens' Personal Protection Act of 2003, would make county sheriffs responsible for administering the permitting process. The committee amended a provision into the bill that would give property owners the right to ban guns from their premises. This language did little to comfort opponents of expanded gun rights. Under the provision, a property owner that prohibits firearms must post a notice of the ban, must provide secure storage lockers for firearms, and must assume full liability for gun-owners' safety on the premises. The liability provision does not exempt accidental or non-violent injury. In other words, if an entity such as a city chose to prohibit guns from city property, the city would then assume liability for any injury suffered by an individual that removed a firearm prior to entering. The League provided testimony opposing a reduction in municipal authority and expressing concern about the liability provisions. The bill passed to the Committee on Ways and Means by a vote of 12 to 8.The Senate Crime Prevention and Public Safety Committee is expected to hear the original version of the bill, SF 222 (Pariseau, R-Farmington), later this week. ~ Shooting range bill narrowly passes House committee Craig Johnson The latest version of a bill to remove local government authority over shooting ranges was heard Feb. 19 in the House Local Government and Metropolitan Affairs Committee. Various versions of this bill have been presented since the 1999 session and have passed the House, but not the full Legislature. At the recent hearing, shooting range advocates described HF 327, authored by Rep. Tom Hackbarth (R-Cedar), and their desire for the ranges to be exempted from local ordinance changes once sited and from having operations affected by local regulations. This bill contains numerous other limitations on local regulations, exempts shooting ranges from any claim of public nuisance~ even with changes in operation, and further requires both takings claims and relocation costs be paid by the regulating unit of government--even ifa range is closed as a result of being the cause of a proven, immediate public health risk. Staffofthe League of Minnesota Cities, Association of Minnesota Counties, and Minnesota Association of Townships all commented exten- sively against the bill. Staffpointed out both the unreasonableness of the language and the extensive permanent removal of private property rights the change would cause for anyone living near a shooting range, either now or one sited in the future. While the bill still passed narrowly on a voice vote, the problems identified by local government organizations received special notice and the author was asked to address those issues before the bill reaches the House floor. The next scheduled hearing for the bill will be in front of the House Civil Law Committee in Room 5 of the State Office Building at 2:30 p.m., March 5. To check on the status of HF 327, search the LMC Bill Tracker on the Legislative section of the LMC web site at: www. lmnc.org. ~- March 5, 2003 Page 7 .08 DWI passes Senate committee Laura Offerdahl Last week the Senate Crime Prevention and Public Safety Committee passed SF 58 (Foley), a bill reducing Minnesota's per se blood alcohol concentration (BAC) threshold from .10 to .08. The committee heard testimony from state agencies and from Mothers Against Drunk Driving about the impacts of a lower BAC threshold on reducing traffic fatalities. A representa- tive from the Office of Traffic Safety also warned legislators that the federal government will begin withholding highway construction dollars if the state fails to adopt a °08 law by this October. The federal government would return withheld funds if the state passes a law before October 2007. Opponents also registered their concerns with the committee. The Metropolitan Inter-County Association argued counties were already hit hard by the felony DWI law that went into effect last August, and said lowering the DWI threshold would aggravate the impact on county budgets. The association representing the state's bowling proprietors suggested the bill targets social drinkers and will nega- tively impact on-sale establishments around the state. Legislative interest in this issue goes back several years, but .08 legisla- tion may be more likely to pass this year with federal highway funds on the line. States that do not adopt the .08 BAC laws by federal FY 2004 would have 2 percent of highway comtruction money withheld, with the penalty increasing to 8 percent by 2007. If the Legislature fails to enact the .08 BAC standard, Minnesota stands to lose 2 percent ($6.64 million) in FY 2004 and 4 percent ($13.28 million) in FY 2005. This is also the last year the state is eligible for almost $3 million in federal incentive money for joining 34 other states that have already made the change to .08. The League supports adopting the .08 BAC threshold to keep critical federal highway funds that will help provide a safer transportation system. As the Legislature begins debating the financial impacts of making this change, the League will work to ensure the state compensates local units of government for any related cost increases. To review this legislation, visit the Legislature's bill tracking page at: