Cities vow to treat bump in state aid as windfall, not a 'new normal'

  • Article by: LAURIE BLAKE and DAVID PETERSON , Star Tribune staff writers
  • Updated: May 28, 2013 - 3:48 PM

Most say they won’t count on state aid for operating expenses because it’s undependable.

Nearly $2.4 million in additional aid is expected to flow to eight south-metro communities after the Minnesota Legislature agreed to bump up taxes and spending.

But, burned too often in the past, cities say they are loath to build those state aid dollars back into budgets. They’re more inclined to treat the money as a temporary windfall, useful but nothing to rely on long-term.

“It is very, very good news,’’ said South St. Paul City Administrator Steve King, whose city is one of the biggest winners in the south metro. “Not just the dollars but the philosophy that underlies it.’’

His city’s so-called “local government aid,” or LGA, will rise from about $1.7 million to about $2.3 million.

Of the eight cities, three, including Burnsville, will get not a dime in 2013, but they are being added back to the list for next year. Hastings and Jordan are the other two to go from zero to something.

Five others that have been getting money will see jumps ranging from 25 percent for Elko New Market to a near quintupling for Belle Plaine, though it comes from a low starting point.

In dollar terms, increases range from just over $40,000 to South St. Paul’s $627,000, following a formula designed to gauge a city’s need for outside help.

At the helm of a city that lost its primary tax base and employer, the meatpacking industry, King said he appreciates the use of local government aid to “equalize the resources available to cities.’’

Abrupt callbacks of local government aid to balance the state budget have trained South St. Paul to largely wean itself from reliance on the aid. It won’t spend the money until it’s sure it has it, King said.

There is no shortage of things to spend it on, however, King said. One possibility is upgrading the city’s Mississippi River levee as required by the Army Corps of Engineers.

West St. Paul is getting the third-biggest dollar bump — about $1.2 million next year — up from about $774,000 in 2013.

Overall, the state will deliver $80 million more in aid to local governments this year with money raised through state tax increases.

Distribution of the aid will come via a revised formula that better reflects the needs of cities, said Rep. Jim Davnie, DFL-Minneapolis, chairman of the property and local tax division of the House Tax Committee. For the first time, the formula responds better to the needs of first- and second-ring suburbs, which are starting to look more and more like the two central cities, Davnie said.

Burnsville and Bloomington, for example, will get aid for the first time. Legislators intend for cities to use the money to hold down property taxes and deliver adequate public services, Davnie said.

Cities are happy for the help.

“We are very thankful for the property tax relief,” said West St. Paul Mayor John Zanmiller. It’s unlikely that the city will bundle the aid back into the operating budget because of the uncertainty of the funding, Zanmiller said.

“I would love to just take the whole thing and roll it into the budget, but that makes us dependent on it again.’’

There are plenty of projects it could be applied to, he said. “We’ve had a decade of things we’ve had to pass on or delay. We have been without a park and rec director for about seven years.”

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