The Free Press, Mankato, MN

November 13, 2012

Minnesota city leaders make case for state aid

By Dan Linehan
The Free Press

NORTH MANKATO — Minnesota's cities are resuming their plea for local government aid, arguing that the money is still the best way to ensure every city can provide a minimal level of service.

Mayors or city managers from five cities, including St. Paul Mayor Chris Coleman, stopped in North Mankato Tuesday afternoon for a roundtable discussion organized by the Coalition of Greater Minnesota Cities.

"What we can't budget for is flat or declining aid from the state," Coleman said.

It's easy to see why Minnesota's relatively poorer cities support state aid -- it's $425 million they don't have to ask their taxpayers for.

But, more than 40 years after it began, state aid is still the fairest way to put rich and not-so-rich on a somewhat equal playing field, said Bradley Peterson, an attorney with the St. Paul firm Flaherty and Hood, which represents the city coalition.

And LGA represents only 2 percent of the state budget, he said.

Without state aid, New Ulm would need to raise its taxes by 75 percent if it wanted to reach the average per-capita spending of Minnesota's cities of $500.

The difference between New Ulm and cities that receive no local government aid, mostly suburbs, is that outstate cities have a lower tax base. In other words, a small tax hike in a poorer city doesn't do nearly as much as the same hike in a wealthier city.

For example, it takes only 1.1 percent of Wayzata's tax rate to buy a $186,646 fire truck, while it takes 11.5 percent of Sleepy Eye's tax rate. Wayzata has only about 17 percent more people than Sleepy Eye.

Put another way, a 1 percent tax rate increase gets the city of St. Peter $4.08 per person. In North Mankato, a 1 percent hike gets the city $7.88 per person. In Mankato that per-capita figure is $9.52, in Edina it's $23.20 and in Wayzata it's $42.28.

Local government aid can be thought of as a huge taxpayer that adds tax base to some cities.

And if you think about state aid like a taxpayer, it's clear who the constituents are -- the 201 members of the Minnesota Legislature.

There were no legislators present Tuesday, though some had been invited. The result was typical -- everyone agreed with each other and criticized legislators who just don't get it.

It wasn't quite that simple, though, for Mankato Mayor Eric Anderson, who didn't exactly oppose the group's message but didn't endorse it, either.

"I do feel sorry for city managers, I really do," he said.

He noted that while state aid for cities is only 2 percent of the budget, other property tax credits add 6 percent more. The suggestion seemed to be that state aid, taken altogether, is a bigger part of the budget.