Our Opinion: Legislators should rethink LGA funding
Cities throughout greater Minnesota are imploring the Legislature and Gov. Mark Dayton to return local government aid to 2002 levels. Brainerd is no exception.
Brainerd receives $4,104,000 in LGA, which is about 27 percent of its revenue. The House and Senate Tax Conference Committee's proposal for next year calls a statewide increase of $6 million, of which Brainerd would see about $35,000 more in LGA. The 2014 LGA appropriation to Minnesota cities that qualify is $45.5 million less than it was in 2002.
In a letter to area legislators, Mayor Ed Menk and City Administrator Jim Thoreen are joining the chorus of city officials throughout Minnesota asking for a return to 2002 LGA funding levels to undertake projects they've identified as needs, not wants—buying firefighting equipment, building a salt/storage building, meeting technology demands and developing a plan for more collaboration with other units of government.
While the merits of those projects can certainly be debated, one point that Menk and Thoreen make cannot—Brainerd is not wealthy in terms of property values and LGA is one way the city can avoid raising its property taxes while maintaining and improving services it provides to its residents.
For the uninitiated, LGA was enacted by the state in 1971 as part of a number of tax relief programs known as the "Minnesota miracle." Its purpose is to provide assistance to cities for services and infrastructure and to hold down property taxes. It has been distributed based on a city's revenue needs and its ability to pay.
Arguments can be made about how Brainerd got itself into a position that a quarter of its revenue is dependent on the state, but the reality is unless a miracle happens regarding property values, Brainerd will be in this position for the foreseeable future. For that reason, we're in favor of the state distributing more LGA to the cities that need it, including Brainerd.
Many will remember in 2009 the city was looking at what services should be cut or reduced under the threat of an LGA reduction. The ideas floated—including the elimination of the full-time firefighters and elimination of staff at the parks department—didn't sit well with many residents. It's a scenario worth avoiding.
The Coalition of Greater Minnesota Cities reported city revenues continue to decline while state revenues are increasing. LGA accounts for only 2.2 percent of the state's general fund and lawmakers, armed with a budget surplus, are looking at various forms of tax relief. We hope legislators will consider increasing LGA as one of those options.
If cities like Brainerd weren't doing their best to look for ways to cut expenses and hold property taxes down, we'd be against increasing LGA. But as it is, this is the best tool available to keep property taxes down while maintaining services residents expect.