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State-aid cuts squeeze townships
by Charley Shaw, Staff Writer

April 29, 2008
Local governments resort to raising property taxes

Minnesota’s townships have been feeling a financial pinch in the last five years, according to a new report from the State Auditor’s office.

The report, released last week, reported five- and 10-year trends in which state financial support for towns has declined and local property taxes have been increased.

“The most noteworthy trend found in this report for towns overall is that there has been a steady decline in intergovernmental revenues over the last five years, and a proportional increase in taxes to replace them,” State Auditor Rebecca Otto said.

Minnesota towns in 2006 reported $236.8 million in revenue, a 3 percent increase from 2005. Towns reported $244.5 million in expenses in 2006, a 5.5 percent increase from 2005.

Between 2001 and 2006, towns increased their share of revenue that comes from local taxes by 15.7 percent, according to the report. During the same time, towns saw their share of intergovernmental revenue such as state township aid decline by about the same percentage, the report said.

Kent Sulem, a lobbyist for the Minnesota Association of Townships, said the auditor’s report backs up information his group has been tracking since state cuts to townships earlier this decade. Inflation and other cost increases have placed further pressures on town budgets, he said.

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“We’ve had almost a doubling of property taxes at the town level,” Sulem said.

Townships lost $33 million in state funding earlier this decade when the state faced multimillion-dollar deficits. State lawmakers reduced township aid and eliminated the homestead agricultural credit aid (HACA).