Editorial: Take care when approaching local aid cuts

Published 12:00 am Friday, January 4, 2002

From staff reports


Friday, January 04, 2002

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Gov. Jesse Ventura didn’t surprise many when he apparently singled out local government aid as a target of state budget cuts as the legislature prepares to tackle a billion-dollar budget deficit. On the surface, cutting this aid makes sense, but unless Ventura wants local property taxes to skyrocket, it’s a short-term solution.

Cities and counties keep reserve funds, some of which Ventura considers excessive. One of the largest reserve funds in the state is held by Mower County, for instance, which has $22 million in its reserves – that’s as much as the county spends in a whole year.

Cutting other state services or raising taxes while all that money is sitting there is understandably something Ventura doesn’t savor. Directing some of that money to make up the budget deficit makes sense. This would be accomplished by cutting state aid to local governments, which would leave a hole in the local budgets. Cities and counties would then presumably use their budget reserves to fill out their budgets.

The problem with this approach is that it only works for so long before too much of the local reserves are exhausted. And some cities will run dry before others. That means the state either must reinstate the higher levels of aid or watch the local governments hike taxes to pay for their operations – a large percentage of which are either essential functions or ones mandated by state or federal governments. Forcing local governments to raise taxes looks like a convenient way for the state to pass the buck without having to increase taxes themselves.

And once an appropriation like LGA is slashed, it can be hard to restore it to previous funding levels. A cut now, made with the short-term goal of balancing the budget, runs the risk of being a long-term loss of funding.

Ventura is on to something in targeting local budget reserves, but any legislation that aims to cut them should be equipped with some kind of guarantee that cities and counties will not be bled dry and forced into raising taxes.