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What’s ahead: Where the gubernatorial candidates stand on revamping Local Government Aid programs

Third of three articles

Mark Dayton

MinnPost/Terry Gydesen
Mark Dayton

The published policy outlines and public statements of the Mark Dayton, Tom Emmer and Tom Horner campaigns on the matters of Local Government Aid, county aid and “redesign of government” offer another glimpse of the major philosophical differences of the three gubernatorial candidates.

Mark Dayton’s views
Dayton says if he becomes governor, he will restore the LGA cuts made by Gov. Tim Pawlenty and the Legislature in the 2012-13 budget cycle; by raising taxes, Dayton says he would be able to do that.

Dayton recently told the League of Minnesota Cities in an interview: “It’s my commitment to protect local government aid and continue that funding and have it provided reliably.”

As recent trends have shown, LGA reduction bears a direct correlation to an increase in property taxes as local units of government seek ways to recoup their state-funding losses. Dayton calls those property tax hikes “the most unfair tax.”

Tom Horner’s views

Tom Horner

MinnPost/Terry Gydesen
Tom Horner

Horner speaks of reworking the complex LGA formula and completely eliminating county aid; according to his campaign, he wants to “connect the unit of government taxing the service to the unit delivering it.” Counties would need to scramble for funding under a Gov. Horner.

Much of Horner’s local and county aid policies are driven by his running mate, Jim Mulder, the former executive director of the Association of Minnesota Counties.

To plug in for lost aid, Horner has proposed a few tax remedies for cities and counties.

Tom Emmer’s views
If Emmer is elected, his austere proposed budget would cut $1.1 billion from “aids and credits,” much of that to local units of government. He is emphatic that LGA go only for “core services,” such as police and fire services, and water and sewer infrastructure. His campaign has scoffed at the use of some LGA funds for non-essentials.

(Horner has also said LGA funding should be limited to those so-called core services.)

Emmer said of LGA at a Sept. 14 news conference: “It’s not working the way it was intended. Nor is it working in a fair and equitable way.”

Tom Emmer

MinnPost/Terry Gydesen
Tom Emmer

In an email to MinnPost, Emmer’s communications director Carl Kuhl wrote: “A redesign of local government aid is necessary … Clearly, there is a disconnect between the cities that have wish lists they are funding with LGA, the cities who truly need and use LGA for core city services and the way the state funding formula works.”

Nothing simple about aid formulas
Nothing is simple when it comes to the LGA formula. Age of housing stock, decline in population, and commercial/industrial market values are factors for cities of fewer than 2,500 residents. The number of traffic accidents per capita are part of the equation for larger cities.

For a full explanation, go here (PDF).

But LGA experts say there have never been restrictions on how LGA money can be spent; LGA money is fungible and becomes part of a city’s budget. Similarly, county aids are used for a variety of services that aren’t restricted to only police, fire, water or sewer.

In Traverse County, the state’s smallest in population, cuts over the past five years have included the elimination or combination of several social service and administrative jobs, reductions in jail staffing, as well as cutting a highway maintenance worker and an on-call social worker, according to county Coordinator Janet Raguse,

And in Wheaton, Traverse County’s biggest city, because of the LGA shortfall, budget trims have include reductions in force, work furloughs and employee attrition and cuts in library hours. The city also has turned over parks maintenance to inmates in the county jail and has limited street repaving to a few blocks.
Horner has proposed allowing counties to impose a local 0.5 percent sales tax. But that’s of little help because there is virtually no retail in Traverse County to speak of. Currently, Traverse receives $123,000 annually from the state. Seven years ago, before Gov. Pawlenty and the Legislature began making cuts, Traverse County received $577,000.

Horner also has proposed allowing cities to not pay sales taxes on items they purchase.

In Wheaton, City Administrator Jamie Beyer projected that a city sales-tax waiver could save the city about $14,000 a year; however, the most recent LGA cuts to the city amounted to $82,500.

There’s one other major factor in any proposed recrafting of LGA and county aid rules or redesign plans when the next governor takes over.

