New LGA Plan Being Debated
The House Property and Local Tax Division will take another look at the new LGA formula this week. It's part of the larger Property Tax Division report draft that will debated and amended, then sent to the full House Tax Committee for possible inclusion in the House omnibus tax bill.
This new formula is the product of a compromise between the state's major city organizations, including the League of Minnesota Cities, MetroCities, and the Coalition of Greater Minnesota. Unlike the original proposal, the version of the city LGA proposal includes only a $60 million increase in the LGA appropriation in 2014. The original city proposal contained in HF 1608 / SF 1491 was based on an $80 million increase in 2014. Governor Dayton's revised budget also included an $80 million LGA appropriation increase.
Despite a reduction in the 2014 appropriation increase sought by cities, the LGA formula in the current draft of the Property Tax Division report does contain other major provisions of the LGA reform agreed to by cities, including a simplified city revenue need formula, an improved mechanism for adjusting LGA payments so that the aid distributed does not exceed the level appropriated, and an adjustment in future years so that the LGA appropriation keeps pace with inflation and population growth.
Click here to view a Minnesota 2020 simulation of the LGA that each Minnesota city would receive under the LGA formula contained within the House Property Tax Division report in 2014, with projections for subsequent years through 2019.