03-14-1988 - Agenda Packet City Council - regular meeting

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Chart 7 also illustrates that per capita city spending declined sharply in I'le early 1980s, a result of cuts in state aid prompted by the state's budget problems. During that time, cities curtailed spending by reducing the number of employees and by delaying needed capital Improvements and other projects. Since 1983, city spending has begun to rise again as cities have found it necessary to move forward with previously -delayed projects. CITIES COSTS FOR INFRASTRUCTURE AND PUBLIC WORKS RISING In January 1988, State Auditor Arne Carlson released the annual report on city revenues, expenditures and debt for 1986. The report indicated that cities spent 10.8 percent more in 1986 than they did in the previous year. In releasing the report, State Auditor Carlson praised cities for their efficient delivery of services and made clear that city governments were not the culprits for such a large spending increase. The Star Tribune news article (1/30/88) reported Mr. Carlson's opinions: 'The blame for higher spending lies not with the cities.... The fault is with the federal government for spending cuts in areas such as water and sewer improvements .... And it lies with the state government for not sharing the bur- den, and indeed unloading its burdens onto the cities." The Auditor's report for fiscal year 1986 indicated that cities in Minnesota spent $396.1 million for streets and highways in 1986, up 8.1% over 1985. Almost sixty percent of these expenditures were for new equipment and construction. Cusis of major infrastructure projects increased dramatically for cities in 1986. Capital expenditures for enterprise operations such as municipal sewer and water systems, electrical power plants, ambulance services, and recreation operations to- taled over $100 million dollars, a 47.2% increase over 1985. Both of these increases result more from the elimination or decrease in federal assistance through general revenue sharing and wastewater treatment facility con- struction grants than from increasing the size or number of public works projects. (See section on °Red,iction in Federal Grants and Aid to Cities' for more detailed discussion.) The state government has also been inconsistent in its efforts to share in the burdens handed down to cities by the federal government. While the federal retrenchment is likely to continue, the state has given some indication that It may commit funds to assist local communities in providing necessary transportation, sewage treatment, water and other public services. In the area of wastewater treatment, 1986 state and federal grants provided 50 and 55 pe, cent, respectively, of the funds needed for municipal projec .s. The state in 1987 provided substantial financial assistance through the issuance of state bonds in an attempt to ensure a stale and federal share of 80% of facility construction costs. It is uncertain at this time whether the commitment to this financing level will hold when reviewed by the 1989 legislature and administration. While the state has increased its funding commitment for improved sewage treat- ment fecil!!es, Is commitment to transportation financing is uncertain. In 1987, the 12