Minneapolis faces three very different outcomes regarding Local Government Aid, depending on who wins the Nov. 2 gubernatorial election.
Each candidate has a different take on how to allot money to cities while also addressing Minnesota’s $5.8 billion deficit over the next two years.
LGA is state-distributed money that funds city services and has been in place since 1971.
Tom Emmer, the Republican nominee, said he would cut aid should he be elected, while DFLer Mark Dayton would fully fund cities using the current LGA formula. Tom Horner, the Independence Party nominee, has said he would continue aid, but change the formula.
Minneapolis is a net contributor to the state, meaning it generates more money, primarily in sales tax, than it gets back in aid, Mayor R.T. Rybak said. For every dollar Minneapolis sends to the state, it receives about 20 to 25 cents back.
“For many years there has been a partnership betweencities like Minneapolis and the state,” Rybak said. “That partnership has been radically changed under Gov. Pawlenty, who slashed aid to cities while still taking significant amounts from local
Rybak said he wasn’t sure what was going to happen next year.
The current budget proposal for Minneapolis assumes that the city will receive all of the aid promised — $87.5 million — from the state. Minneapolis has received less aid than promised the past three years.
Should that happen again, Rybak said the city had a contingency plan that would make several cuts, including repaving streets, which he said is long overdue already.
He stressed he would minimize cuts to public safety as much as possible but said “no part of the city could be spared [from cuts].”
“I understand the state is under financial challenge,” Rybak said. “But we also need somebody who can be a partner in reinventing government so that we can continue delivering services, even when we know everybody has less money to spend.”
A broad tax base
Emmer’s proposed budget calls for roughly $700 million in cuts to LGA funding and a focus on communities that don’t have a broad property tax base.
“[LGA] has morphed into … a pot of funds, a majority of which go to a few larger cities, and it’s become a political slush fund,” said Carl Kuhl, a spokesman for Emmer.
He said that cities such as Minneapolis have the broad tax base to provide services and should not receive as much aid.
“Minneapolis does have the resources to [provide basic services],” Kuhl said. “They’re spending money in other areas that may not be as high a priority as police, fire and other infrastructure.”
Much of the LGA funding should go to cities outside the metro area, where many cities are seeing a decline in population and property tax values, he said.
Kuhl said Emmer believes the money cities earn should remain there, as officials in communities typically know more about what their constituents need than the state and federal government do.
“There should be more money kept in the local communities — period,” Kuhl said.
Dayton’s full support
A strong supporter of LGA, Dayton wants to bring funding up to its promised amount.
This would be funded, like the rest of Dayton’s budget proposals, by creating a new tax bracket for individuals who earn more than $130,000 a year and couples who earn more than $150,000 a year. Dayton’s revenue proposal also includes raising money through a new property tax bracket of 2 percent on homes worth more than $1 million and opening a new state-owned casino.
“Mark wants to protect the services that make Minnesota great,” said Katharine Tinucci, a spokeswoman for the Dayton campaign.
She said Dayton believes cities cannot take any more cuts to services and that cities like Minneapolis should see full LGA funding if Dayton were elected governor.
A new formula
Horner wants to fund LGA fully, however he wants to make changes to the formula that determines the aid.
“Over the last several years there have been significant cuts to LGA — real cuts, not just nominal cuts — and those cuts … have had a direct result” with bad consequences, Horner said.
Beyond LGA, he said another way to get more money into the hands of cities is to allow them to pay no sales tax on items they purchase.
Horner said a recent survey by the Coalition of Greater Minnesota Cities showed that 40 percent of member cities had cut from basic services including fire and police departments.
“Mayors and city council members, in most communities [that have made cuts], have cut fire and police and other core services because they’ve been backed into a corner,” Horner said. “They have no alternatives.”
Horner said LGA has to be reformed to work for large cities like Minneapolis, suburbs and small towns across the state.
“We can’t pit one community against another.”
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