Editorial: City taxpayers feel state squeeze

Recent budget proposals from the mayors of Minneapolis and St. Paul put hard numbers on the cost of balancing the state's books at the expense of cities. The no-new-taxes approach to state government is simply shifting the tax burden to the local level.

After a difficult state shutdown and prolonged session, the Legislature made significant cuts in local government aid (LGA). Those cuts are hitting home as cities draft their 2012 budgets.

St. Paul Mayor Chris Coleman places most of the blame for his proposed 6.5 percent property tax increase on reduced state aid. St. Paul is absorbing about $15 million in LGA cuts from the state for the remainder of this year and a $12 million cut for 2012.

To offset next year's reduction, Coleman suggests $6.2 million in cuts to city departments and a 6.5 percent increase in the 2012 property tax levy. His recommended general-fund budget would spend slightly less in 2012 than in 2011.

Last year, Coleman recommended -- and the City Council passed -- a budget that did not increase the property tax levy.

Along with the 6.5 percent proposed increase, reallocating funds and dipping into reserves would allow the city to maintain the current strength of its police, fire and city attorney staffs.

Under Coleman's budget, the city would continue to invest in out-of-school programs, purchase new snow-removal equipment and keep libraries and recreation centers open, though library hours would be cut. All of these are important quality-of-life measures for cities.

Minneapolis currently spends 8 percent less and has 10 percent fewer full-time positions than a decade ago. During that same period, the city paid down $130 million in debt and last year regained its AAA credit rating.

Minneapolis and St. Paul are not alone; dozens of other Minnesota cities are also struggling to fill budget holes left by state cuts.

The pain is so widespread that it's reasonable to ask whether the current LGA formula is still effective in doing what the program is designed to do -- help cities provide municipal services at a reasonable price for local property taxpayers. That's an issue that deserves more attention from legislators.

Perhaps the pain caused by the LGA cuts will also prompt more discussions about how municipalities might consolidate or share services to save money. And it would be a good time for the state to look at other methods of property tax relief, including better use of the state's "circuit breaker" refund program for low- and middle-income homeowners.

In the meantime, both Rybak and Coleman have proposed smart, balanced approaches to setting 2012 budgets -- a mix of raising revenues, reducing spending and making key investments. That's exactly the kind of approach we wish we'd see on the state level.