City seeks to avoid bankruptcy

The northern community of Tamarack has a population of less than 100. It could be facing bankruptcy if the state doesn’t step in to provide a little financial cushion.

Their problems stem from a sewer system the city installed in the 1990s.

“They acted on advice that should have been reliable … and installed a system that was too big for their needs,” by a contractor that did shoddy work, Rep. Carolyn McElfatrick (R-Deer River) told the House Property and Local Tax Division Feb. 29. It turned out the monthly charge to those hooked up to the service is greater than expected.

City officials were able to pay off the construction loans, and had to raise fees in 2007 to pay operational expenses. “With a quarter of the town’s hookups delinquent on their fees, the operational costs are consuming all the city finances,” McElfatrick said. The town could be facing bankruptcy by the end of the year.

She sponsors HF2283 that would provide an additional $12,000 in local government aid in 2013 to provide a “respite” for the town as it figures out how to pay the costs and plan for a replacement system more adequately sized to the town’s needs. The bill was approved and moved to the House Taxes Committee.

Rep. Tim Mahoney (DFL-St. Paul) questioned the wisdom of the state stepping in to help solve a problem of a system built with federal funds.

“The town can’t afford to maintain the system,” he said. “For you to come here and ask for us to maintain a system that doesn’t work, that was paid for by the tax dollars and there is absolutely no plan for the next 20 years for what kind of system to put in, much less how to pay for it, begs a question … but I won’t ask it.”

The companion, SF2077, sponsored by Sen. Tom Saxhaug (DFL-Grand Rapids), awaits action by the Senate Local Government and Elections Committee.