State to cities: Stick to what you do best
Minnesota State Roundup
Published May 1, 2004 | May 2004 issue
A report issued by the state in mid-March was harshly critical of municipally run businesses and cautioned cities about getting into fields that could be better left to the private sector.
The report, commissioned by state legislators and compiled by the state auditor, was based on surveys of more than 2,000 city-run businesses statewide. They include more traditional city enterprises like utilities, but also restaurants, water parks and others.
Although many of those businesses bring in additional revenues for city governments, the report said, cities shouldn't get greedy or rely on those revenues over traditional sources.
For necessary services, like utilities, the report said user fees should only cover costs. Public services like recreation often require subsidies, and cities should be careful about venturing there, the report said. Any other kind of business should make money or be closed, according to the auditor.
The report was also critical of attempts by city governments to obscure expenses for public enterprises by hiding the costs in other budget items.