Cities may get more LGA funding

Published 9:16 am Wednesday, April 3, 2013

A local government aid reform package proposed in the Minnesota Legislature has drawn support from local officials and the Coalition of Greater Minnesota Cities.

The proposal calls for $80 million in additional aid funding across the state, a simpler formula and an adjustment for inflation and population growth.

“Cities have been really crying out for stability and an end to funding from the state that’s up and down,” said Tim Flaherty, of law firm Flaherty & Hood. “Here’s the rare opportunity to fix it.”

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Flaherty, who is lobbying for the Coalition of Greater Minnesota Cities, said for the first time in at least 30 years, the governor, Senate and House are all favorable toward LGA. And the metro cities, the Twin Cities’ suburbs and Greater Minnesota cities are all showing their support as well.

“This is a once-in-a-lifetime opportunity,” he said.

LGA helps cities with low property tax wealth provide reasonable tax rates and city services. In the last five years, LGA funding has been cut or unallotted, which in turn has forced local governments to raise property taxes or cut services, said Flaherty and Albert Lea City Manager Chad Adams.

The new formula looks at population — cities would be characterized based on whether they have a population of under 2,500, between 2,500 and under 10,000 people, or more than 10,000 people.

Within each grouping, the formula looks at items such as the amount of housing built before 1940, household size, peak population decline since 1970, jobs per capita and percent of housing built between 1940 and 1970, depending on the category.

Under the proposal, most cities would see increases in LGA funding in future years. Albert Lea would go from about $4.7 million in 2013 to about $5.1 million in 2014.

Flaherty called the formula “objective” and “defensible,” saying it gives city leaders more stability in the future to know what the city would receive based on the formula.

“The city isn’t going to be able to hire back all the people it laid off, but it is going to be able to do the things it has deferred,” Flaherty said. “It’s still going to be tight, but it will be able to have a little breathing room.”

Adams said he thought the proposal would provide the city with a sustainable plan moving forward that would address some of the city’s infrastructure needs.

Though the additional $80 million in the proposal would raise the LGA base across the state to $506 million, the funding would still be about $59 million short of what was appropriated in 2002, Flaherty said.

Under the proposal, Greater Minnesota would receive about 66 percent of the overall LGA funding, suburbs would receive about 7 percent and Minneapolis and St. Paul would receive about 27 percent, he said. Of the new $80 million, 50 percent would go to support Greater Minnesota, 22 percent would support suburban cities and about 28 percent would go toward Minneapolis and St. Paul.