Mayors of state's largest cities warn against LGA cuts

by Laura Yuen, Minnesota Public Radio

St. Paul, Minn. — The cities of Minneapolis, St. Paul and Duluth warn that a Republican proposal to wean them off state aid would devastate their communities.

Both the GOP-controlled House and Senate this week passed a tax plan that would cut the amount of local government aid that cities across the state are certified to receive this year by 26 percent or $137 million.

Republicans say the effort is needed to balance the state's budget deficit. But critics say it's a politically charged move aimed at crippling urban centers -- which are largely governed by Democrats.

DFL Gov. Mark Dayton said he'll reject the proposal, which he believes would amount to higher local property taxes that have already been soaring.

LGA was part of a series of tax reforms in the '70s known as the "Minnesota Miracle." It was designed to pay for basic services -- from parks to public safety -- that cities with greater needs couldn't cover through property taxes alone. The idea was no matter where you lived in Minnesota, your quality of life would be consistent.

But the philosophy on LGA is evolving. Republican Rep. Linda Runbeck of suburban Circle Pines told her colleagues in the House this week that she sees LGA as, in her words, "very discretionary."

"It serves no known specific government purpose, and that is why we need to look at it carefully, and ask: 'Are we getting our fair value for it?' " Runbeck asked. " 'Is it a buck well spent?' It's time to keep ratcheting it down, keep looking at what we're getting for our money, and keep asking these local governments to start sharing, start cooperating, and start living within their means."

Duluth Mayor Don Ness says his city is doing that -- to the point where services are nearly skeletal. As LGA has waned over the past decade, Ness says Duluth has reduced library hours, closed community pools and eliminated a senior bus program.

"We've taken all these steps to focus on core services, and we're proud of the fact that we now have budget stability," Ness said. "And yet, because of the inability of the state of Minnesota to address their own problems, they're now looking to make us the scapegoat. They're now looking to bring more pain to the local level and force us to cut these services that people care about."

Duluth stands to lose $10 million this year. Ness said that's a big piece of his city budget; the city typically spends $5 million on parks and libraries combined.

In St. Paul, Mayor Chris Coleman said the proposed $28 million cut in LGA and market value homestead credits would mean layoffs and higher taxes. And Coleman said that's just the beginning.

"If the leadership of the Republican Party wants to come and look through my budget, tell me how many cops they want me to lay off, tell me how many fire stations they want me to close, tell me how many libraries I'm supposed to close. The fact of the matter is they're governing in ignorance. They don't know what we do. They have a mythology of what cities do. They have a mythology of where we spend our money."

Coleman said his city and the other DFL strongholds of Minneapolis and Duluth are being unfairly targeted.

The Legislature's plan would phase out LGA payments to Minneapolis, St. Paul, and Duluth by 2014 -- but omits fast-growing Rochester. The GOP is targeting so-called "first-class cities" -- which are defined as having populations of more than 100,000. Rochester meets that threshold today, but Republican leaders are using 2008 levels to make their calculations.

Last year, Rochester received about $5 million. Duluth received more than five times as much.

In Minneapolis, where LGA makes up nearly a quarter of the city's general fund, Mayor R.T. Rybak said the cuts would hurt the middle class. He said the city has trimmed its work force by 10 percent over the past decade.

In response to shrinking LGA payments over roughly the past decade, the city last year developed a priority list of things that would go first if more cuts to state aid came. City paving projects would be among the first items on the chopping block. But the city could also be forced to lay off positions in the police and fire departments, depending on the magnitude of the LGA cuts, said City Council Member Betsy Hodges.

Under the Legislature's plan, the Twin Cities and Duluth would see their checks from the state whittled by 25 percent annually over the next four years until it disappears completely. All other cities would receive this year what they got last year -- or what they're certified to receive this year -- whichever amount is less.

Republican House Speaker Kurt Zellers rejects the argument that the plan would amount to higher taxes. He says local communities have chosen to raise property taxes even in years with a budget surplus.

"So if someone goes out and raises property taxes because they have either the same amount of money or a perceived loss in the increase, I would say it's on the local officials -- whether it by city, county, mayor, whatever. The argument doesn't fly anymore."

The prospects of the bill are unclear, as the budget battle remain deadlocked leading up to Monday's deadline for adjournment.

Broadcast Dates

• Morning Edition, 05/20/2011, 8:25 a.m.