Repeal of local government compensation cap gets OK in House division

Rochester recently lost a top municipal utility employee to the private sector. Money was a key reason.

“The 15-year-old salary cap likely made more sense when it originated, but it has not kept pace with the world around us,” said City Councilman Patrick Keane. “… While Rochester sees it in the city’s best interest to run something like a municipal utility and an airport, these missions put us in competition with investor organizations that operate without such constraints.”

Sponsored by Rep. Sandra Masin (DFL-Eagan), HF325 would repeal state statute established in 2005 that caps the compensation for an employee of a political subdivision. The cap, annually adjusted for inflation, is $180,927 for 2021.

It was approved Wednesday by the House Local Government Division via a 6-3 party-line vote and sent to the House State Government Finance and Elections Committee. Its companion, SF33, is sponsored by Sen. Steve Cwodzinski (DFL-Eden Prairie) and awaits action by the Senate State Government Finance and Policy and Elections Committee.

No other state has such a law.

“We have tried to survey our other state leagues around the country, and people, to be honest, rather laugh that we have a law like this,” said Gary Carlson, intergovernmental relations director at the League of Minnesota Cities.

The law includes a waiver provision through Minnesota Management and Budget. However, supporters say the process is time-consuming and results are uncertain.

A letter from the League of Minnesota Cities said, “In 2019, there were 41 requests for waivers but only 22 were granted, some for only a portion of the compensation waiver sought by the local government.” It also stated waiver requests were lower due to the COVID-19 pandemic.

Exceptions to the law exist, including for school districts, hospitals and clinics owned by a governmental unit and Metropolitan Airport Commission employees.

Supporters do not foresee the bill, which has no cost to the state, opening up excessive spending by local units of government, whose leaders must answer to voters.

“It’s not as if we’re gonna run off like drunken sailors and give everybody a 10% raise,” said Olmsted County Commissioner Ken Brown. “All of our counties, especially the larger ones, do struggle with this issue and it’s getting worse.”

Rep. Bjorn Olson (R-Elmore) asked why a local government unit employee deserves more money than someone who oversees the entire state. The governor’s salary is $127,629.

“We need to allow our communities the ability to hire the staff that they need to do a good job,” Masin said.