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Cities debate proposed cuts to local government aid
by Lorna Benson, Minnesota Public Radio
February 11, 2003

Officials in cities around Minnesota are concerned about a recommendation from the state auditor that local government aid to cities be cut by 42 percent. Some cities depend on the annual state aid to pay for essential services. Auditor Pat Awada claims that LGA money is often used for services she terms non-essential, such as libraries and parks. Other cities say the LGA formula should be reworked to be more fair.

St. Paul, Minn. — Minnesota Auditor Pat Awada is recommending a 42 percent cut in local government aid to cities. Awada said Monday the state could erase nearly 12 percent of its $4.2 billion deficit in fiscal years 2004-05 by cutting the aid, also known as LGA. Last year, the state spent $565 million on LGA. The proposal would cut aid to 103 cities.

Awada, a Republican, argues 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.

Minneapolis, St. Paul and Duluth, three of Minnesota's four largest cities, would bear two-thirds of the cuts.

The mayor of St. Cloud, John Ellenbecker, takes issue with Awada's definition of essential and non-essential services. He says his city would lose up to $7 million if the cuts went through.

The Municipal Legislative Commission has a different take on the necessity of LGA. The commission represents 11 Twin Cities suburbs which receive little or no LGA. The organization's Tom Poul says his group would like to see the LGA formula changed to make it more fair.

MPR's All Things Considered host Lorna Benson spoke to Ellenbecker and Poul.

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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