Projection shows city will lose LGA in 2014
BEMIDJI – The city of Bemidji could face more budget challenges next year if state projections hold true.
An initial estimate from the Minnesota Department of Revenue released last month shows Bemidji will lose about $135,000 in Local Government Aid next year under current law.
Simply stated, “It certainly wouldn’t be helpful,” city finance director Ron Eischens wrote in an email.
Bemidji collected $2.9 million in LGA from the state in each of the last three years. In 2002, the city received $3.8 million in LGA.
Next year will be the first time since 2007 that all cities’ amounts are based off of the LGA formula, which measure’s a city’s need and ability to pay for services, according to the League of Minnesota Cities.
“It should be a pretty close estimate as to what would happen if the Legislature did nothing to LGA during the 2013 session,” Gary Carlson, a lobbyist with the league, said of the state’s LGA projections. He noted that this legislative session, in which taxes and LGA will be examined by lawmakers, has only just begun.
“As a city we will certainly keep the potential loss of LGA in mind when we begin our budget discussions this spring,” Eischens said. “By then we should have an update on LGA for 2014.”
LGA accounts for about a third of Bemidji’s general fund, which pays for essential services like fire and police protection.
Cities were expecting about $587 million in LGA in 2003, a number that has since declined to about $427 in 2013. Cities commonly blame LGA cuts for property tax increases and slashed services. The Coalition of Greater Minnesota Cities advocates adding an extra $100 million to the LGA pot.
Lawmakers are poised to look at potential LGA reform this session. Two different groups have been taking a look at the LGA system and Gov. Mark Dayton’s budget proposal, which is expected to be revealed next week, will address tax reform and LGA.
“I’m sure we’ll have discussions with our legislators about (LGA),” city manager John Chattin said.