For small cities such as Nicollet, and others with a population of less than 5,000, the Legislature’s newly created transportation revenue source for towns like theirs was welcome news.
But now, the state’s smallest towns are hoping lawmakers can provide them some back-up money, after the date to start distributing the funds was pushed back.
When lawmakers passed what’s called the Small Cities Assistant Account during the 2023 session, it was supposed to start generating funding in-part through delivery fees accrued by online purchases on Jan. 1, DFL Rep. Jeff Brand, of St. Peter, said.
Small cities were supposed to start getting their share of $3 million in fiscal year 2024 and $19.9 million in fiscal year 2025.
But the delivery fee will instead be implemented on July 1 due to the state’s interpretation of when it should start.
As such, small cities won’t get anything this fiscal year and will only receive a combined $2.5 million in fiscal year 2025.
That’s why Brand’s bill seeks a one-time $25 million appropriation from the general fund to fill that gap so cities can start important road work sooner while the state waits for funds to come in.
“They delayed implementation of the delivery fee until July 1. That’s six months where small cities weren’t getting any money,” Brand said.
Nicollet Mayor Fred Froehlich said if the city were to receive money now, it would increase the amount of streets it is trying to preserve by crack sealing.
“We don’t have the tax base that the big cities have,” he said, adding that last year, Nicollet scrapped two street projects due to a lack of funding. “It’s really needed for small cities under 5,000.”
Nicollet is just one city in Brand’s district that would benefit from the one-time funding. Courtland, Kasota and Lafayette would also receive money.
“I imagine Courtland will also need some of that money in the future, because that community’s going to grow now that Highway 14 is done and there’s new opportunity for redevelopment,” Brand said.
Statewide, around 700 cities would benefit from Brand’s funding and the permanent source.
During a recent committee hearing, Minnesota Small Cities Executive Director Cap O’Rourke said if the bill passes, cities can start using the funding during this calendar year when they had intended.
“Our cities were expecting these monies. They had started to plan for these monies,” he said. “The fact that we have had this huge setback is really concerning for our cities.”
Brand’s bill has bipartisan support in the House and Senate.