While it was good news Gov. Tim Walz and the Legislature restored Local Government Aid funding to 2002 levels, cities won’t pave their streets with gold anytime soon.
The needs of cities have been underfunded for years, with many turning to property taxpayers to make up the difference. When the property tax was maxed out, they sought approval of local option sales taxes, and many of those referendums passed with overwhelming majorities.
A local option sales tax in Mankato and North Mankato to fund everything from flood control to recreational facilities passed by about 70 percent. It’s a sign residents want things funded that impact their quality of life. It also shows a bit of disgust among taxpayers for the inability of state and federal governments to get anything done.
The efficiency of local government stands as one reason to fully fund a local government aid program. Local governments are closest to the taxpayers and therefore face tough scrutiny and accountability in their funding decisions.
Local Government Aid was established with the idea that the level of property wealth in a city should not govern the level of basic amenities and services. Some cities, St. Peter, for example, have tax exempt properties like a private college and the Minnesota Security Hospital that require a lot of municipal services but pay very little or nothing in taxes for those services.
Walz and the Legislature boosted LGA by about 5 percent this year to $564 million. Had LGA risen at the rate of inflation since 2002, there would be about another $235 million going to cities that qualify for the aid.
The boost in LGA comes at a time when cities are facing more and more costs like millions to upgrade wastewater treatment plants to meet new state and federal pollution standards. Roads have been so underfunded for years, counties had to impose their own road taxes and many of them did. Cities cannot use the same tool.
Local government aid is also a fair way to pay for services. It draws money from everyone in the state who might benefit from any city’s services, be that good roads or adequate public safety.
Unfortunately, all the infrastructure projects that went unfunded for 16 years will likely be more costly to fix now.
Local government aid has always been a sound public financing idea. We urge the Legislature and governor to continue reasonable increases to help cities invest in and maintain basic services, infrastructure and their quality of life.