Guest Column
In the run-up to the Legislature’s deliberations on how to best fix a $4.56 billion projected budget deficit, Local Government Aid has been vilified as a black hole, a worthless program that exists only to suck wealth from state government.
Detractors of the program would have you believe that LGA has become an archaic program that has long outlived its usefulness. They contend that its intent and effectiveness have been corrupted by years of political mischief.
Their propaganda campaign clearly is designed to validate a course of action many people would otherwise find objectionable. They are attempting to justify either repealing or crippling a program that for years has served taxpayers in Minneapolis, St. Paul and greater Minnesota quite well.
Legislators from some of the Twin Cities better healed suburbs have never been able to accept the notion of sharing some of their wealth with less fortunate cities and suburbs.
It is a political belief that groups Minnesota’s cities into collections of haves and have-nots. It suggests that Minnetonka, Bloomington, Eden Prairie, and Eagan should have better police and fire protection because the four cities have more property wealth – or economic development – than other cities. The argument embodies a public policy objective that is based on self-interest, a concept that is alien to Minnesota.
Local Government Aid was created to help cities with lower property wealth provide a basic level of services at a rate local taxpayers could afford. Over the years, the state revenue sharing program has been instrumental in holding down property taxes in low-wealth communities.
Without the Local Government Aid program, property taxes in cities throughout greater Minnesota would be sharply higher today than those in the Twin Cities. Rural taxpayers would be paying more for fewer services.
If city councils were to recapture the revenue lost through elimination of the Local Government Aid program, property taxes in Detroit Lakes would have to be increased 103 percent. In Crookston, the property tax increase required to offset the loss would be 200 percent. A 227 percent increase would be needed in Willmar to offset the LGA loss, and 649 percent increase would be required in Bejou..
Taxpayers in Bloomington, Edina, Eden Prairie and Minnetonka, meanwhile, would see no increase in their property taxes if suburban legislators succeeded in repealing the Local Government Aid program. By reducing or eliminating Local Government Aid to help solve the budget crisis, the governor and legislators would be ordering those cities and taxpayers that got the least benefit from the 2001 property tax reforms to pay for the damage created by spending almost $1 billion on property tax relief for expensive homes, businesses and apartments during a recessionary period.
City officials generally agree that they have a role to play in solving the state’s budget crisis. But everyone must be involved in the solution, not just the poor. We do not accept the unfair proposition that the solution should be based on sacrifice in low-wealth cities, while high-wealth communities enjoy the benefits of tax reform.
Local Government Aid must not be a vehicle used to solve the budget crisis. Reducing or eliminating the aid program undermines rural Minnesota’s economy by weakening the viability of its cities. We do not promote economic development with service cuts and tax increases. We do not improve Minnesota’s economy by destroying the state’s rural economy.
That is not good public policy. -- Detroit Lakes Mayor Larry Buboltz,
President, Coalition of Greater Minnesota Cities
