Cities weigh effects of cuts

MINNEAPOLIS (AP) -- You may soon feel some of the effects from recent reductions in state financial aid to Minnesota cities. On the other hand, you might not notice anything at all.

The Legislature imposed the cuts to help erase a $4.23 billion deficit.

Minneapolis and St. Paul stand to be hit the hardest and are already resigned to layoffs and service reductions. On the Iron Range, Virginia is losing more than $1 million -- 11 percent of its $10 million budget.

Suburban Maple Grove, meanwhile, is losing nearly all of its state aid while wealthier Twin Cities suburbs like North Oaks will feel little pain because they received little state aid to begin with.

Cuts in two programs, Local Government Aid and the Market Value Homestead Credit, have been the focus. The Market Value Homestead Credit reimburses cities, counties, townships and school districts based on a percentage of a home's value. Local Government Aid uses a need-based formula to dish out aid to help fund basic services.

Cities in the Twin Cities region will lose a total of about $108 million in aid in the calendar year 2004, compared with $61.4 million for outstate cities.

Maple Grove, one of the Twin Cities' largest suburbs, will lose $1.15 million in state aid in calendar year 2003, and again in 2004. That amount is virtually all it received from the state. But the city also has a $3 million general fund reserve.

City Administrator Al Madsen said the city this year proposed hiring only one new employee, a police officer. It's considering trimming costs by, among other things, replacing its squad cars every five years instead of four.

Among policy changes, the city might switch to plowing streets once a snowfall reaches 3 inches, instead of 2 inches. "Is it something the average homeowner's going to notice? Maybe not," Madsen said.

Even so, many city administrators are upset with the targeting of cities.

Many Iron Range cities, for instance, will be hit twice -- first by the general criteria involved in determining LGA cuts, then by a provision that counts a region-specific aid from taconite mining against the amount of LGA they can receive.

In monetary terms, Minneapolis and St. Paul could be seen as the biggest losers.

An analysis by the League of Minnesota Cities shows that Minneapolis and St. Paul will lose about $79 per capita, by far the highest cuts of any cluster of cities. State regional centers, such as Albert Lea and Moorhead, and subregional centers, such as Detroit Lakes and Mahnomen, are the next highest in per-capita cuts; cities in those clusters will lose an average of about $52.

The lowest per-capita impact would be in high-income suburbs, such as North Oaks and Minnetonka Beach, which rely on little or no state aid. They will see per-capita cuts of about $11, according to the league's analysis.