Letter: Tax bill effect on LGA is 'overstated'
By Dave Smiglewski, Mayor of Granite Falls and President, Coalition of Greater Minnesota Cities In a recent letter to the editor, Rep. Steve Drazkowski overstated the impact the state's 2017 tax bill will have on local government property tax levies.
By Dave Smiglewski, Mayor of Granite Falls and President, Coalition of Greater Minnesota Cities
In a recent letter to the editor, Rep. Steve Drazkowski overstated the impact the state’s 2017 tax bill will have on local government property tax levies.
First, it should be noted that only $15 million of the $650 million tax bill will be spent on Local Government Aid (LGA) for cities. While cities appreciate this modest boost, it does not make up for the massive LGA cuts of the 2000s. In fact, even with this increase the LGA program still receives $30.5 million less in funding than in 2002, and that does not include factoring any inflation in the past 15 years.
Second, the slight LGA increase will not have the dramatic impact on city levies that Rep. Drazkowski seems to think it should. For example, a large increase in health insurance costs can easily swallow up the entire LGA increase a city receives, leaving little or no additional funding to cover other expenses.
Finally, Rep. Drazkowski notes the significant property tax relief for main street businesses. This is indeed something to celebrate; however, it represents the lowering of a state imposed tax and has no relevance on whether a city’s levy will or should go up or down.
LGA plays an important role in restraining property taxes and allowing cities to provide services, but it is just one of many factors that city officials take into account when setting levies. Just like every family’s finances are different, every community’s priorities and financial needs are different, and the varying levy increases and decreases across the state reflect these contrasts. Further, it is important to note that individual property taxes do not necessarily go up just because a city raises its levy. Factors such as new construction and the mix of property values in a city can result in lower property taxes even if the levy goes up.
Rep. Drazkowski appears to issue a warning to local governments: either lower property taxes in response to the tax bill’s small LGA increase or the entire LGA program could be in jeopardy. City leaders should not be intimidated by these comments. City officials - who understand their community’s unique needs - should base their budgeting decisions on what is best for their city, not a state lawmaker’s threats.