Agenda - Council Work Session - 12/07/2010

Home

by allowing the state to decide the appropriate level of local taxation and services, despite varying local conditions and circumstances. I -C Restrictions on Local Government Budgets Metro Cities opposes the imposition of artificial mechanisms such as valuation freezes, payroll freezes, reverse referenda, super majority requirements for levy, or other limitations to the local government budget and taxing process. I -D Local Government Aid (LGA) The LGA program, originally enacted in 1971, was created with the goals of providing property tax relief, and ensuring a sufficient level of revenues for local government needs. Metro Cities supports Local Government Aid (LGA), the only form of general purpose state aid to Minnesota cities, as a means of ensuring that a11 cities are able to provide basic public services without over - burdening the property tax. In response to the state's budget deficits, LGA has been continually reduced. These reductions have fallen disproportionately on metropolitan area communities. Overall, reductions to local government aids and credits have been greater on a percentage basis than reductions made to other areas of the state budget. The level of reductions and unallotments and the unreliability of funding from year to year undermine the goals of the LGA program. Metro Cities strongly opposes the continued reductions of Local Government Aid for the purpose of balancing state budget deficits. Metro Cities supports the restoration of LGA, adequate funding of the LGA program and the continuation of LGA to those cities whose public service needs and costs exceed their ability to pay. -E Local Government Aid Reform Metro Cities supports reforming the LGA program and distribution formula to address geographic disparities, the issue of volatility, and the needs of metro area cities not addressed through the current formula and distribution. As a result of modifications and reductions to LGA, aids to metro area cities have been reduced on a per capita basis by almost 50 %. Metro Cities supported the formula modifications and LGA increase in 2008. lHowever, the LGA formula continues to be geographically disparate and volatile, and the level of funding inadequate to support the goals of the LGA program. Metro Cities supported the establishment of the LGA study group, passed by the 2008 Legislature, to conduct an analysis of the LGA program that includes an examination of existing geographic disparities in the distribution of Local Government Aid, an analysis of current need and capacity factors and consideration of alternative factors, an analysis of 2 Metro Cities