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STATE AID AND CITY FINANCE <br /> <br />LEGISLATIVE ACTIVITY <br /> <br />Local Goverdment Aid (LGA) Formula <br /> <br />The Legislature has changed the method by which local government aid (LGA) will be paid to <br />cities beginning in fiscal 1994. The new formula eliminates equalization aid and the city portion <br />of d;sparity reduction aid, folding them into LGA. For 1994, each city will receive a base <br />amount of LG~ equal to its t 993 LGA, equalization aid, and disparity reduction aid. In addition, <br />total LGA distributed to cities will increase by $8.75 million for fiscal 1994. <br /> <br />The table belSw compares the 1993 statewide city aid distributions to the estimated 1994 aid <br />distributions. <br /> <br />FUNDING FOR STATE AID TO CITIES <br />1993 AND 1994 <br />(IN THOUSANDS) <br /> <br />Program <br /> <br /> 1993 1994 <br /> <br />$ 288,037 $ 330,637 <br />20,011 Repealed <br />13,854 Repealed <br /> <br />$ 321,902 $ 330.637 <br /> <br />City LGA <br />Equalization Aid <br />City Disparity Reduction Aid <br /> <br />Total City Aid <br /> <br />Percent increase 2.71% <br /> <br /> I! I <br /> <br />The City of R:~msey received LGA, equalization aid, and disparity reduction aid of $283,027 <br />in 1993. The}City's LGA is projected to be $292,751 in 1994, an increase of 3.43%. <br /> <br />Homestead arid Agricultural Credit Aid (HACA) <br /> <br />The householdi growth adjustment for homestead and agricultural credit aid (HACA) has been <br />eliminated beg~jnning in 1994. While HACA paid to cities will not be decreased from 1993 <br />levels, future i~creases for growth in the number of households are eliminated. This change will <br />cost Minnesota cities an estimated $2.5 million in 1994, with rapidly growing cities being the <br />hardest hit. <br /> <br />Local Government Trust Fund <br /> <br />The property t~x targeting program, which costs approximately $21.5 million for the biennium <br />and was being ,funded by the state's General Fund, will be paid from the Local Government Trust <br />Fund (LGTF) ,beginning in fiscal year 1994. Also, the renters' property tax refund program, <br />which costs ap.~roximately $177 million per biennium, will be funded by the LGTF effective in <br />fiscal year 1997. These changes may reduce the amount of funds available to pay future local <br />government aid to cities. <br /> <br />-1- <br /> <br /> <br />