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LGA study group has formidable task in reaching consensus

Conflicting ideals and objectives face the group charged with improving the state’s complicated system of funding cities.Related: Minnesota’s city aid discussion dominated by cuts, confusion, criticism

A handout distributed at Tuesday’s Local Government Aid meeting showcases some of the challenges and conflicting ideals facing a study group that wants to improve the complicated system. 

Halfway down the list or program objectives, one item read: “LGA should be used to equalize tax bases.”

A few lines below: “LGA should not be used to equalize tax bases.”

So, there’s some substantial work to do for the latest incarnation of a legislatively required LGA study group that met for the second time Tuesday morning to discuss its goals.

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But as politics go — and the handout reaffirms — reaching a consensus on those objectives could prove tricky.

Steve Peterson, a senior policy analyst with the Coalition of Greater Minnesota Cities and a study group member, said he would be “thrilled” if the group could come to agreement.

“I just think that overall philosophies on LGA might get in the way,” he said after the meeting. “It might not.”

Beyond the conflicting “tax base” goal, the handout listed such other proposed goals as a less complex and more intuitive formula, discouraging excess city spending and stabilizing funding levels.

Nevertheless, both Peterson and Rep. Linda Runbeck, R-Circle Pines, co-chair of the study group, said they are optimistic the meetings will be fruitful.

“We pretty much have to come to a new conclusion, I think, because most people that are part of this LGA system see that it’s really not correct in how it’s distributed,” Runbeck said.

A recent MinnPost report found that many city officials and critics do not understand the allocation formula, question how a city’s need is determined, and take issue with perceived funding inequities.

Those concerned have intensified since the state in recent years began cutting LGA funds. Last year, the state Legislature and Gov. Mark Dayton agreed to hold the city aid at 2010 levels for 2011 and 2012. They approved, however, on a $101 million reduction beginning in 2013.

Although Runbeck hopes a new formula will be ready for 2013, she said it’s possible 2010 funding levels could be extended another year to allow “a little more time to digest what a changed formula would amount to.”

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In the meantime, cities are struggling to cope with reduced state aid and shrinking tax bases because of declining property values and the elimination of the market value homestead credit – a statewide property tax relief program.

But even as revenue streams decline, citizen demand for services remains, said Gary Carlson, director of intergovernmental relations for the League of Minnesota Cities.

“Part of the challenge that I think our cities face is trying to meet their citizens’ expectations with declining budgets,” he said during the meeting.

The study group, which includes legislators, city officials and policy analysts from city associations, plans to meet again in February. Agenda items are likely to include issues surrounding capital investment, tax-exempt properties and the impact of outsiders using services and infrastructure in other cities.

“It seems like people are open-minded and having good discussions, so it should be good in the end, but you never know,” Peterson said. “There’s a lot of these [meetings] that happen and nothing happens in the end.”

The article, reported and written by a University of Minnesota journalism student, was produced in partnership with students at the University’s School of Journalism and Mass Communication, and funded in part with a grant from the Ethics and Excellence in Journalism Foundation.