Cities could see $30 million increase in local government aid

Minnesota cities that rely on local government aid to fund a number of crucial government services have seen appropriations follow a downward trend for 15 years. But those appropriations could reach their highest amount since 2002.

Sponsored by Rep. Paul Anderson (R-Starbuck), HF3493 would raise the appropriation for city local government aid from $534.4 million to $564.4 million beginning in calendar year 2019.

The bill was held over by the House Property Tax and Local Government Finance Division Wednesday for possible omnibus bill inclusion. Its companion, SF3082, sponsored by Sen. Bill Weber (R-Luverne), awaits action by the Senate Taxes Committee.

Rep. Paul Anderson

Rep. Paul Marquart (DFL-Dilworth) called local government aid a “necessity for a quality of life,” and pointed out that many cities would pay as much as double in property taxes without the appropriations.

“It’s the great equalizer,” Marquart said. “It’s so that if I live in Melrose or Breckinridge I should be able to get the same level of public safety. I should feel just as safe in Breckenridge as I would in Minnetonka at roughly the same cost.”

Rep. Steve Drazkowski (R-Mazeppa), the division chair, said the challenge of raising local government aid is making sure the dollars are spent responsibly.

“We’re seeing some cities do a very good job at managing their budgets and managing their funds, and for others there just seems to be no ceiling whatsoever,” Drazkowski said. “They just seem to spend, spend, spend, build things and continue to grow the government.”

The increase in aid to cities would likely reduce property tax levies by a portion of the increase, according to a Department of Revenue report. The reduced property tax burden would reduce state-paid homeowner property tax refunds and income tax deductions, resulting in savings to the state General Fund.