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Duluth officials are nearing a decision on how to plug a budget hole created four years ago when the Fond du Lac Ojibwe band stopped sharing revenue from its downtown casino.

That can't come soon enough for many Duluth drivers, who say neglected street maintenance has made it treacherous to navigate many city streets.

Among the worst is Fourth Street, a main thoroughfare perched four blocks up the steep hillside from downtown. Lined by apartment buildings and storefronts, the street is pockmarked with potholes. 

"The streets in town are pretty horrible," Duluth resident Shelley Plude said. "I know there are some problems as far as the weather that we get, but they seem like they're a lot worse than other places that I've traveled."

For nearly a year, a city task force has studied how best to pay for street maintenance without casino money. Its members have narrowed the options to a monthly fee of $8 or $9 that would be tacked on to utility bills --or a roughly 30 percent property tax increase phased in over the next two years. The task force will present its recommendation to the City Council Thursday.

City officials say the situation has deteriorated since the money from the Fond du Luth Casino dried up.

In 1994 Duluth made a deal with the Fond du Lac band to share 19 percent of the casino's revenues, a first of its kind arrangement over an off-reservation casino. Mayor Don Ness said that amounted to about $6 million a year that the city devoted to street improvement.

But in 2009, the band cut off funding, arguing the revenue sharing deal violated federal Indian gaming law.

"It was a shock, and has had a devastating impact on our street program and our ability to maintain and upgrade our street system," Ness said.

Duluth sued the band for breaching its contract. For a couple years the city funded improvements from a trust fund of casino money it had put aside to continue to pay down old street repair debt. But after federal court decisions began to mount in the band's favor, Ness said, the city had to find another way to fill the budget gap.

"There is no silver bullet, no one's going to come in and fix our roads for us, and yet you have to find the balance between the need to invest in this infrastructure, and our community's ability to pay for that," he said.

Maintaining roads is a challenge throughout Minnesota. But Duluth contends with particularly harsh climate and topography, said Dave Montgomery, the city's chief administrative officer.

"We're on a hill, and it stretches long, and you have water running up and down them, serious temperature extremes," Montgomery said. "It's just a big, big challenge for us."

Part of the challenge is that the city sprawls 26 miles along Lake Superior and the St. Louis River, and there are fewer residents compared to larger cities on whom to spread out the cost of maintenance. In Minneapolis, for example, there are 357 residents for every mile of road. In Duluth, there are 181.

Montgomery said additional funding would allow the city to seal cracks and fill potholes, in addition to upgrading several miles of streets a year. He said more money would be needed to do the extensive road reconstruction work the city needs.

City Council President Linda Krug said Duluth has to do something. She said that need was driven home recently when an out-of-town friend asked, with a straight face, if the city has earthquakes.

"Our roads, our streets, make an impression," Krug said. "And we're trying to grow, we're trying to get more businesses, we're trying to get more people here. Roads are part of that mix."

But the proposal to raise taxes or fees to improve those roads rankles residents like Jim Booth, a financial advisor who works mainly with seniors. He said the plan would hurt people on fixed incomes. 

"Even if they raise their fee $8 per household, there are households that can't afford $8 for fees," Booth said. 

In recent years Duluth has implemented fees to maintain streetlights and storm water and wastewater systems. Voters have also approved levies for increased funding for schools, parks and libraries.

Ness concedes that Duluth's challenge is that no one wants to pay for the improvements residents know are urgently needed.

"You either need to simply live with a damaged system, or you need to find the revenue in order to invest in this infrastructure," Ness said.

Photos

Video from MPR News

Dan Kraker

Author

Duluth drivers wait for the city's decision on how to plug a four-year budget hole that's tearing up the streets.

Duluth's roads need work, but city needs money first

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