Amid a tight labor market and changing industry dynamics heralded by the pandemic, local city and county associations are continuing efforts to repeal a Minnesota law capping the salary of local government employees.
“We have never been able to find another state that has any kind of limit like this,” said Gary Carlson, the intergovernmental relations director with the League of Minnesota Cities.
City managers in Burnsville, Blaine and Maple Grove are the latest to join a list of over 80 public employees authorized to earn salaries above the cap through a state program that allows exemptions to the law based on local factors.
However, Carlson and other critics of the law argue the salary cap hinders local government employer’s efforts towards pay equity, recruitment and the ability to offer salary adjustments for increased responsibilities. A bill introduced in the Minnesota House last year aimed to repeal the law entirely.
Under current Minnesota law, employees of political subdivisions may not be paid a salary above 110% of the governor’s salary. The cap, adjusted annually for inflation, is set at $192,144 in 2022.
Over the decades, changes to the law have increased the salary limit and eliminated restrictions for some government employees.
The current law exempts school districts and does not restrict the pay of elected officials, such as county attorneys and sheriffs.
Still, Carlson said governments face increasing competition from non-profits, out-of-state entities and private sector employers who can promise higher pay and bigger steps up the ladder to top-performing employees.
The Minnesota Management and Budget Office issues waivers to government employers who’ve applied and been approved to pay a salary exceeding the cap.
The waiver, issued by the commissioner of MMB, ties a new salary limit to a particular government job, rather than the individual employee. Once a waiver is secured, the waiver salary limit is also adjusted annually for inflation.
Scott County, for example, successfully obtained a waiver in 2019 for the county administrator role, according to state data. The City of Mankato and City of Lakeville obtained waivers for their city manager roles the following year.
However, the new salary cap authorized in all three waivers landed short of what the government employer had initially requested. Carlson said even employers who’ve obtained a waiver may have little “breathing room” to offer competitive pay increases.
Matt Massman, executive director with the Minnesota Inter-County Association, said compensation decisions for government employees should be left in the hands of local elected officials, who are accountable to the public.
Massman said a statewide process for determining compensation of top local government employees “turns accountability on its head.”
In an email to Southwest News Media, state Management and Budget Commissioner Jim Schowalter said MMB takes no position on whether or not local cities and counties are best suited to make compensation decisions.
He said the agency considers information sent by the local government when determining which jobs will receive an exemption to the law.
“For example, we look at whether the position requires special expertise that is difficult to find in the market or if there is data supporting challenges in attracting or retaining qualified individuals,” Schowalter wrote.
Cities and counties may also provide examples of applicants turning down job offers due to salary limits.
“A demonstration of actual challenges to recruitment and retention are factors to support an exception to the salary cap,” Schowalter wrote. “MMB does not consider factors other than those listed and required by statute when considering requests.”
To determine the salary tied to the waiver, MMB reviews cities or entities of similar size to maintain parity among similar jurisdictions, he added.
Efforts to repeal
State Rep. Sandra Masin, DFL-Eagan, introduced a bill to repeal the salary cap last year.
The repeal efforts sparked opposition from State Rep. Bjorn Olson, R-Elmore, during a hearing by the House Local Government Committee in February.
“I guess I would just question the logic behind why a city administrator, for example, should warrant pay that exceeds an executive who is responsible for 5.64 million Minnesotans?” Olson questioned. “I think if we don’t worry about this a little bit we’ll allow cities to completely explode their pay to city administrators.”
Looking ahead, Carlson said efforts to repeal the salary cap face an uphill battle in the Legislature.
With higher priority issues on the table, and an election upcoming, it’s unlikely the cap will be repealed in the upcoming session.
“There’s always this scrutiny of the public sector,” Carlson said. “I think, politically, it’s very difficult to repeal.”