Reprinted from

Posted at 4:00 PM on 2/10/03

Struggle of pitting rural and big city interests against suburban areas has intensified, says Auditor Awada

by T.W. Budig
ECM capitol reporter

The evolving battle over local government aid (LGA) — a struggle often depicted as pitting rural and big city interests against suburban — has intensified.

State Auditor Pat Awada today (Feb. 10) released a report examining the impact of LGA on cities with populations over 2,500.

Among the conclusions drawn from the study is that the more LGA funding cities receive the more they’ll spend on essential and non-essential services.

Specifically, cities above the median in LGA per capita spend 42 percent more in total expenditures than cities below the median, according to the study.

“It (LGA) rewards and encourages spending,” said Awada.

“Our analysis found that it’s possible to reduce LGA significantly without cutting essential services or raising taxes,” she said.

Essential services include fire and police protection, roads, the cost of government. Non-essential services include parks or social services.

Other study findings:

•Cities that received the most LGA per capita had much lower taxes per capita — 28 percent less for cities above the LGA median than for cities below.

•Cities above the LGA median spend a greater percentage on non-essential services than cities below the median. The top quarter spends $223 per capita on non-essential services compared to $70 for lower quarter — three times the amount.

•The top quarter of cities in LGA per capita spend $389 more per capita on essential services to $288 for the bottom quarter.

A breakdown of the spread of LGA funding — $1.2 billion for the 2004-05 biennium, according to the report — clearly shows the split between the suburbs and Greater Minnesota and the big cities on LGA funding.

According to the report, metropolitan suburban cities receive about 10 percent of large city LGA while containing 52 percent of the population — $27 per capita.

Greater Minnesota cities receive about 51 percent of large city LGA funding ($231 per capita) while Minneapolis and St. Paul claim about 39 percent ($276 per capita).

In terms of population, Greater Minnesota cities and Minneapolis and St. Paul total 29 percent and 19 percent of the population, respectively.

Awada, former mayor of Eagan, a city in which LGA as a percent of total revenues comes in at .2 percent, acknowledged the split.

She came from a city that was a LGA loser, she said. “It gets down to a fundamental fairness argument,” said Awada, who likes the general idea of LGA.

In pointing out options for policymakers, the Auditor’s Office ruled out eliminating LGA and styled an across-the-board cut as unfair.

Adjusted reductions are considered the best approach — a 43 percent LGA cut is given as an example.

But not everyone agrees the auditor’s report is accurate and without political overtones.

Not on spending spree

John Sundvor, a lobbyist with the Coalition of Greater Minnesota Cities, dismissed the idea that cities are on a spending spree. According the coalition, city spending increased only 2.4 percent per capita over the 1990s compared to a 17 percent growth in spending per capita in the state’s general fund.

Compared to the national average, Minnesota cities’ expenditures per capita adjusted total expenditures from 1987 to 1997 rose 2.9 percent compared to 14.8 percent nationally.

While examples of higher spending can be found in Greater Minnesota, “it’s not a pattern,” said Sundvor.

He argued that services deemed as non-essential in the study, such as parks or libraries, are essential services in Greater Minnesota because they’re fulfilling regional needs.

The effect of cutting LGA by 43 percent would be profound, said Sundvor. It would be “devastating” for Greater Minnesota regional cities, he said.

He suggested the auditor’s report served as an opening barrage of the LGA debate — a means of “softening up” the opposition.

LGA funding accounts for about four percent of the state budget, said Sundvor. All told, LGA, plus other state aid to cities, accounts for about 11 percent of the state budget, he said.

LGA funding to cities with populations of more than 2,500 makes up about 85 percent of the total LGA funding.

The percent of LGA as percent of total revenues for 2001 for some area cities are: Caledonia, 37 percent; Mora, 28 percent; Milaca, 28 percent; Chisago City, 14 percent; Princeton, 14 percent; St. Cloud, 11 percent; Big Lake, 11 percent; Anoka, 10 percent; Fridley, 10 percent; Buffalo, 9 percent; North Branch, 8 percent; Coon Rapids, 7 percent; Oak Grove, 7 percent; Lindstrom, 7 percent; St. Francis, 7 percent; Spring Lake Park, 6 percent; Blaine, 5 percent; Cambridge, 5 percent; East Bethel, 5 percent; Forest Lake, 5 percent; Farmington, 4 percent; Ham Lake, 4 percent; Ramsey, 3 percent; Elk River, 2 percent; Lakeville, 2 percent; Apple Valley, 1 percent; Burnsville, 1 percent; Andover, 1 percent; Eagan, .2 percent; Lino Lakes and Rogers, nothing.