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Pioneer Editorial: Dayton will keep local aids intact

The Republican-led Minnesota Legislature took the first step in the budget battle by passing a bill calling for $1 billion in cuts, which Gov. Mark Dayton, a Democrat, promptly vetoed as providing a piecemeal solution to a $6.2 billion problem.

But the governor also vetoed the bill because it relied too heavily on state aid cuts to local government, a pot of money which has been decimated over the years in an attempt to balance the state budget without raising revenue.

Gov. Dayton, in his veto letter, notes that reduced state aid -- Local Government Aid in the case of .cities -- leads to higher property taxes. The state Revenue Department estimated that the vetoed GOP bill would increase property taxes by$428 million.

"The property tax is the most regressive and unfair of all state and local taxes,: the governor wrote. "Middle-income families pay four times more a percentage of their incomes in residential property taxes than the wealthiest Minnesotans." The same is true for businesses in property taxes versus corporate taxes.

Gov. Dayton last week underscored the importance of LGA to property-poor cities by leaving it untouched for the upcoming biennium.

"Local Government Aids are crucial to services like police and fire, plowing and street maintenance. Continuing these payments is crucial to preventing huge property tax increases -- the most regressive and unfair of all state and local taxes. The Revenue Department estimates that every dollar the state cuts in LGA causes a 67 cent increase in local property taxes," according to the statement outlining the governor's budget.

The governor proposes $3.47 billion in local aids and credits, with no reductions to local aids and credits. Steady funding levels mean:

E Local governments will have at least two years of stable state payments, and less pressure to increase regressive property taxes.

E Accountability for increased property taxes will rest squarely with local officials.

E The state budget will be honest and transparent about where it raises tax revenues, rather than exporting tax increases to local governments.

State government under the Pawlenty administration has wrecked havoc with local government budgets, as LGA was targeted again and again, forcing up local propety taxes. By keeping LGA stable, local government budgets can become stable and have predictable funding.