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Coalition of Greater Minnesota Cities: Make LGA an election issue

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News Bemidji, 56619
Bemidji Pioneer
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Bemidji Minnesota P.O. Box 455 56619

The Coalition of Greater Minnesota Cities wants cities to budget for the amount of state Local Government Aid for 2011.

As is, without any legislative changes or further gubernatorial unallotments, Bemidji is slated to get $3.37 million in the state aid for 2011.

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"We encourage cities to budget as though you're getting it," Brad Peterson, lobbyist with Flaherty-Hood, which represents the Coalition of Greater Minnesota Cities, told Bemidji City Council members Monday night.

"Clearly the need for LGA remains," he said. "The uncertainty is at what funding level. You should have backup plans, such as money in your capital expenditure budget even it you don't use it."

LGA is used by cities to supplement police and fire budgets and also quality of life budgets, such as libraries and parks.

"We cannot send the message we can go without LGA," Peterson said.

Local Government Aid has been at the forefront of lobbying for the CGMC for years, ever since gubernatorial candidate Tim Pawlenty pledged to uphold LGA and then, as governor, has proposed slashing it each year he's been in office.

The CGMC offered several plans in 2010 to keep LGA but raise revenue elsewhere. One idea, Peterson said, was to extend the state sales tax to services such as body piercing and tanning. That would have raise $60 million.

"IT was offered as a vehicle to talk about LGA," Peterson said, adding the proposal didn't go anywhere.

"A more serious offer was with the property tax equity program," he said."It provides for taxpayers paying the same for services in each part of the state."

CGMC proposed putting the metro transit system back onto property taxes where it was prior to 2001, and to compensate, reduce market value credit in rural Minnesota, but leave LGA intact.

The Legislature proposed three budget bills, with one solving a third of the $960 million budget shortfall by taking $52.5 million from LGA and another $52.5 million from state aid to counties. Aid cuts to cities would first come from market value credit and then from LGA

"We didn't support, but we didn't reject it," Peterson said.

But the Minnesota Supreme Court ruling that negated Pawlenty's 2009 unallotments put the Legislature back to settling a $2.7 billion shortfall.

CGMC lobbied that Pawlenty's unallotments be ratified but not made permanent, which then would have affected baseline budgets, Peterson said. As a result, the $537 million LGA base for 2010 went to $558 million for 2011,rather than the $338 million under the governor's budget, Peterson said.

In the latest moves, at the end of the 2010 session, Bemidji lost another $218,000 in state aids to cities -- in LGA and market value credit cuts, Peterson said. That left LGA to the city of $2.7 million for 2010.

Under Republican Gov. Pawlenty's budget, Bemidji would have lost $581,000 -- all of it LGA. Prior to the 2010 session, Bemidji's $3.44 million in LGA was cut $485,688 by unallotment, Peterson said.

With a tax capacity rate of 40 percent, the loss of LGA would mean the city of Bemidji would have to increase its property tax levy 71 percent to maintain its current spending, he said.

With a statewide average tax capacity rate of 32 to 33 percent, cities receiving LGA have a tax rate if 41 percent and would need to raise property taxes 61 percent to maintain current spending.

"The election is a great opportunity to have this discussion," he told councilors, prompting them to raise LGA when talking to gubernatorial and legislative candidates.

"You need to ask them how they will solve a $6 billion state budget deficit, if they will raise taxes and how much, and about LGA and the state/local relationship," Peterson said.

Y bswenson@bemidjipioneer.com

The Coalition of Greater Minnesota Cities wants cities to budget for the amount of state Local Government Aid for 2011.

As is, without any legislative changes or further gubernatorial unallotments, Bemidji is slated to get $3.37 million in the state aid for 2011.

"We encourage cities to budget as though you're getting it," Brad Peterson, lobbyist with Flaherty-Hood, which represents the Coalition of Greater Minnesota Cities, told Bemidji City Council members Monday night.

"Clearly the need for LGA remains," he said. "The uncertainty is at what funding level. You should have backup plans, such as money in your capital expenditure budget even it you don't use it."

LGA is used by cities to supplement police and fire budgets and also quality of life budgets, such as libraries and parks.

"We cannot send the message we can go without LGA," Peterson said.

Local Government Aid has been at the forefront of lobbying for the CGMC for years, ever since gubernatorial candidate Tim Pawlenty pledged to uphold LGA and then, as governor, has proposed slashing it each year he's been in office.

The CGMC offered several plans in 2010 to keep LGA but raise revenue elsewhere. One idea, Peterson said, was to extend the state sales tax to services such as body piercing and tanning. That would have raise $60 million.

"IT was offered as a vehicle to talk about LGA," Peterson said, adding the proposal didn't go anywhere.

"A more serious offer was with the property tax equity program," he said."It provides for taxpayers paying the same for services in each part of the state."

CGMC proposed putting the metro transit system back onto property taxes where it was prior to 2001, and to compensate, reduce market value credit in rural Minnesota, but leave LGA intact.

The Legislature proposed three budget bills, with one solving a third of the $960 million budget shortfall by taking $52.5 million from LGA and another $52.5 million from state aid to counties. Aid cuts to cities would first come from market value credit and then from LGA

"We didn't support, but we didn't reject it," Peterson said.

But the Minnesota Supreme Court ruling that negated Pawlenty's 2009 unallotments put the Legislature back to settling a $2.7 billion shortfall.

CGMC lobbied that Pawlenty's unallotments be ratified but not made permanent, which then would have affected baseline budgets, Peterson said. As a result, the $537 million LGA base for 2010 went to $558 million for 2011,rather than the $338 million under the governor's budget, Peterson said.

In the latest moves, at the end of the 2010 session, Bemidji lost another $218,000 in state aids to cities -- in LGA and market value credit cuts, Peterson said. That left LGA to the city of $2.7 million for 2010.

Under Republican Gov. Pawlenty's budget, Bemidji would have lost $581,000 -- all of it LGA. Prior to the 2010 session, Bemidji's $3.44 million in LGA was cut $485,688 by unallotment, Peterson said.

With a tax capacity rate of 40 percent, the loss of LGA would mean the city of Bemidji would have to increase its property tax levy 71 percent to maintain its current spending, he said.

With a statewide average tax capacity rate of 32 to 33 percent, cities receiving LGA have a tax rate if 41 percent and would need to raise property taxes 61 percent to maintain current spending.

"The election is a great opportunity to have this discussion," he told councilors, prompting them to raise LGA when talking to gubernatorial and legislative candidates.

"You need to ask them how they will solve a $6 billion state budget deficit, if they will raise taxes and how much, and about LGA and the state/local relationship," Peterson said.

bswenson@bemidjipioneer.com

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Pioneer staff reports
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