State aid to cities would increase by $90 million under legislation that has won support from large and small communities as a way to reduce local property taxes on homeowners and businesses.
The biggest winners would be cities with more than 5,000 people that have a relatively high number of jobs but a low property tax base. Wealthier bedroom communities with less employment could see a decrease in the aid that they expected for 2009.
State aid to cities has been a major issue in Minnesota since cutbacks in 2003 effectively shifted more of the expense of local government onto property taxpayers or prompted cities to cut services. There are 854 cities eligible to receive the state aid.
"We know this solution is not perfect," Louis Jambois, executive director of the Association of Metropolitan Municipalities said at a legislative hearing Thursday. "But we think it's a very significant improvement."
The legislation sponsored by Sen. Rod Skoe, DFL-Clearbrook, seeks to restore cuts in local government aid while changing the method for distributing it. The $90 million represents a 19-percent increase from what had been expected. In future years the aid would be increased by between 2.5 percent and 5 percent annually for inflation.
The Coalition for Greater Minnesota Cities said that even with a $90 million increase, the state aid would still be well below the amount distributed in 2003, adjusted for inflation.
Filling a hole
DFLers have blamed Gov. Tim Pawlenty's pledge not to raise state taxes for increasing the burden on property taxpayers. Local governments across Minnesota lost state aid in the last legislative session when Pawlenty vetoed the 2007 tax bill, which included that money. He has advocated a cap on local property taxes as a way to provide relief to homeowners and businesses.
