Minnesota’s cities and counties would see no cuts in state aid if Gov. Mark Dayton’s two-year budget that was released Tuesday makes it through the Republican-led House and Senate unscathed.
That announcement on Tuesday was met with relief from Brainerd, Crow Wing County and Baxter officials, but they all cautioned the Dayton budget plan was a long way from being a done deal.
“If his (Dayton’s) proposal held and the Legislature would somehow approve it that would have a huge impact (on Brainerd’s budget),” City Administrator Dan Vogt said.
The absence of state aid cuts could translate into approximately a half-million dollars in added revenue to Brainerd, Vogt said.
“LGA (local government aid) is not a big part of the budget,” Vogt said. “From a percentage point we’ve taken more than our share (of cuts). I think LGA has taken more than its proportionate share of cuts.”
The governor’s proposal calls for nearly $3.5 billion in funding for local governments. It calls for half of the budget fix for $6.2 billion shortfall over the next two years to come from higher income taxes on the wealthiest Minnesotans.
Crow Wing Auditor-Treasurer Laureen Borden said the release of Dayton’s budget was good news, but she noted that county budgets have been set with the anticipation there would not be much aid coming from the state. She said the governor doesn’t have the final say and that any time local government aid is cut it results in higher property taxes.
She said the certified amount received last time from the state for market value credits and county program aid was $2.8 million, but the county ended up getting $1.4 million.
“We got about half of it,” she said. “We did not budget for anything in this year’s budget. So now, anticipating the $2.8 million, the amount certified and the $1.4 million that we ended up getting was a temporary cut ... so hopefully we will get $2.8 million but we’ll have to see what the Legislature does. We’ll just have to see what’s forthcoming. We’ll not count our dollars before they’re received.”
Jeremy Vacinek, finance director for the city of Baxter, said because of the city’s growth and increased values, Baxter has not received local government aid since 2003 or 2004.
He said that if Dayton’s budget is approved by lawmakers the city stands to gain about $200,000 in market value homestead credit. Vacinek said the city didn’t budget for that amount in 2011 and is not reliant on it.
“It’s pretty insignificant,” he said of the credit designed to lower the burden of property taxes. He said the market value homestead credits phases itself out as value increases in a community.
Reaction to Dayton’s local government aid plans among District 12 legislators fell along party lines.
Rep. John Ward, DFL-Brainerd, issued a news release praising the governor for “holding the line on property tax increases by restoring critical funding to cities and counties.” He also said the budget “protects services our communities depend on such as our police and fire departments.”
Rep. Paul Gazelka, R-Brainerd, said he thought it would be wonderful if no cuts were made to local government aid but he didn’t want to promise something he couldn’t deliver. Realistically, he said, if the budget is going to be balanced without raising taxes LGA cuts similar to those in 2010 are likely.
“We are not in favor of raising taxes,” Gazelka said. “State government needs to live within its means.”
Rep. Mike LeMieur, R-Little Falls, said the Republican plan is to keep local government aid at the 2010 level rather than the amount that was certified earlier. He said he’s part of a rural caucus group that is trying to minimize the aid cuts to local governments but Dayton’s planned income tax hikes aren’t the way to go.
“We’re doing all we can to prevent (cuts),” the former Little Falls City Council president said. “It’’s not like we’re out to get small cities and counties. We have to do the best we can to balance the budget with the money that we’ve got.”
Nancy Carroll, Park Rapids mayor and president of the Coalition of Greater Minnesota Cities, said in a news release the continued cuts to local government aid have led to city property taxes “that have skyrocketed 77 percent since 2002.” She said cities have made painful cuts to services such as police, fire, libraries and snow plowing.
MIKE O’ROURKE may be reached at firstname.lastname@example.org or 855-5860.