http : / / www. leg.state.mn.us /leg/ legis.asp. For more information on .08 BAC, visit the Minnesota Office of Traffic Safety's web site at: http:// www. dps.state.mn.us/ots/ Laws_Legislation/default.asp (click on the "Hot Topics" link). II~ LMC Business Associates For information on becoming an LMC Business Associate, call Rebecca Erickson at (651) 281-1222. Advanced Drainage Systems Barna, Guzy & Steffen, Ltd. Bolton & Menk, Inc. Bonestroo, Rosene, Anderlik & Associates Briggs and Morgan CenterPoint Energy Minnegasco David Drown Associates, Inc. Dorsey & Whitney LLP DPRA Incorporated Ehlers & Associates, Inc. Evensen Dodge, Inc. Galliard Capital Management, Inc. HDR Howard R. Green Company Kennedy & Graven, Chartered Krass Monroe PA LOGIS MFRA Pa u lse n Arch itects Ratwik, Roszak & Maloney, RA. RLK-Kuusisto, Ltd. Springsted Incorporated TKDA TSP Voyageur Asset Management Widseth Smith Nolting Xcel Energy Yaggy Colby Associates Page 8 LMC Cities Bulletin Cities show support for improved street funding options Resolutions adopted by 74 cities Anne Finn Earlier this year, the League of Minnesota Cities (LMC), the City Engineers Association of Minnesota, and the Minnesota Chapter of the American Public Works Association released the Funding Street Construction and Maintenance in Minnesota's Cities Report. The report describes challenges relating to maintenance, safety, conges- tion, highway access, and all-season carrying capacity. P~eport recommen- dations pertain to funding mechanisms for the municipal state aid (MSA) and non-MSA city street systems. Last month, the report's author, Matt Shands, accompanied by member city representatives, presented the report to the House Transportation Finance Committee and the Senate Transportation Policy and Budget Division. Testimony focused on the need at the local level for flexible funding tools that would allow city officials to preserve infrastructure investments while remaining account- able to local taxpayers. The need for improved mechanisms, according to the report, is greatest on the non-MSA city street system. The report's recommendations seek, among other initiatives, local authority to establish street utility billing, greater flexibility to generate revenues through special assessments, and authorization to establish impact fees. The report was distributed to all League members and was accompanied by a sample resolution supporting the report's recommendations. To date, 74 cities have adopted the resolution and have provided copies to their legislators. League intergovernmental relatiom staff is in the process of seeking authors for legislation that would accomplish the report's recommenda- tions pertaining to the non-MSA system, and key legislative committee chairs have agreed to give hearings to bills originating tkom the report. If your council wishes to consider a resolution supporting the report's findings and recommendations, visit the Legislative section of the LMC web site to download the Funding Street Construction and Maintenance in Minnesota's Cities report and a sample resolution at: http://www, lmnc. org/advocacy/streetstudy, cfm. Your help is critical to this legislative effort. Please review the report and make your legislators aware of its applicability to your city. If your council adopts a resolution supporting the recommendations, please forward copies to your legislators and to Arme Finn, LMC, at afinn~lmnc.org. ~- HR training sessions for city supervisors Training your city's supervisors on the basics of human resources ensures smooth operations and helps protect your city from employment-related claims. Choose the session closest to you: · Crookston--May 12 · Two Harbors--July 17 For more information on these sessions or for information on HR training, please visit the League's web site at www. lmnc.org or contact Jill DeVriend, HR & Benefits Assistant, at (651 ) 215-4064 or j devriend@lmnc.org. HUMAN RESOURCES AND BENEFITS ASSISTANCE FOR LEAGUE MEMBERS March 5, 2003 Page 9 Discussion of tax-free zones continue JOBZ proposal heard on the House side Jennifer O'Rourke One of Gov. Pawlenty's top initiatives for greater Minnesota is the plan to create tax-free zones around the state. Touted now as the JOBZ (Job Oppor- tunity Building Zones) proposal, the bill to stimulate economic develop- ment in rural Minnesota had its first hearing in the House last week and is likely to receive more hearings over the next few weeks before the first committee deadline of April 4. The chief author ofHF 3 is Rep. Doug Magnus (R-Slayton) who presented the bill, along with Louis Jambois, with the business and community development office of the Dept. of Trade and Economic Devel- opment (DTED), and DTED Com- missioner Matt Kramer, to the Jobs, Economic Development Budget Committee chaired by Rep. Bob Gunther (R-Fairmont). HF 3 is estimated to cost upwards of $5 million in the out biennium, which Pawlenty accounts for in his budget proposal. The full House Research summary ofHF 3 can be found by visiting the LMC Bill Tracker located in the Legislative section of the LMC web site at: www. lmnc.org. The bill was amended in corn- mittee with a delete-everything amendment to address many of the original concerns: · The revised bill cleans up much of