That’s the Legislature. Its members represent the 87 counties and 854 cities in the state. They will have something to say about the new governor’s — and state’s — relationship to Greater Minnesota.

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Comments (7)

  1. Submitted by Greg Kapphahn on 10/29/2010 - 09:38 am.

    The concept of local government aid reflects the idea that, as citizens of Minnesota, “we’re all in this together.” It was originally based on the idea that there is tremendous benefit to the state, as a whole, if each municipality and county in the state has a certain, basic level of services – educational, physical, social, law enforcement, legal representational infrastructure.

    In fact, this is a very necessary part of the economic success of every region and locality in the state.

    It was also based on the absolute reality that the economic fortunes of various parts of the state rise and fall in natural cycles. For example, the inner ring suburbs, once extremely prosperous, are now struggling with a wide variety of poverty-related issues.

    The outer ring suburbs, most recently filled with well-off citizens living in palatial homes now find themselves facing a distressed population and a lot of empty homes, whether never purchased in the first place, or now foreclosed on.

    Northwestern Minnesota (Thief River Falls and north) continues an economic boom of which the rest of the state is largely unaware, but which a few small changes in the world’s economy could promptly erase.

    When times are good, it’s very tempting for all those who are riding high to take credit for their own good fortune (in both senses of the word) and blame the less fortunate (both individuals and whole regions) for their comparative poverty. Far too few of us have the intelligence, and the emotional and spiritual maturity to say to ourselves, “There but for the grace of God, go I” (or any other responsible entity or non-entity you might care to name).

    We, all-too-easily fall prey to the anecdotes trotted out by demagogues like King Timmy (a practice started by Satanic Ronnie Raygun with his story of the “welfare queen driving a Cadillac – a person who NEVER existed) of how, somewhere, out there, there’s a lazy, able bodied (and able minded?) individual who’s got it way too easy because, while we, ourselves are slaving away, the government is taking our TAX money and just handing out to those who are too lazy to work. We never imagine that the day might come when we, despite our best efforts, might need help.

    So we elect people who are among the lazy rich or those who are their sycophants who take it easy while their underlings rearranging tax structures and economic systems to massively enrich themselves while pointing us at the “lazy poor” as the source of our economic burdens.

  2. Submitted by Greg Kapphahn on 10/29/2010 - 09:39 am.

    Inevitably, as those who promised to save us from the “lazy poor,” game every system to suck the income that system produces into their own pockets, our own incomes stagnate. Jobs disappear. We borrow to try to make up the difference. Credit card companies, realizing they’ve got us over a barrel, jack our interest rates to the sky. Multinational Banks use unscrupulous local representatives (massively well-paid mortgage brokers) to lie to us about how big a mortgage we can afford then make off like bandits (literally) by selling those impossible contracts to unsuspecting investors,…

    Until the time comes when those who claimed they would save us from supporting the lazy poor have gathered all the wealth to themselves and made it largely impossible for us to make economic gains, no matter how hard we work (if, indeed, we can even find jobs), and we have taught ourselves, once again the truth that our religious leaders (the faithful ones) have been trying to remind us of all along,…

    That WE OURSELVES now need the same help we thought no one SHOULD ever need – which many of us only discover when it becomes the truth of our own lives.

    So here we are, wallowing in the truth. We’re all in this together. We rise and fall together.

    The huge cuts in LGA, and the resulting necessary increases in local property taxes, mostly in the LEAST prosperous areas of the state, are part of the snake oil that the fabulously wealthy have been convincing us to buy for the past thirty years – wherein they’ve used our resentment, our jealousy, and our tendency to covet what we do not have, and our desire to believe that we’re smarter than everyone else (which, of course, we could prove by listening to them and following their advice) to get us to go along with them as they stripped us of our assets, our income, and any chance we ever had of a comfortable retirement.

    The restoration of LGA is a first VERY EXCELLENT step in telling them that we’ve had enough. That we’ve suddenly remembered we’re all in this together and that it’s worth helping those in need because we never know what that person, that municipality, that county in need might be the one we live in.

