LGA funding important to local businesses

Published 10:14 am Monday, April 22, 2013

Column: Guest Column, by Randy Kehr

It appears that change is in order for funding the local government aid program. The League of Minnesota Cities and the Coalition of Greater Minnesota Cities have presented a compromise bill to the Minnesota Legislature. This legislation would bring true stability to the program. This stability is especially important to local businesses as well as the citizens of Freeborn County communities.

Randy Kehr

Randy Kehr

For 40 years, the LGA program has helped to level the playing field by keeping our property taxes and our city services on an even keel with those in areas with greater tax capacity. That was a policy decision that kept our entire state strong and economically healthy. Recently, LGA has fallen victim to cuts and unallotments. The impact goes far beyond the city’s budget.

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Albert Lea is typical of many mid-sized rural cities, and past cuts have already left it and other Greater Minnesota communities less competitive and less attractive to families and new businesses. The quality of life in our community is greatly influenced by available services.

The LGA legislation before the Legislature will, hopefully, repair some of the damage but, more importantly, provide much needed stability to our property tax burden.

Albert Lea city leaders have done a remarkable job of reducing their dependency on LGA. It has not been without pain. Cuts have been made to city services, employees have been offered early retirement and those who do retire or leave may not have been replaced. In spite of this, property taxes for businesses have risen due to the elimination of the market value homestead credit. This action provided some relief for the homeowner but shifted the burden to commercial properties and homes of higher value.

While there appears little action being contemplated on the homestead credit, property taxes should stabilize in most Minnesota cities with this new formula for LGA. Businesses have had to face the fact that reduced city services or higher taxes were often the result of actions from those other than the city government. This legislation and the consistency it provides will allow local businesses and citizens to deal directly with those who most directly influence their property tax levy while giving the city the tool it needs to plan for the future.

For years the LGA program was seen as an investment, and it was an investment that paid off. We had a robust economy, not just in part of the state, but in the entire state, with outcomes that were positive for businesses and cities everywhere. This policy values strong rural cities and helps rural businesses survive even in tough times. For the first time in years we appear to have consensus. Now is the time to take action to ensure that Greater Minnesota continues to thrive.


Randy Kehr is the executive director of the Albert Lea-Freeborn County Chamber of Commerce.