Circle Pines a microcosm of the state's budget debate

As Republican leaders at the Legislature face off with DFL Gov. Mark Dayton over how to solve the state's $5 billion budget deficit, the debate has raised fundamental questions about what services state and local governments should provide and who should pay for them.

One community wrestling with these issues is Circle Pines. The northern Twin Cities suburb is one of the traditionally Democratic blue areas that turned to purple and helped the GOP take control of the Legislature in the 2010 election.

Circle Pines prides itself on not being an ordinary suburb. Twenty minutes north of Minneapolis on Interstate 35W, the town of nearly 5,000 got started after World War II as a cooperative based on the Danish model. Residents were shareowners and agreed to purchase 25 percent of their groceries in town. The socialist cooperative fizzled by 1950, but one legacy is Circle Pines still owns its own gas utility company.

Driving through town in his silver minivan, Circle Pines Mayor Dave Bartholomay pointed out the ingenious circle-and-spoke layout of parks and trails, which puts each home within a block of green space.

"We believe Circle Pines has more parks and trails and open space per capita than any city in the metro area, because they're all throughout," said Bartholomay. "That was a great idea. Parks and trails are the No. 1 amenity that people want to have in a town. The challenge, of course, gets to be from a city's standpoint -- more parks, more trails means more maintenance."

Bartholomay said the recession hit his community hard. He himself was laid off from his job as a software executive in Minneapolis. He earns $4,000 a year as mayor. So he's sympathetic when people say they don't want their property taxes to go up.

"The middle class is getting squeezed," said Bartholomay. "And we're sort of a classic example of that. I think most suburbs are."

The median household income in Circle Pines is $73,000. That's 20 percent higher than the median statewide. Just 2 percent of its residents live in poverty. It's predominantly white.

People here used to vote reliably blue. In the last eight presidential elections, they picked Democrats for the White House. But this southern Anoka county suburb isn't a predictable place. It went big for Jesse Ventura for governor in 1998.

In the last election, Circle Pines voters chose Republican Tom Emmer for governor, and Democrat Taryl Clark for Congress. Both of them lost.

The political mixed bag surprises even new state Rep. Linda Runbeck, GOP-Circle Pines, when she sees a printout of the election results.

"Oh, for heaven sakes. Well, I'll be darned."

Runbeck beat a two-term Democrat, Paul Gardner, to win back the district she'd served in the House and Senate from 1989 to 2000. Runbeck thinks she won because voters felt the economic downturn dramatically, and she promised fiscal discipline.

"We've had perhaps a significant turnover" in the city's population, said Runbeck. "When I did door knock I saw a lot of new people. I think they're coming for the fact that it is affordable living, and it may be a different group than those that populated it in the '50s, '60s and '70s."

As red voters replace blue ones at this edge of the metro, the message to state government from these quarters is to tighten up on spending.

Mayor Dave Bartholomay explained that, when residents go through hard times, the city feels it too. A declining population means Circle Pines will probably lose state money to fix potholes.

""The middle class is getting squeezed. And we're sort of a classic example of that. I think most suburbs are."

"We've had some foreclosures. In fact, we're afraid foreclosures are one of the reasons we've slipped below the magic 5,000 in population," Bartholomay said. "We also had another issue with foreclosure in our community, and that was we had a house blow up."

Batholomay pointed out the blackened remains of an unoccupied house that had the gas leak. He said it'll cost the city $10,000 to $20,000 to clean it up. The city will tack that amount onto the property's assessment, but until someone buys it, it's the kind of unplanned expense that's tough to absorb on a lean budget.

Circle Pines already shares a school district, police and a volunteer fire department with neighboring communities. Bartholomay said city leaders shaved $52,000 off the $2 million budget this year.

"We did the thing most people are afraid of doing," said Bartholomay, with a sigh. "We cut the police department. We cut an officer in the police department. We cut our parks, we've held our staff employees to a budget freeze."

Most of the city's budget comes from property taxes. But regional and state coffers help out. Twenty-two percent of Circle Pines' budget comes from "fiscal disparities," a metrowide redistribution of money.

Circle Pines is a bedroom community with almost no commercial and industrial revenue. It's subsidized by suburbs like Bloomington, home to the Mall of America.

Circle Pines isn't expecting any local government aid, or LGA, next year. This year, 1 percent of Circle Pines' budget came from LGA. Bartholomay said most of what they were expecting disappeared in former Gov. Tim Pawlenty's unallottment.

Local government aid is under fierce debate at the Capitol. Circle Pines' Rep. Runbeck is at the center of it.

"It's an old outdated model, and it needs to be fixed," said Runbeck.

As chair of the House Property and Local Tax Division, Runbeck wants to phase out LGA for big cities like Minneapolis, St. Paul and Duluth. She said it was supposed to provide property tax relief, not what she considers "extras," such as arts spending or Target Center's green roof.

"I just think that they have thought this money was never was going to end, that they didn't have any responsibility to state taxpayers. We're paying this money," said Runbeck. "Frankly, they need to start looking more favorably on the rest of us because we've been giving our donations."

Runbeck's view of government is to provide essential services. Her community mirrors that.

Circle Pines is no frills. There's no arts, no community center. Little League parents maintain the baseball fields.

Runbeck thinks her own city could be leaner still. She says police costs could be trimmed by relying on the Anoka County Sheriff for protection, or adding another city to its shared police force.

Circle Pines Republican voter Mike Kula feels his city government is doing a good job with his tax dollars, but he thinks the state hasn't been as careful.

"I believe Ms. Runbeck is doing a fabulous job of trying to do some things that are good for communities like Circle Pines," said Kula. "If that means that cities like Minneapolis and St. Paul have to look at other options, and we don't have that LGA available to them the way it has been in the past, I think that's a good idea."

Kula says he's not worried about his property taxes going up as a result of state budget cuts, but he is very concerned that Gov. Dayton's proposal to raise taxes on the wealthiest Minnesotans could drive prosperous Minnesotans to leave.

But another Circle Pines resident agrees with Dayton. Eleanor Yackel was at City Hall buying a burning permit for her lakefront property. Yackel describes herself as a liberal. She says she's concerned about proposed Republican cuts to education -- particularly early childhood and family education.

"We're insisting that we can't levy taxes, and I think there are some of us who are able to make this a more equitable system," said Yackel. When asked if she'd be willing to pay more, Yackel said sure, but hastened to add, "judiciously."

The issue for these Circle Pines voters is equity. What's a fair contribution from a bedroom community in the suburbs? How much pain should its residents absorb as Minnesota tries to balance its budget?

The Legislature and the governor are trying to resolve those questions.

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