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The Board considered the appropriation increase, new need formula, and transition mechanism proposals outlined in Gov. Dayton’s recommendations.
(Published Feb 25, 2013)
The League Board of Directors on Feb. 21 discussed Gov. Dayton’s local government aid (LGA) proposal and how it measures up to the League’s 2013 LGA funding and reform policies (FF-4 and FF-5 in the 2013 City Policies).
The Board considered three aspects of the governor’s plan—the appropriation increase, the new need formula, and the transition mechanisms.
Based on the League’s 2013 policies, the Board of Directors reiterated the League’s support for the governor’s restoration of previous cuts in the LGA appropriation. Although the governor’s plan does not fully restore the cuts experienced since 2002, the $80 million funding increase does represent nearly one-half of the funding lost since LGA was distributed in 2002.
The governor’s plan does not include any appropriation adjustment beyond the initial $80 million appropriation increase. The LMC Board reiterated support for the restoration of the annual inflation adjustment to the LGA appropriation per the 2013 policies.
Need factor changes
The Board discussed the existing LGA formula that has largely been in place since the 2002 legislative session and found that the existing formula needs to be updated to reflect new data and the changing circumstances faced by cities.
The Board did not support or oppose the governor’s LGA formula need factor. Instead, it reiterated the existing League policy goals that support modifications to the LGA system to make it more predictable and stable, to ensure that the formula equalizes property tax bases, to ensure that it reduces tax burden disparities among cities and between cities and townships, to recognize overburden factors, and to make sure it is based on easily measurable need factors. The Board also discussed the need to simplify the formula to make it more understandable to city officials and citizens.
The League’s Board did not support the transition mechanism included in the governor’s recommendations, which starts with the $30 per capita increase in the LGA distribution for each city that received LGA in 2013. For many cities, this initial LGA increase is phased down over the next four years as the new formula is phased in. The Board’s concerns were based on the existing League policy that supports a functioning LGA formula.
The League will share these positions with the Legislature as the Governor’s tax bill is considered in committee.
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Contact Gary Carlson
(651) 281-1255 or (800) 925-1122
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