Mayor: LGA cuts will hit rural cities like Wadena the hardest
The legislative session is now over, but there is still work to do in St. Paul. As you well know by now, Governor Tim Pawlenty will be taking on the task of balancing the State Budget by himself.
He is asking for our input as citizens and I have sent him a letter outlining reasons why he should reduce the cut he has proposed to Local Government Aid for Wadena and cities across Minnesota. Sixty-five percent of the total LGA allotment is distributed to cities in greater Minnesota to alleviate the stark property tax and service disparities that would otherwise exist between cities like Wadena and higher wealth metro suburbs.
The governor's proposal would cut Wadena's LGA by $52 per capita ($218,201) while Apple Valley, for example, will only lose $18 per capita. Targeting LGA for cuts will disproportionately affect greater Minnesota cities and as a result, cities will have to either raise property taxes or cut services.
As president of the Coalition of Greater Minnesota Cities, I have been advocating statewide that cities are willing to be part of the budget solution. We support the House of Representatives budget proposal that cuts LGA by $85 million. Cities are already making cuts.
Many cities state wide have frozen salaries and hiring as well as laying off employees, they have held off on equipment and supply purchases, and like Wadena, they are holding off on making large improvements to infrastructure like street projects.
From 2003-2008, the state's workforce has risen by 10 percent while the cities has decreased by 6 percent. During that time period, cities have lost $780 million in LGA and as a result property taxes have increased 65%.
The governor's staff estimates that property taxes will increase by more than $600 million dollars in the next three years under his proposal.
Property taxes are a regressive tax that do not consider your ability to pay, unlike income tax which is based upon how much you make. Wadena, like other cities statewide, is currently under a levy limit which will hold tax increases to a maximum increase of 3.9 percent. Wadena's levy actually decreased in 2009 as a result of this formula.
The governor has labeled me and Wadena as a community with a huge ($1 million dollar) "rainy day fund" and states that we should spend down that money if we wish to not make cuts.
Wadena has done a great job of growing our fund balance and we abide by the state auditor's recommendation that it should be between 35 and 50 percent of your operating budget.
This "rainy day fund" is actually a cash flow account, which like the state, we use to operate on for six months between LGA and property tax payments. We will not use one-time money to fund ongoing expenses. In my letter to the governor, I stated: "Please don't discount the severity of these cuts.
They will have serious impacts in our communities. While we may have our differences of opinion on policy, we can both agree that Minnesotans -- no matter what corner of the state they live in -- deserve strong communities at an affordable price. This is the fundamental basis of the LGA program, and I hope you take it into account as you prepare your unallotment cuts."
I encourage you contact the governor, Senator Dan Skogen, and Rep. Mark Murdock. Tell them that Wadena is important and the services we provide to you are needed.