    It’s an EXCELLENT step in beginning to restore our state to one where the people who, for reasons of their own psychological dysfunctions can’t bear to have the government tell them they MUST pay a certain level of taxes, they MUST not pollute the environment, the MUST not rip off their fellow citizens, are ignored by their healthier fellow citizens or get mad enough to leave the state. In either case we’ll be a healthier, more prosperous state without them (or at least when we stop listening to them).

  3. Submitted by Thomas Swift on 10/29/2010 - 10:53 am.

    “But LGA experts say there have never been restrictions on how LGA money can be spent; LGA money is fungible and becomes part of a city’s budget.”

    Hence the problem.

    Given government’s rapacious history and miss-management of the public’s treasure, why would anyone expect a program ostensibly meant to assist small, rural municipalities in providing core services not to be plundered and misappropriated?

    Feckless fiscal managers like RT Ryback and Chris Coleman see ‘fungible’ and immediately think ‘fun’.

    It’s time to send the message that the party is over to our clueless leftist leaders.

    The fact that there are dozens of cities, large and small, competently managing their affairs despite the fact they have never received a penny of LGA suggests this is a program that is ready for retirement.

  4. Submitted by andy on 10/29/2010 - 11:04 am.

    Exactly. Local governments have had two funding streams for some time- local property taxes and a little from the general fund. Why? So even poor areas can have a shot at the same clean water, good roads, and quality education richer areas have. It really is an investment in ALL or our people. Individually, such projects can be expensive, but collectively they become possible and affordable.

    The evil brilliance of the new and unimproved MN GOP is in how they’ve gamed the system. Tax cuts, most of which benefit their rich pals, take away funding from local units of government. Property taxes go up, school referendums become annual fights, and people begin to be squeezed. People begin to think of their local governments and school systems as the Enemy, and thus the GOP “earns” ever more converts.

    Maybe now we have the chance to REALLY vote in Good Government, and Minnesota can once again be an island of sanity.

    And believe you me, if the GOP takes the House this fall, we’ll need it- because while the rest of the country falls while they’re trying to Impeach yet another President, Minnesotans will only have other Minnesotans to rely on!

  5. Submitted by Jim Roth on 10/29/2010 - 12:44 pm.

    As on many issues, Emmer’s approach is overly simplistic and unrealistic. Mr. Swift’s many comments endorse this tactic. It is insulting to the mayors of Minneapolis and St. Paul to suggest that their budgets in these difficult times fund things for “fun”.

  6. Submitted by Paul Udstrand on 11/01/2010 - 11:18 am.

    Thanks for an excellent series Jay.

  7. Submitted by Dan Dorman on 11/02/2010 - 04:24 pm.

    Where to start?

    First there have been many changes to the LGA formula over the years. At one time, it could have been argued that the more a city spent the more they received in LGA. That was changed long ago. In fact, the current LGA formula was designed by the current Governor not a DFLer. One of the biggest changes made was to remove what was referred to as the grandfather clause which allowed a city to never go below their current funding level, even if they no longer had the need. That was a good change.

    However, when I hear some people argue against LGA, including the Emmer camp, they seem to be using the old formula to base their arguments.

    The last time money was added to the LGA system was in 2001. And those, including this writer and the current Governor, campaigned on this being property tax relief.

    So if additional LGA is property tax relief, taking money out has to be a property tax increase.

    There were other items in the 2001 tax bill besides increased LGA (which has no been more than taken away). In order to provide property tax relief to the metro area, especially to cities that don’t get LGA, the state took over the property tax levy for transit. It should be noted this take over is only for the metro area. So instead the property tax payer sending the money to the Met Council, the state sends the check to the Met Council. This program has not been reduced. Sounds a little bit like LGA..the state sends a check to another unit of Government so the property tax payer does not have to.

    I don’t have the numbers in front of me, but per capita, a resident of Edina gets more more from the transit levy takeover then residents in my hometown of Albert Lea get in total LGA!

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