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Worthington's LGA would see increase under Dayton's budget plan

Worthington City Hall (Brian Korthals/Daily Globe)

WORTHINGTON -- In the latest budget proposal by Gov. Mark Dayton, Local Government Aid (LGA) will increase for greater Minnesota cities.

"We first want to say we're very encouraged by the governor's proposal that recognized there have been needs for a community like Worthington moving forward," Worthington City Administrator Craig Clark said. "The continual tightening and restriction on LGA going the wrong way only increased the challenges we have for viability and competitiveness. We're very encouraged he's acknowledging that and putting resources toward it. How we get to the point of a final budget is where we're having a little bit of a disagreement."

LGA is designed to offer some property tax equality throughout the entire state.

"Over time, because of the revamping of the formula, that's gotten skewed," Worthington Mayor Alan Oberloh said. "Our idea as a low property wealth city by comparison to, let's say, Edina or Bloomington -- it's critically important that we maintain some level of stability in property tax increases or people wouldn't afford to be able to live here."

"Our squad cars are the same price as Bloomington is paying for them and those sorts of things," Clark said.

"They have a larger tax base to be able to generate the revenue and their rate is therefore lower, so we have the same relative amount of fixed costs. We have the same needs, and that's what the program is intended to do -- address those realities."

In 2013, the city of Worthington is slated to receive a little more than $2.7 million in LGA.

With Dayton's plan, Worthington would receive $513,160 more than previously estimated by using the current law in 2014. That would be an increase of more than $350,000 from 2013.

By 2018, Dayton's proposal gives Worthington an increase of $1,147,347.

"If he, as an administrator, came forward to council and said, 'We are going to have an additional $384,000 in local government aid, what projects do you want to do?"' said Oberloh, who served on the Mayors Tax Reform Advisory Group on Local Government Aid. "There might be zero projects. It might just go to simply property tax relief. We're not in the mindset that because you give us more money, we need to necessarily do more things. We'll do more things with the money when there are critical things that need to be done."

Under current law, there are seven different factors that determine how much aid a city will receive. With the new proposal, that will be cut to three.

"How many pre-'70s homes you have in your community, how much land is in your community that is owned by a non-tax paying entity? Whether that would be a county library, a county government building, a sheriff's department, a prison, churches or schools, but not city-owned property?" Oberloh asked. "Things that are city-owned do not qualify.

"The reason the Department of Revenue did that was because if they give you a credit for having lots of city-owned property, what incentive would you have to do something with it? Cities could go around and buy more property just to collect more LGA. If its city-owned, it doesn't qualify. Your population is the third."

One of the downsides, as Oberloh pointed out, is there is no room for the formula to change.

"There is not a factor put into it for it to grow," he said. "There are no factors that allow you to make any changes on this. It's based on today. If your population changes drastically one way or another, the formula doesn't change."

In the past few years, LGA has been an easy place for legislators to cut spending.

"We've lost, with market value credit and LGA, over $6.4 million since 2003," Clark said. "If you said 'what would Worthington do with that kind of money,' it would be a vastly different community.

"That's essentially what we're arguing in the global scheme of things; are we going to compete and have as high of amenities as they have in Eagan? No, we recognize that, but shouldn't there be some semblance that we have similar type of amenities out here for folks in greater Minnesota without taxing them into oblivion?"

Without LGA, it would be tough for smaller cities in the state to compete with the larger ones, Oberloh and Clark insist.

"Without local government aid as a part of our city government, and having to count on the only way we can do things is by instantly going to raise somebody's taxes, that's a tough pill to swallow," Oberloh said. "Especially when you look at metro communities that can geographically be a third of our size, but yet have high-end wealth whether it is business or residential -- it's pretty tough to compete."

With some opposition to Dayton's plan, the Coalition of Greater Minnesota Cities is taking a closer look at parts of the budget.

"The coalition, on behalf of the cities that are part of it, they have staff now that are digging into the full formula to try to decide how this got put in place because there were five coalition mayors of the 15-mayor group that met to go over LGA," Oberloh said. "Nowhere did we delve into the numbers to the degree of detail those numbers are. Now, there will be staff that will go forward that try to figure it out because there are winners and losers throughout the state."

Comparing the current law to Dayton's plan, in 2018, regional cities would see an increase of the following amounts:

* Adrian: $55,303

* Luverne: $261,285

* Jackson: $70,452

* Pipestone: $172,320

* Windom: $190,483

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Coordinator Aaron Hagen may be reached at 376-7323.