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State auditor proposes major cut in local government aid

St. Paul, Minn. — (AP) - Republican State Auditor Pat Awada is recommending a 42 percent cut in local government aid to cities, arguing that the program has subsidized excessive spending and lower taxes for certain cities at the expense of others. In a special report released by her office Monday, Awada divided all spending by cities between essential and nonessential services. She found higher levels of spending on nonessential services, which include such things as parks, libraries and anti-poverty efforts, among those that receive more state aid.

She defined essential services as general government, public safety and roads.

"Simply put, it's pretty clear that the more local government aid you get, the more you spend," said Awada, a former mayor of Eagan, which receives almost no LGA. "It has rewarded and encouraged spending."

She said her office considered recommending eliminating the program entirely, but decided it was politically unfeasible. The proposal would cut aid to 103 cities.

John Sundvor, a lobbyist for the Coalition of Greater Minnesota Cities, said if enacted, such cuts would be mean a combination of service reductions and property tax increases for most cities outside of the Twin Cities metropolitan area.

"It would mean a major devastation to the regional centers in Minnesota," he said, noting that cities such as Austin, Worthington, St. Cloud and Rochester fund services including libraries, airports and hospitals that surrounding communities depend on.

He said that if the budget is balanced through large cuts in LGA, it would hurt less-wealthy cities more.

"We're saying everybody should participate," he said.

Gov. Tim Pawlenty is expected to outline next Tuesday his plan to cut more than $4.2 billion from the budget for the next two years. He delayed the announcement by a week.

Awada's study compared only cities with populations over 2,500 and she argued that smaller cities should be spared cuts.

The state paid about $565 million in LGA for 2002, about 4 percent of the state's total general fund budget. Local government aid was created in 1971, essentially to guarantee that people wouldn't be driven out of certain areas of the state - dominated by smaller, older and poorer cities - because local property taxes became so high.

The plan would cut about $244 million, based on 2002 numbers.

The system was overhauled in 1992 to account for changes in demographics, but all the cities receiving money were grandfathered in at previous levels.

These days, the state considers four factors in setting a city's aid: percentage of homes built before 1940, percentage of commercial/industrial property, population decline over the last decade and population.

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