Duluth needs to slash millions from city budget

Great Lakes Aquarium
Duluth's Great Lakes Aquarium is the city's most popular tourist attraction, with 125,000 paid admissions per year. But the aquarium survives with a $300,000 annual subsidy generated by a Duluth tax on tourism related activities.
MPR file photo/Bob Kelleher

The city's not broke yet, but the writing's on the wall.

If nothing changes, Duluth is facing a projected $4.4 million budget deficit this year. That's about five percent of the city's general fund budget, and four times what's left in city reserves.

Don Ness
Don Ness has served two terms on the Duluth City Council. A former campaign manager for Congressman Jim Oberstar, Ness currently works for a Duluth-based non-profit, the Zeppa Family Foundation.
MPR Photo/Bob Kelleher

Mayor Don Ness said Duluth city government is going to look a lot different. He said it's no longer a question of what services city government can provide.

"It's more of a question of what services do you expect from city government, and a recognition that the city won't provide all of the services that we have in the past," Ness said.

Ness said there are a number of reasons for the budget crunch, including insufficient state aid to cities, the price of gas, and the cost of providing benefits for 1,100 retired city workers.

"Our retiree health care costs alone are increasing by a million dollars a year," said Ness. "And we have an older workforce in the city of Duluth, and we've seen a number of retirements and folks moving to that defined benefit."

Now, the red ink is starting to flow. Ness is recommending 120 ways to pump up the money coming in, and stem the flood of cash pouring out.

Polar bear
The polar bear is considered the most popular animal to see at Duluth's Lake Superior Zoo. The city is exploring turning operations for the city-owned zoo over to a private non-profit group; all in hopes of cutting the city budget.
MPR Photo/Bob Kelleher

The city would slash subsidies to popular events like the John Beargrease Sled Dog race, and Grandma's Marathon. Duluth's Economic Development Authority would lose its subsidy. A city fire hall could close and a fire rig retire. Ness would cut the city's share of the Human Rights Office.

He wants to cut by one-third an annual subsidy to the Great Lakes Aquarium. Aquarium Director Jack Lavoy said the $100,000 loss would be a problem. They've already cut staff to 17 full time positions, down from 70 when the aquarium opened eight years ago.

"We are down to the bone, and we have a huge responsibility on our hands," Lavoy said. "We're basically a huge life support system for aquatic animals and birds, and we have really about as thin a crew as we can right now taking care of those functions."

The mayor also wants a non-profit group to run the city zoo. Sam Maida directs the Lake Superior Zoological Society. Maida said the time may be right to essentially privatize zoo operations.

Sam Maida
Sam Maida heads the Lake Superior Zoological Society, which is considering a plan to take over zoo operations from the city.
MPR Photo/Bob Kelleher

"The city is facing such a financial crunch now and into the future that we really fear for the future of the zoo," Maida said. "You know, you hear a lot about closure, or shrinkage or whatever, and sometimes you think that it's just talk, but I think there's a lot of backbone behind it this time."

Mayor Ness's list has more than a dozen new fees, like charging out-of-town folks for fender benders.

"If there's an accident that happens in the city, that we're going to seek to recover the costs of city services with the insurance companies," Ness said.

Homeowners insurance would be tapped for the costs of firefighting. The city wants defendants to pay for prosecuting them in court.

Ness is proposing new fees for youth recreational activities, while he said adult recreation like softball would have to go it alone.

"We're saying we are no longer going to do it," said Ness. "We're giving you fair warning. And we hope and expect that community members who are passionate about adult rec softball leagues will organize this themselves and will be able to provide the service without the expectation that the city will be the one providing it."

The Duluth City Council has given its preliminary approval to Ness's plan, although it pulled specific language about closing a fire hall for further discussion. It will take months to actually do much of the budget cutting and fee increasing.

And even then, Duluth's mayor concedes, the city would still be running a deficit - with a much higher deficit predicted next year. Ness is expecting what he calls "modest revenue increase proposals" next year. That's political talk for higher taxes.

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