Not many of you probably catch the evening news on Channel 6 – KAAL TV. That’s because it’s from Albert Lea. I don’t happen to watch that news either, but I do occasionally check up on their reporting via their online service. Here’s an interesting story they put on their website just yesterday about the financial plight of Minnesota cities and the potential impacts of a quirk in Local Government Aid that cities receive from the State.
Fate of Local Government Aid hangs in the balance.
If you live in Eden Prairie, here’s how this issue effects your city government. If the Governor certifies a distribution of Local Government Aid (LGA)under what people are calling the “letter-of-the-law” (let’s call it LOL, for short) formula, Eden Prairie will receive a LGA payment from the State of $172,400 in 2005. Our budget for 2005 was set last year with the assumption that we would receive zero LGA, so receiving $172,400 in LGA would be a nice surprise – especially considering that we received zero LGA in 2003 and 2004.
If you live in Albert Lea, here’s how this issue effects your city government. Albert Lea received $5,657,814 in LGA in 2003. They planned to receive $5,585,980 in 2005 due to LGA cuts implemented by the State Legislature during the 2003 legislative session. However, if the Governor goes forward with implementing the LOL distribution of LGA, Albert Lea will receive $5,501,364. Still a lot of money, but $84,616 less than they were expecting to receive in 2005, and still $156,450 less than what they received in 2003.
LGA is a very big factor in the budgets of outstate cities. In Albert Lea, for example, the city received $5,657,814 in LGA in 2003. That’s a per capita contribution from the State government to the City government there of $308.22/person. In the same year that Albert Lea received $5,657,814 in LGA, it taxed the property of its own citizens $1,626,460 to fund its municipal General Fund operations. That’s a local taxing effort of $88.60/person.
In Eden Prairie, for example, the city received zero in LGA in 2003. That’s a per capita contribution from the State government to the City government in Eden Prairie of, um, zero/person. In 2003 Eden Prairie taxed the property of its own citizens $24,911,257 to fund our local municipal operations. That’s a local taxing effort of $453.74/person.
There are a lot of issues the swirl around the political debate on LGA. It’s a difficult subject to get your arms around. In short, Albert Lea will continue to get substantial LGA, regardless of how it is distributed in the future. Eden Prairie will continue to get minimal (or zero) LGA, regardless of how it is distributed in the future.
It is an emotional subject in many cities in our state because many cities have a high dependence on LGA. If their LGA goes down, they must increase their own property taxes or cut their own services. Neither option seems fair or equitable to them.
We are fortunate in Eden Prairie not to be dependent on LGA. Eden Prairie citizens pay the freight for the City services they receive.
