Local Government Aid could return to its highest amount since 2002 under legislation in the Minnesota House.
Under the bill, LGA would increase from 534.4-million dollars to 564.4-million dollars by 2019, which would stop to the downward trend in appropriations over the last 15 years.
Representative Clark Johnson (D-North Mankato) says cities like Saint Peter that have low property values, LGA is used to make sure essential services continue to be provided.
“I believe up to 40-percent of the budget in Saint Peter depends on that. It’s absolutely essential that Local Government Aid be stable. During the (Tim) Pawlenty cuts back ten years ago, Local Government Aid was the first to get cut. That resulted in cut services and higher property taxes across rural Minnesota,” said Johnson. “But we still haven’t returned to the levels of years and years ago before those cuts. So that 30-million dollars is to restore it where it was.”
The increase in aid to cities would likely reduce property tax levies by a portion of the increase, according to a Department of Revenue report.
Representative Bob Gunther (R-Fairmont) says smaller communities are desperate for anything they can get to pay for police and fire departments and build new infrastructure.
“If they can’t afford to have them because they don’t have enough money or population, that’s what the bond LGA is for. For example in St. James, 41-percent of their budget, approximately, is Local Government Aid. Well there’s a lot of reasons for that, income levels, and so forth, of the people there and the taxes that they bring in dictate that they can’t afford a lot of things. So they have a large LGA factor.”
A similar bill in the Senate is still awaiting further action by the Taxes Committee.