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City leaders watching political tussle over LGA

Money provided by Minnesota's Local Government Aid program is a mainstay in the budgets of cities throughout the state, and potential funding hikes and cuts to it have city leaders keeping a close eye on the Legislature.

For 2017, Gov. Mark Dayton has included a one-time $21.5 million increase to the program in his supplemental budget while Senate leaders confirmed Wednesday they have placed a $45.5 million boost in their version of the tax bill.

Dozens of cities across the state have ratified resolutions in support of an LGA increase, including Wadena.

While Dayton and the Senate are pushing for a surge of funding, past versions of the House's tax bill includes LGA cuts to the tune of $84 million. The cuts primarily target Duluth, Minneapolis and St. Paul, which will receive $29.2 million, $77.8 million and $62.3 million, respectively, this year.

In total, about $519 million will be disbursed to Minnesota cities this year through the program - the highest amount since 2002.

Facing a major budget deficit, state legislators overhauled the system in 2003 and resulted in cuts to aid for cities. From 2002 to 2003, the total amount of aid paid to cities dropped from $565 million to $464 million.

Cities can use the money on just about anything.

Wadena has $1,556,541 in LGA listed in the 2016 budget. LGA provides funding to cities to help pay for basic services such as public safety, infrastructure and fire protection. The Coalition of Greater Minnesota Cities lobbies for LGA for cities in part to help cities pay for unfunded mandates from the state, including increased pension requirements, wastewater infrastructure costs and more.

LGA is disbursed based on a formula that takes into account population, average household size, peak population decline and the percentage of housing built before 1940.

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