A Tale of Two Cities and Local Government Aid

I can say I was somewhat excited as a City Manager when control of the House and Senate went to the Democrats.  Not for political reasons, but simply because I figured Local Government Aid would get a fairer shake in the upcoming legislative session.  The Governor said that he favored more LGA and we depend on it for our existence out here on the prairie.  What I didn’t realize was that a major change is being proposed that could pose a very big problem for us.

The question at hand always seemed to be how much money would be given to communities that needed help providing basic services.  Yes, there were those that didn’t understand LGA and why some cities got it and others didn’t, and there were underlying debates about what it should be used for, but it always seemed to come back to money.  The compromise position over the last four years was to freeze the amount of money we received.  We have been frozen at the 2009 level ever since.

Now, for the first time that I can remember, it appears the end result of both sides being proposed is a loss of aid for the City of Morris.  Current law that froze LGA for us for 2013 included language that allowed the LGA formula to kick back in.  The formula is what determines how much aid we get.  Not only was the aid level frozen since 2009, but apparently the formula was frozen too.  If the formula kicks back in, the City of Morris will lose approximately $53,000 in LGA next year.

The Governor’s proposal includes approximately $80 million more for LGA, but it also proposes a new formula.  A formula based upon a few basic services like public safety and roads.  Everyone thought it would mean more money for cities like Morris, and in 2014 it does, a lot more, almost $160,000.  However, the extra money is short-lived and over the course of the next four years, the new formula will transfer most of the additional aid to the metro cities.  In the end, we will be at the same level—$53,000 less—that we would see under current law.  The only difference is that the cut would be put off until 2018.  It appears the extra money is used to ease the pain of what is really being proposed.

Any good City Manager knows you can’t spend that new money for on-going service increases.  It is basically one-time money, even though it is over the course of four years.  It starts shrinking immediately in 2015.  It won’t do anything to stabilize our budget and help us to provide basic services now and into the future.

There will be a very big debate over aid to cities and we need to make sure everyone understands what we are doing out here on the prairie.  Our property taxes are low because City leaders used the Local Government Aid to pay for the basic services we provide.  Losing it will result in either higher property taxes or fewer basic services.  Either one of those will be bad for our future.

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