No two ways about it, Local Government Aid has been cut

Here is a piece that I submitted to the Rochester Post Bulletin.  I reference data posted on this site.  Here is a direct link to LGA data.  Here is a link to the efficiency of our local government.  When I first became interested in studying the numbers I looked at a decade lookback.  However for some of the tax items it makes more sense to look post 2003 when some new tax structures began.

The real size of Rochester city government has shrunk 17 percent since 2003. Over that period, Rochester property taxes have increased 28 percent because of state Local Government Aid cuts.  Unlike some other figures that have been thrown out in the media, these are true and not misleading.

You may like us or hate us, but unlike the state Legislature, every year your local city, county, school, and township governments pass an honest budget that balances. We don’t get to change laws to unallocate money we promised, and we don’t get to raid tobacco or other funds. We certainly don’t get to take a billion here or there with accounting shifts. Not surprisingly, Rochester also maintains an unquestioned AAA rating.

Some of our legislators are engaging in a game that I like to call “magic mushroom mathematics.”  Basically, it is an attempt to deceive people with numbers that are misleading and/or incorrect.
For example, a 20 percent increase in the size of state government sounds really bad — and it would be, if it were even close to being true. A public that is gullible enough to believe that one is as guilty as the purveyor of such statements.

I want to share some real numbers. I posted the actual data on my website so you can check them for yourself. As always, I am happy to answer questions, and email works best. There may be small discrepancies in how a number is calculated here or there, but by and large these numbers are as fair as I possibly can make them.

When looking at growth, there are two factors that some people want to pretend don’t exist — inflation and population growth. It is best to always compare different years in a common currency value and per capita. In my numbers, I use 2011 dollars, adjusted using previous years Consumer Price Index. These numbers remain conservative, because I didn’t include the latest $2 million in state aid cuts, through a change to a tax credit that some of our local legislators didn’t understand, even after voting.

•  In 2003, Rochester spent $1984.43 per capita. Today we spend $1640.45 —  a decrease of 17.3 percent.
•  The 28 percent increase of your 2011 Rochester property taxes is due to the state not living up to its 2003 LGA commitment level.
•  Rochester has lost tens of millions in state LGA and credit cuts.
•  This year’s state cuts will mean more property tax increases and service cuts.
•   In 2001 we had about 1 employee per 150 residents. Today we have one employee per 165 residents, so we’re 9.6 percent more efficient.
•  Since 2001, we have increased public safety spending by 7.4 percent, but our parks, library, and arts have been cut by 9.3 percent (It’s actually worse than that, but additional support and sponsorship dollars were found).

I have been heartened by cities’ ability to stand together, even as the Legislature fails us. There was an attempt to try to massacre funding to Duluth, St. Paul and Minneapolis. Rochester and other cities large and small realized that this was a partisan political hack job. It wasn’t right to do this to our neighbors in those cities. Even though Rochester was to receive special loophole treatment, devastating any city with LGA cuts is just plain wrong.

As an elected official in Rochester, what happens in Lanesboro, Grand Rapids, Wadena, Rondo, or Canal Park still matters. Cities have never had more reasons to attack each other and fight for the bones, but this has not happened. We must continue to stand together to fight this Legislature.

Regional cities generate far more in revenue for the state than we receive. The state takes the bulk of the income, sales and even certain types of property taxes our economies generate. Cities get some property taxes, fees, and a sliver of micromanaged sales taxes. LGA is the part of the Minnesota Miracle that restores some fairness.

Gov. Dayton was criticized for a proposed $1.8 billion tax on the wealthy; however, little was said about the Legislature indirectly raising local property taxes. If we really can’t work it out in the future, I have a different suggestion: Undo all the tax changes that took place from 1998 to 2003.  Those tax cuts did not make Minnesota better, and we know that we prospered under previous rates. If you would have told me that the tax cuts and rebates in the late ’90s and early 2000s would have exhausted our reserves, doubled public tuition, hurt K-12 education, hurt our parks, and skyrocketed property taxes, I would have preferred we take a pass.

Let us never forget that Minnesota’s job creators have always been our strong education, health care, and quality of life. We don’t buy fortune 500 companies: We create them.

 

 

3 comments

  1. Thanks for writing this and for submitting it to the Post Bulletin, so it can get to a larger audience. I have only one comment. You write “In 2001 we had about 1 employee per 150 residents. Today we have one employee per 165 residents, so we’re 9.6 percent more efficient.” Doesn’t that assume the same amount of work is being performed? I think that it’s more likely that Rochester gov’t is probably as efficient as it ever was, maybe more so, but not the full percentage you quote. Some percentage of that is simply the amount of work (which translates into services of probably every kind) that local gov’t can no longer perform (and from which citizens no longer benefit).
    Again, thanks for the data and the analysis.

    1. James,

      Thanks for the question, this if fairly complicated because each department is different. There are some functions where work has been cut and others where work has been expanded. The “efficiency” figure is really a rough guess based on employees per capita. Public works and Public Safety have gotten bigger in general. However their growth has typically not kept pace with the rest of the community (Police have outgrown the community over this time). Other areas like the Library and Parks are providing more services to more users with less funding so the efficiency claim is easier to justify. Most cuts to this point have come from capital budgets so there really haven’t been many services cut. Thanks for the question.

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