New LGA proposal would benefit Austin, greater Minnesota

Published 10:35 am Wednesday, March 20, 2013

A new Local Government Aid proposal before state legislators should fairly distribute aid to greater Minnesota cities, including Austin.

The proposal, which simplifies the LGA formula while still keeping older city housing stock in mind, will go before the House of Representatives Property Tax Division today.

Officials from the Coalition of Greater Minnesota Cities are lauding the bill, which ensures smaller communities across the state will still have funding.

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Austin officials agree the proposal would benefit the city in the long run, as LGA payments would have built-in inflation adjustments starting in 2014.

“We’d get increases in future years until we met a maximum need,” Finance Director Tom Dankert said. “There does not show for us to have any reductions in future years.”

Many local government officials across the state were concerned with the first LGA proposal Gov. Mark Dayton introduced earlier this year, which would temporarily boost LGA funding for a short time before decreasing aid to cities like Austin. Under the new proposal, Austin would receive steadily increasing funding over a period of years. The new proposal still calls for an extra $80 million set aside for LGA.

Austin heavily relies on LGA, as it makes up almost half of the city’s general funds. The city received about $7.1 million this year, and Dankert said it would likely be decades before the city would reach its maximum LGA funds based on need, which is estimated at about $10 to $11 million.

Rep. Jeanne Poppe, DFL-Austin, said she supported the new proposal’s efforts to ensure greater Minnesota cities receive funding.

“We’ve been great beneficiaries of local government aid because we have old housing stock,” Poppe said, referring to the formula’s reliance on housing data from the 1940s through the 1970s throughout the state.

The proposal will likely be rolled into the House Democrats omnibus tax bill, which Poppe said may include tax and revenue increases in order to fund measures like LGA and school district repayments.

“We really have to figure out that we want to invest in Minnesota, and if we’re going to invest, then we’re going to have to raise revenue,” she said.