the language regarding definitions of the zones and now allows for a zone to consist of sub-zones or noncontiguous areas. Under this provision, one J©BZ zone could actually be part of five cities. This revision is important because it would allow an applicant to target key areas needing redevelopment. · The delete-everything amendment to HF 3 is also more descriptive on qualifying businesses; thus addressing some of the concerns of Minnesota businesses moving stakes and relocating just because another community has a tax-free zone. The intent is to encourage more start-up and business expansion, as well as enticing out-of-state businesses to consider relocating to Minnesota. · The original bill would have provided income tax exemptions for an individual living in the tax-free zone; that language has been removed. Testifying in support of the bill were representatives of the Albert Lea Economic Development Authority, who explained how such a program would address the competition they experience with Iowa and help them to recruit businesses into the area. Members opposing the bill said the state should keep its investment in programs with proven track records for economic development such as MN Technology Inc. and the MN Investment Fund. The governor, incidentally, has proposed reducing state appropriations for both of these programs. Next stop for the bill is consider- ation by the House Tax Committee. The Senate version was recently introduced as SF 496 by Sen. Tom Bakk (DFL-Cook), and was sent to the Jobs, Housing, and Community Development Committee. For more information To read a discussion of the related policy questions pertaining to tax-free zones, visit the Policy Research section of the LMC web site at: www. lrnnc. org (click on "In-Depth Policy Analysis:Tax-flee zone initiatives" under the Research Highlights header).To read a summary of the analysis, see the Feb. 12 issue of the Cities Bulletin newsletter. ~ Page 10 LMC Cities Bulletin In-Depth Policy Analysis Cities across Minnesota cooperating to provide services Rachel Walker To read a full analysis of the League's information on cooperative agreements, visit the Policy www. bnnc. org. Cooperation between local govern- ments to deliver services is increasingly in the spotlight as officials ponder solutions to the state budget deficit. The idea, however, is not a new one, and it is one that cities around the state have been putting into practice for decades through service contracts, mutual aid agreements, and joint powers entities. The League is currently working on an in-depth analysis of cooperative agreements using several sources of this information. It is important to point out, however, that there are likely thousands of cooperative agree- merits in effect throughout Minnesota and the League's information reflects only a small portion. The purpose of the analysis is to estimate the degree to which cities across the state are cooperating to provide services, and to identify the kinds of services most often delivered in cooperative arrange- ments. The analysis will also include a brief discussion of some of the barriers to cooperation. In 1992, the League of Minnesota Cities surveyed cities about cooperative agreements. More than one-third of the member cities (294) responded with information on over 1,800 agreements. In 1999, the Advisory Council on Local Governments surveyed cities in the seven-county metropolitan area. Of the 111 cities responding, 97 cities reported service contracts with other local units and/ or joint provision of services. The North Metro Mayors' Association is currently working on a project to identify cooperative efforts by its constituent cities. The League recently informally reviewed joint powers agreements for which the League's Insurance Trust (LMCIT) has information, and has also been requesting information from member cities over the last several weeks about current cooperative agreements. The League now has information on more than 400 coop- erafive agreements between cities and other local units. The League has Research section of the LMC web site at: posted online information that was assembled last summer as part of a resource packet pertaining to public safety joint powers agreements; to access, visit the LMCIT section of the LMC web site at: www. lmnc.org. In addition, the topic will be further discussed at the 2003 LMCIT Safety & Loss Control Workshops scheduled to be held across the state this Spring; to register, visit the Conference section of the LMC web site at: www. lmnc. org. Police and fire services make up a large portion of these agreements, with over 50 agreements each. Parks and recreation services also compose a large group, with over 70 agreements for projects such as hockey arenas, swimming pools, and community recreation centers. There are more than 40 general government/adminis- tration agreements, covering purchas- ing, planning, and building inspections. Finally, there are over 30 sanitation agreements, which include sewer services and water treatment facilities. ~- / ' isit the League on the Web: www. lmnc.org for all the latest information about how your city can participate and benefit from LMC and LMCIT services, resources, and training opportunities. March 5, 2003 Page 11