Providing at least $644 million in annual state aid to cities and granting another $450 million for local water and sewer projects is critical to keeping property taxes from rising even higher, according to the Coalition of Greater Minnesota Cities.
The organization represents more than 110 cities across the state, but south-central Minnesota had a prominent role in Thursday’s announcement of the coalition’s priorities during the upcoming 2026 legislative session. St. Peter Council member Keri Johnson and New Ulm Mayor Kathleen Backer served as the face of rural Minnesota municipalities during an online media event.
As always, Local Government Aid is the top priority of the CGMC, which is staffed by the lobbying firm Flaherty and Hood and works to influence lawmakers at the state Capitol on behalf of outstate cities.
“LGA is critical to restraining property taxes,” said Johnson, who is serving as president of the CGMC Board of Directors this year.
Those state dollars, totaling $3.65 million for St. Peter in 2026, amount to more than a third of the city’s general fund budget. In all 747 cities will benefit from LGA assistance this year.
While cities are grateful for lawmakers’ past support, funding allocated to the program hasn’t been enough to match growing costs faced by cities, Johnson said.
“LGA has not kept pace with rising expenses and inflation.”
The raw numbers bare that out. The LGA program totaled $394 million at the start of this century, according to a report by the Minnesota House Research Department, so it’s risen by $250 million in 26 years. But that 63% rise is less than the increase in the Consumer Price Index.
If LGA program funding had matched the CPI since 2000, the funding distributed would have been $756 million rather than $644 million, according to a federal inflation calculator.
The second-highest priority for outstate cities in the 2026 legislative session is obtaining hundreds of millions of dollars for water and sewer projects. The coalition is seeking $200 million to be distributed for sewage treatment systems and drinking water infrastructure around Minnesota.
Many cities have aging utilities would struggle to finance them by relying solely on homeowners and other ratepayers, said Elizabeth Wefel, a Flaherty and Hood lobbyist.
“It’s one of the most pressing issues facing our cities across the state,” Wefel said.
Backer focused on another problem — lead water pipes that can poison the drinking water distributed by municipal water systems.
New Ulm stopped installing lead water lines in 1972, but an unknown number of older pipes are still in use across the city, which was founded in 1854. So far, city staff have identified more than 300 lead service lines. The status of another 2,164 pipes is unknown.
A rough estimate suggests the city needs $6.9 million to replace all of the identified lead lines but has so far received just $1 million in state aid, Backer said. That initial $1 million will be focused on replacing water lines to day care centers, schools, churches and other priority locations.
CGMC is asking lawmakers to approve $250 million to be targeted at lead-pipe replacement efforts.
“This is a very basic need,” Backer said. “Clean water is essential for a healthy community.”
The coalition is far from alone in presenting wish lists to the closely divided Legislature and Gov. Tim Walz. Counties are facing major budget challenges, stemming in part from federal cutbacks in assistance programs for the poor; state colleges and universities are seeking funding to alleviate staffing cuts and tuition increases; K-12 schools want to prioritize education aid; housing advocates see affordable homes and apartments as critically important. And up against those spending requests will be the wish of many business owners and individuals for tax cuts.
The Legislature will need to sort out those various demands starting Feb. 17 and concluding no later than May 18. Fewer than six months after the session is adjourned, Minnesota voters will be passing judgment on how their elected leaders performed. The governor’s office and all 201 seats in the state House and Senate will be on the Nov. 3 general election ballot.