Bill Has St. Michael, Albertville in Line to Get Local Government Aid in 2014

After years without local government aid, the City of St. Michael could soon see hundreds of thousands of dollars coming into municipal coffers.

The funding figures differ under various scenarios, but they can get huge: A February LGA proposal by Gov. Mark Dayton had St. Michael's payments ballooning to more than $700,000 by 2018 (see PDF).

Now the Minnesota Legislature is considering a new proposal that would inject tens of millions of dollars into the system and change the way those millions are distributed.

The bill by Moorhead Rep. Ben Lien (DFL-4A) would add $80 million to the $426 million that the state is scheduled to spend on local government aid (LGA) in 2014.

Albertville could expect an allocation of $79,727 under Lien's scheme, while current law and Dayton's proposal had the city continuing to get no LGA funds.

St. Michael would also get LGA funds under Lien's bill, but not as much as the city would under current law.

Next year, St. Michael's LGA payment is set to jump from zero to more than $100,000 under either the current system or Lien's bill. Current law would see $415,306 come to St. Michael, while the new bill would send a smaller amount—$239,370—from St. Paul.

Use the drop-down search tools above to explore LGA amounts for Minnesota cities. 

Closing 'Aid Gap'
It would also create a new formula that adjusts aid based on its “aid gap”—a product of how the formula determines “unmet need,” according to the House Research bill summary. For so-called “large cities” that have more than 10,000 people, including St. Michael (but not Albertville), the formula considers three factors in determining need per capita:

• Jobs per capita
• Percent of housing built before 1940
• Percent of housing built between 1940 and 1970

LGA is intended to help cities with greater needs than they can reasonably expect to fund through property taxes. In most cases, the money goes into a city's general fund, to be spent however city officials deem necessary.

If Lien's law passes, no city would receive less aid in 2014 than it did in 2013. But aid could decrease in later years if it was bigger than what the formula determined to be unmet need. Decreases could not be more than 5 percent of the city’s levy the previous year.

In all, 85 of the state’s 854 cities (including Albertville under either formula) would not receive LGA in the initial year—down from 107 that do not receive it now, according to the Red Wing Republican Eagle.

The bill has united people in cities in the Twin Cities metro area and rural Minnesota who believe it would make LGA more predictable from year to year. An earlier proposal from Gov. Mark Dayton also recommended setting aside $80 million more for LGA, but it didn’t tweak the formula so radically.

Check out the House Research’s Local Government Aid Lookup tool.

Use the search tools above to compare how cities would fare if the bill passes. (You can ignore the first three dropdown choices and simply use the bottom box for a simple search by city name.)

The top widget allows comparison by “city cluster”—groups of cities that have similar characteristics. The House Research Department only started using new city clusters on March 6, 2013. St. Michael and Albertville are in the “Urban Fringe” group. (Read more about city clusters.)