How do you budget for a blood feud?

This morning’s Star Tribune brings word that the League of Minnesota Cities is debating whether to keep insuring the City of Greenfield.  Greenfield is mired in what can only be called a feud, along what is sadly becoming a familiar pattern: existing leadership does something uncouth (throws weight around, supports unpopular project, approves major capital project, gets city sued, all of above); opposition gels around idea that incumbent mayor/council not just wrong, but evil; opposition candidate wins, makes “cleaning house” overriding priority; city staff quits/is fired, meetings descend into chaos, nothing gets done, city gets sued some more.   There is no method for recalling local officials under state stautes, and episodes like this emphasize why that is great policy (and also explain why statutory cities headed for the ninth circle like Greenfield often develop charter commissions).

Sometimes these things settle down on their own.  Other times, they don’t, which is when the League begins to lean on a city by threatening to pull insurance coverage.  Most of the time, this gambit works – no matter how bitter the conflict, almost everyone grasps the significance of having to cover $200,000 or $500,000 in legal expenses to settle scores.  The deductible applies to the costs of defense as well as any final outcome, so even “successful” cases (like the one linked above) end up blowing a hole in the city’s budget.    

Greenfield is getting interesting because it seems that it may be the first place where losing insurance doesn’t knock some sense into people.  As with all truly great feuds, nobody seems ready to take responsibility for anything (having comments shut down on a regular news story is another leading indicator of a great feud).  Maybe talk of deductibles and insurance coverage is too abstract.  Right now, municipal liability caps are $500,000 per claimant, and $1.5 million per incident.  Judgments against cities must be paid quickly out of existing funds or new taxes – not subject to levy limits – must be levied to pay the judgment.  If the city won’t do it, the County Auditor is required to levy the tax.  Passing a charter has no effect on these laws.  This is bad enough in any city, but one with about 1,0o0 households and around a $1 million annual levy?   At some point, any valid claim – car accident on a snowy city street, injury to a public works employee, storm sewer failure, etc. – could require Greenfield to double its property taxes.  It’s not hard to see why most cities get the hint.

UPDATE (11/13): The League has pulled coverage for acts or omissions of elected officials, but will maintain Greenfield’s basic property and liability coverage.  So the scenario in the last couple of sentences above thankfully won’t play out.   Still, the city should pray for land developers to stay away until the coverage issue is fixed.


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