The Debate Over How to Pay for Duluth Street Reconstruction is Far From Over

By KBJR News 1

August 27, 2013 Updated Aug 27, 2013 at 5:28 PM CST

Duluth, MN (NNCNOW.com) --- The debate over how to pay for Duluth city street reconstruction continues.

At the city council board meeting on Monday night 3 councilors voted against using money from the Community Investment Trust Fund, to pay for street improvement.

That money came from Casino payments from the Fond du Lac Tribe, payments that stopped in 2009 when the band and the city entered an on-going court battle,

"That fund was never to be touched except for the interest. The principle was to stay there and earn interest to pay for our city streets," said councilor Jim Stauber.

Stauber, a Duluth city councilor who voted against using the CIT fund, says that the administration has taken the principle and spent it in different areas that he does not approve of, leaving the principle so small that the interest could no longer pay for their bonds.

"The citizens have spoken through the survey, that they want their streets improved. Well citizens, this administration has spent down that nest egg," said Stauber.

Garry Krause, another city councilor who voted against using the fund, says he did so because when Mayor Ness proposed dipping into the CIT fund the first time, he said it was a one-time solution.

Krause, along with Stauber, feels that it is a bad strategy to keep dipping into those funds.

City administrators are unhappy with the outcome of the vote

"The city administration is deeply disappointed," said Daniel Fanning, Community Relations Officer.

Administrators defend the proposal, and say the CIT fund is the appropriate source to pay down the lingering $2.2 million in street repair debt from previous years.

But they'll have to find another way..

"It's unfortunate that it comes down to that. Nobody wanted to be in the situation that we still have $2.2 million in debt. But the reality is we do," said Fanning.

Fanning says the situation opens the city up to financial uncertainty.

"That exact kind of uncertainty that threatens the credit of the city," he said.

Councilor Krause says that he has a counter proposal he plans to present to the chief financial officer that will pay the debt without dipping back into the CIT funds.

"The broader debate that we need to have and continue to have in city government is how if we don't have the casino money, that $6 million a year, how are we going to fund the full reconstruction," said Duluth Mayor Don Ness.

Fanning says that by not using the CIT fund the city will be forced to either raise taxes by 10% or to lay off up to 40 staffers from facilities in Duluth.

Elsa Robins
erobins@kbjr.com