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Local Government Aid: Low hanging fruit ripe to pluck

Nancy Carroll

Park Rapids stands to lose $157,931 in Local Government Aid from the state if a Republican budget proposal passes.

Minnesota House Republican leaders and Democratic Gov. Mark Dayton met Tuesday in an effort to lay groundwork on working well together, but later in the day took opposing views on how to begin tackling a $6.2 billion state budget deficit.

The Republican proposal for 2012-13's budget would extend then-Gov. Tim Pawlenty's budget cuts, known as unallotment, to find the $840 million in savings.

Hardest hit in the next budget under the GOP plan would be state payments to local governments, such as Local Government Aid. The bill reduces those payments $460 million from that expected in the two-year budget beginning July 1.

Chairwoman Mary Liz Holberg of the House Ways and Means Committee said the Legislature will reform Local Government Aid so cities that really need the aid still receive it.

Park Rapids Mayor Nancy Carroll, the president of the Coalition of Greater Minnesota Cities was not happy.

"We are deeply concerned that politicians who are calling for 'reforming LGA' have started the legislative session without any substantive policy conversation, but rather a blanket proposal that is simply another cut," Carroll said.

Park Rapids City Administrator Bill Smith said the city's 2011 budget anticipated cuts to LGA.

"We did budget conservatively in regard to LGA and Market Value Credits," Smith said. "If the Republican Legislature proposal is implemented, the city will receive about $89,000 less in revenue than what we projected."

He had no idea yet how the city would curtail expenses by that amount but said, "we'll wait and see what comes out of St. Paul."

Senate Minority Leader Tom Bakk, DFL-Cook, said a cut like Republicans propose probably would drive up local property taxes by $300 million.

Republicans who control the Legislature announced they want the Dayton administration to trim $200 million from the budget that ends June 30 and cut another $840 million from proposed spending in the two-year budget that begins the next day.

Tuesday's Republican bill introduction was the first of several budget-balancing measures, with larger budget cuts coming later.

Dayton did not like the way Republicans are going about the budget-balancing situation.

"I will not agree to piecemeal cuts and partial solutions eliminating the $6.2 billion deficit in the next biennium," Dayton said. "I will propose a reasonable, balanced and complete budget solution on Feb. 15, and I ask the Legislature to do the same thereafter, with citizen participation through hearings and very careful consideration of the effects of their decisions on people's lives."

The GOP plan also would trim projected higher education spending $185 million and health and human services budgets $72 million.

Chairman Bud Nornes, R-Fergus Falls, of the House Higher Education Committee said he did not know how much students or the public would notice college and university cuts.

Republicans want $200 million cut from the budget that ends June 30.

Holberg, R-Lakeville, said the bill is designed in part to end what she called "Christmas in June," a state government tradition of spending down what is left in an agency's budget as the budget cycle ends.

The bill could pass the Legislature next week.

According to the League of Minnesota Cities, Menahga stands to lose $45,016 in Local Government Aid in 2011 if a bill introduced Tuesday in the state Legislature is approved. Akeley and Nevis would not see a reduction in LGA.

Don Davis reports for Forum Communications Co.