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Roseville City Manager Bill Malinen said the funding, potentially about $225,000, likely would go toward infrastructure. “It’s better used for unmet needs in the capital plan, so that if in fact another change occurs we wouldn’t be adjusting our operating budget,” he said.
Bloomington likely would spend its potential $404,000 allotment on road improvements, said chief financial officer Lori Economy-Scholler, who doesn’t expect it to go to the city’s general fund. “There’s always concern what the state might do the second year or the third year,” she said.
In 2002, St. Paul’s LGA represented 41.9 percent of the city’s budgets for the general fund and libraries, and property taxes 24.4 percent. This year, those figures are practically reversed: LGA makes up 21.2 of the budget, while property taxes pay for 36.4 percent.
In Minneapolis, the general fund covered by property taxes jumped from 29 percent to 45 percent between 2003 and 2013 as LGA payments fell.
“Our No. 1 legislative priority is making sure this gets fixed,” said Joe Campbell, St. Paul Mayor Chris Coleman’s spokesman. “I think we’re all in agreement that when the cities are strong, the state is strong.”
Campbell added that it’s important LGA once again be indexed to inflation, as it was before 2003.
Rep. Paul Torkelson, meanwhile, the lead Republican on Davnie’s committee who thinks the new formula makes LGA more stable and predictable, objects to a provision that would raise payments by between 2.5 percent and 5 percent annually based on inflation and population changes.
“Putting this on autopilot to increase year after year is not something I can support,” said Torkelson, R-Hanska. “It’s fine as long as the economy’s growing and we have more revenue, but we don’t always have that, as people learned in the last few years.”
That provision proved to be one of the most contentious facets of the bill at a Senate hearing Tuesday. “I think that the inflation adjustment is at risk of not surviving the process,” said Sen. Rod Skoe, DFL-Clearbrook, who chairs the Senate Taxes Committee.
Davnie said the provision would be a benefit because it would allow local governments to depend on the money in their budgets. “You can make prudent, rational decisions on the local level and not have to come down here and fight about it every two years,” Davnie said. He said the Legislature could revise the increase in a bad economy.
Despite broad agreement on the new formula, Rybak still would like to see more fundamental reform to the 40-year-old LGA system. He frequently says Minneapolis sends much more to the state in sales and other taxes than it receives in LGA, a gap of more than $300 million.
“Having regional centers like Minneapolis control more of the resources we generate, I think, is part of a longer-term discussion we should have,” he said.
Eric Roper • 612-673-1732
Kevin Duchschere • 651-222-2732