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Cities plead for fix in local government aid
by Michael Khoo, Minnesota Public Radio
July 14, 2004

Mayors from across Minnesota say time is running out for Gov. Tim Pawlenty and lawmakers to correct an error that's left most cities guessing about how much state aid they'll receive next year. A technical glitch has created confusion over how to interpret the aid law -- and city officials say that could lead to budget headaches and unnecessary property tax hikes. Lawmakers and the governor all agreed the law is defective -- but disagree over how and when to call a special session to fix the problem.

St. Paul, Minn. — In 2003, lawmakers and Gov. Pawlenty reformed the way state government distributes aid money to Minnesota cities -- but they unintentionally let a stray paragraph from the old law remain in the new language, creating a bit of confusion.

Last year, Pawlenty disbursed more than $400 million based on legislative intent, rather than the letter of the law. But lawmakers failed to correct the mistake this past spring, and Pawlenty says he now feels obliged to follow the law, defects and all.

For Minneapolis, that could mean a loss of $12 million. For St. Paul, it could be more than $3 million. St. Paul Mayor Randy Kelly says that will come on top of cuts previously made.

"Losing significant portions of local government aid is something that I can certainly understand, as part of extraordinary actions to combat a historic state budget deficit," Kelly says. "But I absolutely cannot understand it when it results from the continuation of a technical drafting error."

Kelly and other mayors say lawmakers only need to remove the misplaced paragraph -- and that they could do so quickly and easily in a short special legislative session. The fix is urgent, they say, because cities will begin setting next year's budgets in September. And with the confusing law dangling over their heads, they say they'll need to prepare a different budget for each possible scenario and consider otherwise unnecessary tax increases.

Kelly says he'd propose a 5 percent property tax hike in St. Paul. It would be the first time the city's property tax has risen in 10 years.

Pawlenty spokesman Dan Wolter says the governor is aware of the problem -- and he says Pawlenty is willing to call a special session. But Wolter says the governor has little hope that lawmakers will act promptly if they don't have pre-set ground rules. And he says Senate Democrats, in particular, are unwilling to accept a clear deadline for completing their work.

"We keep getting the same thing back, 'Sure we want to have a special session, but we want to have a summer full of legislators in St. Paul debating before we do anything.' And we just don't have -- after this session in particular -- we don't have confidence in the process enough to let that happen," says Wolter.

The mayors say if a special session is unlikely, the governor should act as he did last year and disburse money according to legislative intent, rather than the law's exact wording. Some Senate Democrats have advanced a similar argument.

DFL Assistant Senate Majority Leader Ann Rest of New Hope says a special session would offer a cleaner resolution. But Rest says Democrats don't want everything decided ahead of time in private.

"We are indeed committed to a process that has these items and agendas discussed in public and decisions made in public, rather than behind closed doors," Rest says. "And I would hope that we could come to an agreement on that as well."

Rest says Senate leaders are willing to discuss possible deadlines or how to define the agenda.

But Republican House Speaker Steve Sviggum says that's just a recipe for endless negotiations. Sviggum says House and Senate lawmakers have already passed several provisions in common -- including the LGA fix, restored funding for public defenders, and tougher sentences for sex offenders.

"We should be able to have a short special session on those consensus items. Republicans will support that. The governor will support that. The holdup is Democrats," Sviggum says.

The finger-pointing, however, isn't providing much comfort to city officials. Jeff Thompson, the mayor of Paynesville, says city residents will demand answers if services are cut or taxes rise because of the error.

"It's not the governor, Senate majority leader, or speaker of the House who's going to get the phone calls. It's going to be me, and the other 75 percent of Minnesota's cities' mayors and council members, whose cities are going into the 2005 budget cycle blindsided and hogtied by legislative inaction and political stubbornness," says Thompson.

Cities propose a provisional property tax levy in September. That number is finalized in December, before lawmakers could return in their next regular session to correct the drafting error.

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