Chamber calls on state to meet its LGA commitment

Published 9:36 am Thursday, January 27, 2011

By Sarah Stultz and Tim Engstrom, Tribune Staff

The board of directors for the Albert Lea-Freeborn County Chamber of Commerce passed a resolution Wednesday urging the state Legislature to honor its commitment to local government aid certified for 2011.

The resolution opposes the stance of the Minnesota Chamber of Commerce, of which it is a member. The state chamber promotes reducing LGA as a means to lower the state budget deficit.

Randy Kehr

“This is a position our board felt we needed to take,” said Randy Kehr, executive director of the Albert Lea-Freeborn County Chamber of Commerce. “We needed to stand up for the businesses and citizens in Freeborn County.”

Earlier this month, new Republican majorities in the Legislature announced a proposal to cut $460 million in cuts to city and county governments.

For Albert Lea, that specifically would mean reductions of about $1.1 million, including LGA and market value tax credits. The city is certified to receive $5.32 million in state aid.

The city’s total general fund budget is about $14 million.

David Olson, executive director of the Minnesota Chamber of Commerce, said the LGA distribution formula is based on outdated economic data.

“Assuming this is going to be a session-long conversation, it’s going to change. Do you want to be part of the restructure or reform or not?” he asked.

Olson said Crookston is the only other member to diverge from the state chamber’s stance, though he noted others could be considering it.

He said he is disappointed with the local chamber’s resolution. He said the Minnesota Chamber of Commerce “did a lot of homework” in establishing its position to call for a retooling of the state-aid formula. He said the original stance called for elimination, but after a tour of the state, local businesses and chamber members felt that was “too dramatic.” The stance became a call to reduce and reform LGA.

Kehr said LGA was designed 40 years ago to level the playing field between metro areas rich in tax base and Greater Minnesota. He said it has worked for many years.

“But during the last few years, we’ve been cut, unallotted and most Greater Minnesota cities have been forced to raise property taxes,” he said. “The playing field is becoming more uneven.”

A reduction in aid during 2011 would also come after the Legislature already certified LGA levels, he added. Cities have already planned to receive that much LGA in their budgets.

The resolution states LGA cuts will result in higher property taxes and lower services that will make businesses in Albert Lea even less competitive compared to businesses in suburban cities and in cities in other states.

Services that LGA supports, including fire, police, street maintenance and upkeep of infrastructure, are critical to businesses, and quality-of-life services, including parks and recreation, are important to “attract and retain businesses, customers and a quality work force,” the resolution continues.

The board asked the Legislature to honor the certified LGA for 2011 and 2012, not only for Albert Lea but also for Alden, Glenville, Hayward, Emmons, Myrtle, Freeborn, Clarks Grove, Geneva, Hartland, New Richland, Manchester, Twin Lakes, Geneva and Hollandale.

The resolution states LGA cuts of over $1 billion since 2003 have disproportionately hurt cities in Greater Minnesota already.

Olson said Minnesota Chamber of Commerce members are free to have independent opinions.

“We don’t expect people to go lockstep,” he said.

He said he would expect Albert Lea business leaders to oppose tax increases, which he said goes hand in hand with funding LGA.

The Minnesota Chamber of Commerce official position statement on LGA calls for “a transition and innovation fund to incent communities to collaborate, share services and seek greater efficiencies.”

The following is the resolution passed Wednesday by the board of directors for the Albert Lea-Freeborn County Chamber of Commerce:
WHEREAS, LGA is a state funded property tax relief program that helps reduce the property tax burden on businesses as well as homeowners in the City of Albert Lea and Freeborn County and
WHEREAS, LGA cuts of over $1 billion since 2003 have disproportionately hurt cities in Greater Minnesota, and
WHEREAS, additional LGA cuts will result in higher property taxes and lower services that will make businesses in Albert Lea even less competitive compared to businesses in suburban cities and in cities in other states, and
WHEREAS, many of the services provided by the City of Albert Lea including fire, police, street maintenance and upkeep of infrastructure, are critical to our businesses, and
WHEREAS, other quality-of-life services, such as parks, recreation and programs for young people and seniors, are needed to attract and retain businesses, customers and a quality work force, and
WHEREAS, Albert Lea has set its budget based on the $5,322,347 the state has already certified that Albert Lea will receive in LGA for 2011,
NOW, THEREFORE BE IT RESOLVED THAT the Albert Lea-Freeborn County Chamber of Commerce Board of Directors urges the Legislature to honor its commitment and pay the city the $5,322,347 of LGA already certified for 2011. Additional Freeborn County cities whose certified LGA amounts should be honored include Alden, Glenville, Hayward, Emmons, Myrtle, Freeborn, Clarks Grove, Geneva, Hartland, New Richland, Manchester, Twin Lakes, Geneva and Hollandale.
BE IT FURTHER RESOLVED THAT the Legislature maintain funding for LGA at its current funding level for 2011 and 2012.
BE IT FURTHER RESOLVED THAT, upon passage, this resolution be forwarded to the Minnesota Chamber of Commerce, the governor, the speaker of the House, the Senate majority leader, and to members of the state Legislature representing the City of Albert Lea and Freeborn County.