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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. Since 2013, the legislature has <br />restored a total of $107 million in funding <br />for LGA and updated the formula to reflect <br />recent fiscal and demographic data. For <br />2018 and beyond, the LGA appropriation is <br />frozen at $534.4 million. For 2018, the total <br />unmet formula need (the difference between <br />need and ability to raise revenue) is $814.6 <br />million, leaving the current appropriation <br />$280.2 million below the total unmet need. <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 />During the 2017 legislative session, several <br />bills were introduced that would have <br />created offsets to a city's LGA distribution <br />if the city spent funds for activities related to <br />lobbying or a World's Fair, or would have <br />reduced or eliminated LGA if the city <br />enacted ordinances to ban plastic bags, <br />impose certain local labor laws, ordinances, <br />or policies that restrict city employees from <br />enforcing immigration laws, unauthorized <br />ordinances related to diversion programs. <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 2017the <br />Legislature included a one-time acceleration <br />that will distribute 14.6 percent of each <br />city's 2019 LGA in June. <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 and ongoing appropriation <br />increases to the LGA formula to move <br />toward funding the total unmet need of <br />all cities. 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 as well as reductions or offsets for <br />local policy or expenditure decisions. <br />The legislature should avoid creating <br />side -pots or special appropriations <br />through the LGA (Minn. Stat. ch. 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 />League of Minnesota Cities <br />2018 City Policies Page 104 <br />