Mark Fischenich
Most cities in south-central Minnesota have seen aid from the state climb back to — and beyond — the level being received before huge state budget deficits prompted steep cuts in Local Government Aid.
Although the majority of area cities are back to the more-or-less-historic level of state aid, the clamor hasn’t ebbed, however, for state lawmakers and the governor to put more money into the Local Government Aid program.
“It’s a major issue for mid-sized and larger cities,” said Rep. Kathy Brynaert, DFL-Mankato. “So, no, it’s definitely as much of an issue.”
For Brynaert’s district — made up of Mankato and a portion of North Mankato — it’s understandably a big issue because those cities are nowhere close to getting the aid they once did.
Mankato’s allocation of LGA for 2008 will be less than $7.3 million if nothing is done in a special session expected to be held in September to deal with the bridge collapse and flooding that struck the state this month. That’s down from the nearly $10 million the city was slated to receive in 2003 before $4.5 billion in red ink at the Capitol forced reductions in the LGA program and prompted budget cuts and property tax hikes in cities across the state.
And North Mankato’s aid remains $550,000 below what it was originally slated to receive in 2003.
“A lot of financial burden is being put on the property tax that would normally be shared by the state,” Brynaert said. “And LGA is a process for (reversing) that.”
Even lawmakers who represent smaller cities say they continue to hear calls from city officials for boosting LGA during the special session.
“I had two cities complain recently,” said Rep. Tony Cornish, R-Vernon Center, whose biggest cities are Wells, Lake Crystal and Eagle Lake. “But I think the complaint comes not so much from cuts than from the new formula.”
Lake Crystal, for instance, saw its aid rise to $784,000 this year — $119,000 above the pre-budget-crisis level. For next year, however, the LGA formula is causing the city to lose more than $60,000 from this year’s level. Madison Lake’s allocation, which this year finally climbed above the pre-cuts level of $132,000, is slated to drop nearly $7,000 next year — putting it back to the 2003 level.
Cornish said he couldn’t explain the complexities of the funding formula and sought information from House researchers to figure out why those cities are going backward next year.
The formula includes more than a dozen factors including number of pre-1940 housing units, population decline from 1996 to 2006, number of vehicle accidents per capita, the percentage of commercial/industrial property and average number of people per house.
Sen. Kathy Sheran’s district includes a mix of larger cities still struggling with state aid cuts and smaller towns that are at their highest levels ever. But Sheran, DFL-Mankato, said organizations representing both small cities and large ones are pushing hard for increases in LGA. Even school officials are asking the state to help cities, she said, recognizing that rising city property taxes are making it difficult for voters to agree to school ballot measures.
“They see there’s a relationship between that and the schools not being able to pass school referendums,” Sheran said.
North Mankato Mayor Gary Zellmer said interest is not waning among city officials for restoring LGA funding, even among smaller cities.
“They may be back where they were, but they’re not back where they should be,” Zellmer said.
Even as smaller cities have seen the cuts restored, the overall funding for the program remains more than $100 million below the pre-cut level of $587 million. Zellmer was one of several mayors who wrote a letter to the Minneapolis Star Tribune asking lawmakers and the governor to address the shortfall during the proposed special session.
Zellmer, active in the Coalition of Greater Minnesota Cities, said the organization is attempting to work with Minneapolis and St. Paul — the biggest losers in the LGA cuts — to ramp up the pressure on state officials.
The Legislature passed a tax bill in May that included a $70 million bump in LGA, although it was for 2008 only. Gov. Tim Pawlenty vetoed the bill, saying he objected to a different provision that would have required estimates of the impact of inflation in state budget forecasts.
“What we’re stressing is the tax bill was passed and agreed to by pretty much everybody, except for that one little provision,” said Zellmer, who wants the inflation provision dropped and the bill repassed.
City leaders also would like to see the funding formula changed so that cities don’t see swings in state funding that are difficult to predict. He’s less optimistic that lawmakers will tackle that one because every change in the formula creates winners and losers.
“None of ’em want to touch it,” Zellmer said.
