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Pawlenty could cut LGA by 25%, leaving the amount cities receive at levels of more than a decade past

Rep. Lyle Koenen, DFL-Clara City, studies paperwork during a Wednesday House committee meeting during which aid paid to local governments was discussed. The debate on cutting local aid is gathering meomentum as lawmakers are tasked with trimming the state's budget from a record deficit appraoching $5 billion. Koenen, like many lawmakers from rural areas whose cities' budgets depend on local aid, opposes any cuts. Tribune photo by Don Davis

ST. PAUL -- Bill Clinton was president. Arne Carlson was governor. Gasoline was $1.15 a gallon. Six more years of new television episodes were in "Friends" future. Google was two people in a garage.

And Minnesota cities received $368 million in local government aid.

Fast forward a dozen years and all that has changed, except LGA could still be at $368 million. That is how Steve Peterson of the Coalition of Greater Minnesota Cities sees the situation as Gov. Tim Pawlenty proposes to chop local government aids by 25 percent as part of his budget-balancing plan.

"It is a change in policy and a retreat in policy," Peterson told the House property tax committee Wednesday.

But there is little choice other than to make the cuts, Revenue Commissioner Ward Einess told committee members.

"The governor is very sensitive to local aid reductions," Einess said.

However, Einess asked: "Is it a higher priority than other issues?"

"In no way," he added, "is it an indictment of the cities."

Rep. Lyle Koenen, DFL-Clara City, opposes the cuts, like other rural lawmakers whose cities' budgets depend on local aid. But he said that he understands why local aids must be cut -- they are the third largest part of the budget, behind education and health programs.

The state faces a budget deficit of nearly $5 billion, but most policymakers predict that will soar to up to $7 billion when a new economic report is issued early next month.

Rep. Morrie Lanning, R-Moorhead, said he disagrees with fellow Republican Pawlenty on this issue.

Lanning said state government agencies would take a 5 percent cut in Pawlenty's budget plan, compared to about 25 percent for local aids.

"I would look more closely at state government," Lanning said, adding that the local cut percentages should be closer to state cuts.

Property taxes committee Chairman Paul Marquart, DFL-Dilworth, said local government aid will be a major issue in budget-balancing talks.

"LGA is the great equalizer," Marquart said of the program's founding purpose -- to provide communities with less ability to raise property taxes enough funds to adequately serve their residents.

"My concern is disparity," he said, when rural cities, Minneapolis and St. Paul take most of the cuts when suburbs are little affected.

However, many suburbs get little state aid, so there is little to cut, Einess said. "We spend a lot of time looking at the geographic impact."

Einess said the Pawlenty administration did all it could "to spread the pain around." However, he added, "there really is no other alternative."