There was another good report from the Citizen’s League on the current status of the state’s Fiscal Disparities program in the Pioneer Press today. The Star-Tribune had this to say about the same report in their March 25th edition. The annual report from the Citizen’s League again casts some doubt on the effectiveness of the program. You can see a copy of the report by cloicking this link: Minnesota Journal.
Make no doubt about it: the fiscal disparities program is effective in incenting certain behaviors. For example, if St. Paul did not receive the revenue it receives through the fiscal disparities program, they would have to tax their own citizens for the revenues collected and spent by their city government. Without a doubt, St. Paul spends more today than it would spend without the program.
Fiscal disparities also can incent some cities, like the examples of Andover and Lake Elmo, to develop into large lot residential subdivisions because there really is little incentive for a city, froma tax standpoint, to plan and allocate land for industrial development. Why? Because other cities gain more in tax revenue from an industrial development than the city that hosts the development gets.
Let me restate that. Other cities, collectively, in the Twin Cities metro area get more tax revenue benefit from the Eden Prairie Center, for example, than does the City of Eden Prairie. The same can be said about our other major tax payers in Eden Prairie, or Plmouth, or Bloomington, or any other “net contributing” community.
Strange, but true. Strange, but bad, if you ask me.
