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RELEASE: House Property Tax Division holds hearing on Rep. Lislegard proposal to deliver groundbreaking increase in city and county funding

Wednesday, February 8, 2023

SAINT PAUL, Minn. – Today, the Minnesota House Property Tax Division held a public hearing on legislation authored by Rep. Dave Lislegard (DFL – Aurora), the committee chair, to significantly boost state funding for Local Government Aid and County Program Aid. Rep. Lislegard’s bill would deliver an additional $150 million to each program, both of which are critical tools communities count on to deliver vital public services while keeping property taxes in check. The bill also modernizes the LGA distribution formula.

“As a former mayor, I know our cities and counties are amazing partners for the state of Minnesota. They are responsive to local needs and deliver essential services to maintain the high quality of life that residents expect and deserve. In recent years though, we haven’t invested enough in this partnership, and Minnesotans are feeling the impact of higher property taxes,” Rep. Lislegard said. “The state doesn’t tax residential property, but by increasing our investments in tools like LGA and CPA, we can help to keep property taxes down and enable local governments to continue providing services and infrastructure like police, fire, water, roads, and much more. We have to take advantage of his historic surplus to deliver these key investments. If unaddressed, the trends will only get worse, and families will be the ones feeling the impact.”

Local Government Aid was first developed in 1967, and in 2004, a number of property tax aid programs for counties were consolidated under County Program Aid. Current LGA and CPA distribution amounts aren’t adequate due to rising inflation and other costs for local governments to sustainably provide key public services. In 2002, LGA accounted for 4.1% of the state budget. Now, it’s just 2.1%. Similarly, CPA has fallen behind, representing approximately 2% of the state budget in 2002 and about 1% now. Meanwhile, commercial property valuations have remained stagnant leading to a massive property tax shift onto homeowners.

“I’m grateful for Rep. Lislegard’s strong leadership on this bill in the House of Representatives, and I’m proud to be a co-author in the Senate,” said Senator Grant Hauschild (DFL – Hermantown). “This bill is about reducing the property tax burden by getting Northland communities their fair share of state funding to help local governments provide the services we all rely on. This bill would reinvest the state surplus money in communities all across the Northland such as Ely, Hermantown, and Grand Marais. This is the important work that our constituents sent us to St. Paul to do, and we’re committed to getting this done on their behalf.”

Some examples of increases to northeastern Minnesota local governments under the bill include Virginia, which is set to receive $6.2 million in LGA in the coming year under current law. Rep. Lislegard’s bill would increase this by $1.5 million. Ely would see an LGA jump from $2.5 million to $3 million, Chisholm from $3.4 million to $3.8 million, and Hibbing from $8.3 million to $10.1 million. Duluth would experience an increase from $30.8 million to $38.9 million. International Falls’s LGA amount would increase from $4.4 million to $5.3 million. Hermantown, currently receiving no LGA payments, would receive $591,857.

For County Program Aid, St. Louis County would see an increase from $13.4 million to $21.1 million.

Several local leaders testified in support of the legislation including Larry Cuffe, mayor of Virginia.

“Local Government Aid helps our cities to provide necessary services without raising taxes on our citizens,” Mayor Cuffe said. “We want to run our cities efficiently with the highest quality services we can provide. To do that, we need support from our state like Chair Lislegard is proposing with House File 1377.”

Ramsey County Commissioner Mary Jo McGuire, who serves as president of the Association of Minnesota Counties, voiced her support too.

“I want to thank Chair Lislegard for his willingness to dare to envision a different reality for counties and cities,” Commissioner McGuire said. “A reality that resets the relationship between the state and its local governments and recognizes the important roles counties and city play in moving Minnesota forward by providing them with a deserved increase in local government aids, which will help fund vital programs and provide critical property tax and mandate relief.”

Shelia Kiscaden, Olmsted County Commissioner; Matt Stemwedel, Coon Rapids City Manager; Jon Hawkinson, Olivia Mayor; and Neal Gaalswyk, Cass County Commissioner also traveled to the State Capitol to advocate for the bill.

Lists highlighting the impact to each city and county under the bill are available under the new LGA and CPA amounts, respectively.

The division laid the bill over for possible inclusion in a future package of property tax legislation. Video of the hearing will be available on the House Public Information Services YouTube page. Documents and additional information about the hearing are available on the committee webpage.