With more than 50 percent of its revenue coming from state sources, the city of Albert Lea is vulnerable to any decisions that cut Local Government Aid (LGA).

Wednesday, January 16, 2002

With more than 50 percent of its revenue coming from state sources, the city of Albert Lea is vulnerable to any decisions that cut Local Government Aid (LGA). But Albert Lea City Manager Paul Sparks worries more about how funding priorities are changing.

In 2001, the total state aid to Albert Lea was just over 55 percent of the city’s budget, or more than $6 million of the total $12.4 million budgeted. This year, LGA provides more than 57 percent of city revenues.

In comparison, statewide, an average of 17 percent of municipal income comes from the state.

The governor has proposed cutting state aid to cities by a total of 15.2 percent over the next four years. Although the reductions start out small, the cut in Albert Lea this year would amount to $282,000 – or 3 percent of total state aid to the city – the cuts get bigger later, said Sparks.

&uot;It’s a real concern. It’s not fair,&uot; said David McPherson, city council member. The city will be able to get by using cash reserves in 2002, but depleting reserves will complicate plans for street reconstruction projects and repairs of sewer and water lines, he said. Cutting LGA places those projects in jeopardy.

The need to cut aid to cities and ask them to use reserves to make up the difference is understandable to Sparks. With the downturn in state revenues and with deficits looming, everybody has to do their part, he said. It’s the way the cuts are made to local government aid that concern him the most.

&uot;What is most disturbing are the permanent structural changes to the relationship between cities and the state that lie under the surface,&uot; Sparks said.

The relationship Sparks refers to is one that goes back 30 years, when cities like Albert Lea surrendered the right to collect revenue from sources like local sales taxes in exchange for revenue from the collection of state sales and income taxes. As with the way that the state attempts to equalize levy referenda for school districts, the theory was that cities would benefit if the state redistributed sales tax revenue based on need, said Sparks.

If the governor’s plans are approved, there would be a fundamental change to the way cities and the state relate to each other, said Sparks. Only he doesn’t see that being publicized, although he doesn’t seem surprised, either.

&uot;The governor wants to permanently change this relationship because he doesn’t like it. He is by nature against local government aid because when he was in local government, his city didn’t get any and didn’t need any,&uot; Sparks said.

City officials will be maintaining contact with area legislators, including Rep. Dan Dorman (R-Albert Lea) and Sen. Grace Schwab (R-Albert Lea) as the legislature hammers out a budget solution.