Local government officials urge lawmakers to remove compensation cap

Local units of government in Minnesota have a problem no other state faces when it comes to recruiting and retaining top talent: a compensation cap.

Per statute, “The salary and the value of all other forms of compensation of a person employed by a political subdivision of this state, excluding a school district, may not exceed 110 percent of the salary of the governor.”

As of Jan. 1, 2023, that limit is $206,939. A waiver is available through Minnesota Management and Budget, but it can be time-consuming and results uncertain.

Sponsored by Rep. Patty Acomb (DFL-Minnetonka), HF1213 would repeal the compensation cap. It was held over Tuesday by the House State and Local Government Finance and Policy Committee for possible omnibus bill inclusion.

We’re just looking for local control to meet our needs, and a compensation cap is “artificially limiting” our candidate pool, said Minnetonka City Council member Rebecca Schack.

“Recently, MMUA was notified of a member which was starting the search process for the eventual replacement of the utility’s manager and was told by a national search firm that they would not place a client in Minnesota due to the salary cap,” wrote Kent Sulem, director of government relations and senior counsel for the Minnesota Municipal Utilities Association.

“There’s something to be said about you get what you pay for. … We want really good, qualified people running our cities and our counties,” Acomb said.

Supporters do not foresee the bill, which has no cost to the state, opening up excessive spending by local units of government, whose leaders must answer to voters.

“City councils know that our local revenue and budgets are limited, so financial decisions are made with the utmost care,” said Patrick Keane, a member of the Rochester City Council.

Rep. Jim Nash (R-Waconia), a former mayor, does not like the bill and is OK with the current waiver process.

“I just feel that what is a potential of what happens is that we wind up having the impact go to the taxpayer without really having the ability to have a full-throated conversation. … When we pay public officials we’re using taxpayer money, and I think having another way to regulate this or slow it down to have a more thoughtful or deeper conversation is probably where we should stay.”