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Finding $2.5 million in a $500,000 budget

June 21, 2010 By Conrad deFiebre, Transportation Fellow

Mayor Rocky Kolar of Westbrook, Minn., has lots of ways to describe the state of the city's streets: "They're broke up, thinned out, alligatored, crumbling." What he doesn't have is a clear path to fixing them.

Last rebuilt in 1983, the streets in the Cottonwood County town of 700 could cost up to $2.5 million to bring up to snuff, as city leaders hope to do this fall. That's more than five times Westbrook's annual operating budget of $477,000.

Kolar said the city wants to take advantage of lower road construction bids in the current economy, "but there's no way we can burden our taxpayers with assessments higher than their property taxes."

The alternative is to keep patching the cracks and potholes and broken curbs, although street maintenance and repairs already consume almost a third of city general funds.

Westbrook's dilemma reflects a daunting challenge facing cities throughout Minnesota. They maintain nearly 45,000 lane-miles of streets, on which vehicles travel 8.9 billion miles a year. But little of the money needed for the job comes from motorists' user fees such as fuel and registration taxes. Instead, regressive property taxes and special assessments pay the lion's share.

"The total dollars available for street construction, reconstruction and ongoing maintenance fall far short of the needs," the League of Minnesota Cities said in its 2009 State of the Cities report. "When cities face budget shortfalls, street maintenance and construction are often reduced and projects delayed."

As Minnesota 2020's Jeff Van Wychen reported last week, municipal budget shortfalls are the rule, not the exception, these days. Under pressure from state aid cuts, levy limits, shrinking tax bases and voters' resistance to tax hikes, Minnesota municipalities cut their real per-capita spending by at least 10 percent in recent years, to more than five percent below the national average.

And hardest hit of all, especially when it comes to streets, are the smallest cities such as Westbrook. They receive no Municipal State Aid (MSA), a street program for cities of at least 5,000 in population that taps nine percent of Minnesota fuel taxes, tab fees and other revenue sources.

A League of Minnesota Cities survey found that if a city of fewer than 650 people needed street reconstruction work, it involved on average 37 percent of the entire grid. The comparable figure for the biggest cities was just eight percent. The survey noted a similar split in needs for street repairs and maintenance.

Meanwhile, more cities of all sizes reported paying increasing shares of street expenditures from property taxes and assessments while getting smaller shares from state and federal aid and other sources. Only three percent of cities said they received more outside funding for streets in 2008 than in 2000.

The Minnesota Department of Transportation pegs construction costs per mile of MSA streets at $1.24 million. MnDOT also says state aid for streets this year will fall $136 million short of needs. Its January 2010 MSA report stated apportionments for 3,533 miles of eligible city streets this year would reach an all-time low of only $13.36 per $1,000 of 20-year needs. But that's nothing new. The figure, which was nearly $65 in the late 1980s, has hit new record lows every year since 2004. The program began in 1958.

The latest numbers indicate that user fees will pay barely two-fifths of the $4.7 billion in projected construction needs until 2030 for the busiest streets in Minnesota's biggest 144 cities. And that's only if apportionments don't continue to decline. "The money that we have doesn't stretch far enough," said Julie Skallman, MnDOT's state aid engineer.

 In Westbrook, Mayor Kolar said City Council discussions of a once-in-a-generation, border-to-border street reconstruction have drawn positive reactions from residents. "They all know it's time," he said. "We can't just keep overlaying the worst parts."

Whether or not Westbrook can afford it is another matter. Kolar and other city leaders are working hard to whittle down the latest cost estimate for the project. But even the sharpest pencil can't change the fact that the city's median household income is barely half the state's $57,000 average, while the poverty rate of 13.5 percent is well above Minnesota's 7.9 percent.

"The overall cost for years of neglect will be formidable," former St. Paul City Engineer Thomas Eggum wrote last year about Minnesota's ongoing crisis of underfunded infrastructure. "It may be unaffordable in the short run. But a plan to solve this growing problem can be made now and can include early implementation. The alternative is leaving a shameful legacy for our kids and grandkids."

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