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making financial decisions through <br />new Constitutional amendments. <br />FF -4. Funding Local Government <br />Aid <br />Issue: Local government aid (LGA) is an <br />important component in the state's property <br />tax relief system, and a critical tool to help <br />equalize tax base to ensure needs for public <br />services can be met. To avoid undue <br />pressure on the property tax, funding for <br />LGA must keep pace with inflationary <br />pressures. For the 2003 distribution, the <br />legislature originally set the LGA <br />appropriation at $586.8 million. By 2011, <br />the LGA appropriation had been reduced to <br />$425.3 million, a reduction of $161 million <br />from the original 2003 appropriation. <br />Since 2013, the legislature has restored a <br />total of $92 million in funding for LGA and <br />updated the formula to reflect recent fiscal <br />and demographic data. For 2016 and <br />beyond, the LGA appropriation is frozen at <br />$519.4 million. <br />During the 2015 legislative session, the <br />House omnibus tax bill included an arbitrary <br />limitation on the maximum per capita LGA <br />distribution to cities of the first class that <br />would have limited their LGA to 112.5 <br />percent of the average per capita amount for <br />all non -first class cities. This change would <br />have been a significant deviation from the <br />practice of using the formula to distribute <br />LGA and could have jeopardized the long- <br />term stability of the program. <br />Currently, LGA payments are made to cities <br />on July 20 and December 26 each year. This <br />distribution occurs late in the city fiscal year <br />and can create short-term cash flow <br />challenges for some cities. In 2015, the <br />Senate proposed accelerating the annual <br />LGA distribution by making payments to <br />cities on March 15, July 15, September 15, <br />and November 15. <br />Response: In order to reduce pressure on <br />the property tax, and to equalize property <br />tax bases, the League of Minnesota Cities <br />continues to support the existing LGA <br />formula as the appropriate mechanism to <br />distribute LGA resources and opposes <br />artificial limits on any city or group of <br />cities. In addition, the League supports an <br />increase in the LGA appropriation to at <br />least the level that would have been <br />provided prior to the 2003 cuts, including <br />the restoration of the annual inflation <br />adjustment. The League also supports an <br />acceleration of the annual LGA <br />distribution to assist cities with cash flow <br />needs. Increases to the LGA <br />appropriation should be distributed <br />based on the formula. The League <br />opposes targeted reductions to specific <br />cities. <br />The legislature should avoid creating <br />side -pots or special appropriations <br />through the LGA (Minn. Stat. § 477A) <br />program. If special circumstances such as <br />a natural disaster warrant additional <br />state assistance to specific cities, the <br />criteria for the additional aid should be <br />specifically enumerated and the <br />appropriation should be separate and in <br />addition to the appropriation through the <br />general LGA formula. <br />FF -5. State Charges for <br />Administrative Services <br />Issue: Currently, some state agencies have <br />wide discretion in setting the fees for special <br />services they provide to local governments. <br />Response: State agencies should be <br />required to justify their service fees or for <br />increases in existing service fees and not <br />charge more than what is fair, reasonable, <br />League of Minnesota Cities <br />2016 City Policies Page 96 <br />