City explores street-maintenance fee

Might raise your utility bill, or on your property taxes

Hemmed in by a self-imposed property-tax cap, Minneapolis leaders are pondering a new assessment for basic road repairs and traffic-system maintenance, or perhaps a new fee on your utility bill.

Thanks to state-aid cuts and self-imposed 8 percent annual property-tax increase limit, the mayor and City Council balanced the city budget partly by eliminating all preventive maintenance for streets, traffic lights and signs -- saving roughly $8 million. Routine maintenance took added hits.

At an Aug. 1 City Council study session, Public Works Director Klara Fabry said, "General fund revenue available for transportation services is not adequate to maintain and operate the city's investment in general infrastructure -- streets, bridges, malls and plazas, and traffic."

Mayor R.T. Rybak said the city needed to pay for some basic road maintenance now. Rybak said Public Works is challenged while the property tax is at a crisis level. "We have a gap," he said. "We are on a collision course if we don't do something," he said.

His budget address is to be Thursday, Aug. 14. He declined to specify a favored road fix before that speech.

Fabry outlined options for raising money during the study session. A special assessment could be based on square footage of property; a utility-bill fee must somehow measure the specific benefits a user gets from city roads.

Each approach has potential advantages over the other, participants at the meeting said. Special assessments may be tax deductible; that question is being reviewed. Fees based on use might be fairer.

Asked by Rybak to chose her preferred method, Fabry opted for utility fees.

However, treating transportation as a utility fee requires some way to measure use -- just as the water bill measures water use -- and that could be difficult.

Coffee shops that generate a lot of trips, or large employers, would pay more than a single-family homeowner, for instance, said Jon Wertjes, a city public works staffer.

The mayor said specific fee hikes were a year away --if they are going to be enacted at all. He reiterated his commitment to cap overall city property tax revenue hikes to 8 percent per year. The Council has backed such a policy.

Councilmember Lisa Goodman (7th Ward) said special assessments or fees would break the spirit behind the property-tax cap. "I wouldn't support an increased assessment or fees at this point. Fees and assessments are a tax increase. We have to call it what it is."

Said Councilmember Barret Lane (13th Ward), "Should we continue pursuing other revenue? The answer is yes. I would be comfortable with this going forward" for further analysis.

Councilmember Dan Niziolek (10th Ward) said he wanted a matrix with the pros and cons of special assessments versus a utility fee model.

Councilmember Barbara Johnson (4th Ward) expressed concern over adding costs to utility bills, which she said were already an "outrage."

Rybak suggested giving people credits to offset any new fees for properties promoting bike or bus commuting.

An alternative would be the city dropping some services. Niziolek, for instance, raised questions about the city-funded alley maintenance.

"Have we assessed the value that alleys have on our transportation system?" he asked. "If they are not a public street, why are we maintaining them?"

Some city leaders saw a potential advantage of fees or assessments: both might be levied against property-tax-exempt properties such as churches, social-service organizations and educational institutions, said Richard Smith, Public Works director of management support.

Such fees and assessments would require enabling legislation -- either through a city charter change or state law, Smith said. How much new revenue the city could get from tax-exempt properties would depend on what language passed.

Public Works is researching the issue. Fabry recommended Public Works and Finance departments --and a work team of the mayor and key councilmembers -- refine the special assessment and utility fee options. Councilmembers gave their silent assent; they did not take a formal vote, but neither did they tell Fabry to stop the process.