Local governments urged to spend state aid hike wisely

Minnesota’s cities are facing a quandary — start spending again to make up for five years of tight budgets? Or hold the line?

Thanks to a generous 2013 Minnesota Legislature, our local units of government have much to cheer about.

Our cities, counties and townships will benefit as the state flows revenue back to the local level. Some $300 million in additional funds will go to local units.

Local government aid (LGA) was redefined, and future allocations stabilized, to the tune of $130 million. The impact on some cities is dramatic: St. Augusta will receive $55,216, a 403.7 prcent increase; Melrose $766,363, a 24 percent increase; and Long Prairie, $914,704, a 24.4 percent hike.

AreaCities_WEBCities, counties and townships will get another break on Jan. 1, 2014, when they become exempt from paying almost all state sales taxes. That means a savings of 6.9 percent on all purchases, an estimated savings of $172 million for the biennium.

A state-mandated levy limit will control some of what cities can spend. With a few exceptions (disaster repairs and debt repayment, etc.), local governments will be limited to a 3 percent hike in tax rates.

Still, local governments can choose to spend extra revenues as they wish, or they can choose to hold the line on spending, returning the extra funds to the property owner through reduced taxes.

Gov. Dayton and the DFL-controlled legislature called the sales tax exemption “property tax relief,” but cities are not bound to cut the budget in return. The Minnesota Center for Fiscal Excellence says the additional funds “… creates a very rich environment for spending increases with little, if any, short term property tax repercussions.”

These comments raise legitimate concerns. Now is the time to get involved in a “family meeting” at city hall. Cities are working on 2014 budgets right now, anticipating the Sept. 15 deadline for certifying preliminary levies. All property owners will get a statement of estimated taxes due around Nov. 1, as in previous years. However, much of the budgeting process has been completed by that time, so if you wish to help influence your city’s spending, speak up now.

Do you think every penny should go back to the home-owner in lower property taxes?

Do you think your city should restore staff cuts to the police department?

Are there service fees in park and recreation programs that could be reduced?

The great majority of the 250 cities within the ECM coverage area operate with transparency. They welcome citizen input. Check your city’s website for contact names and numbers. Study your property tax statement. See what each unit of government charges you for its services – Counties take about half of your property tax dollar, cities about a third, school districts most of the rest.

Attend the truth-in-taxation hearings in November. Write a letter to the editor. Think about your needs and wants in your community, then be a part of the conversation.

An editorial from the ECM Editorial Board. The Peach is part of ECM Publishers.

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