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Mayors optimistic, but they worry deficit could hurt local aid

ST. PAUL -- Gov. Jesse Ventura's finance commissioner once famously announced that the state had "a boatload of money."

The big debate then was who got the most new money. Since then, state finance officials have looked under every financial cushion for all the spare change they could find, changing the debate to who would lose money. In city leaders' opinions, those funds -- and they say it has not been pocket change -- too often came from their coffers.

During Gov. Tim Pawlenty's time in office, state aid payments to cities were raided time and again so that the state could balance its budget. Now, with Mark Dayton poised to become governor and the state facing a $6.2 billion deficit, leaders mix optimism with fear that the raids could continue.

Dayton is a strong Local Government Aid supporter, but even the liberal Democrat says the state must find places to cut in order to balance the budget.

City aid, commonly known as LGA, was established because some communities could not collect enough property taxes to support fundamental services such as public safety and street programs.

LGA uses a complex formula to divide state aid among cities, with rural cities, Duluth, Minneapolis and St. Paul getting the lion's share.

Supporters argue state aid is essential for cities.

Park Rapids Mayor Nancy Carroll, for instance, said that LGA provides $400,000 of her city's $2.5 million. That is just more than half of the LGA that Park Rapids got when Pawlenty took office in 2003.

Carroll said she is in one of the property-poor communities that need LGA, with low-income residents and older houses making it impossible to raise enough funds via property taxes.

For many LGA supporters, Pawlenty has been seen as the enemy since he has unilaterally cut aid and worked with lawmakers to trim it.

But in an interview before he leaves office on Jan. 3, the governor said some cities get more LGA than they need. And some, he added, improperly blame property tax increases on LGA cuts.

Early in Pawlenty's eight-year tenure, the LGA formula was altered to return closer to the original help-the-poor-cities idea, but the change was not big enough for some.

Pawlenty's answer is for cities to do a better job of watching their budgets.

"It's OK for cities and counties to reduce spending," he said.

Don Davis reports for Forum Communications Co., which owns the West Central Tribune

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.