City Aid Cut - Pat

City Aid Cut - Pat Awada, the new State Auditor, is getting busy. As a lot of us knew she would.

Today, she's proposed a 42% cut in state aid to cities. And a lot of city government stakeholders aren't at all happy about it. But the real story is, why they're unhappy.

Republican State Auditor Pat Awada is recommending a 42 percent cut in local government aid to cities, arguing that the program has subsidized excessive spending and lower taxes for certain cities at the expense of others.

In a special report released by her office Monday, Awada divided all spending by cities between essential and nonessential services. She found higher levels of spending on nonessential services, which include such things as parks, libraries and anti-poverty efforts, among those that receive more state aid.

She defined essential services as general government, public safety and roads.

``Simply put, it's pretty clear that the more local government aid you get, the more you spend,'' said Awada, a former mayor of Eagan [a middle-to-upper-middle class suburb of St. Paul], which receives almost no LGA [Local Government Aid]. ``It has rewarded and encouraged spending.''

She said her office considered recommending eliminating the program entirely, but decided it was politically unfeasible. The proposal would cut aid to 103 cities.

Awada, a conservative Republican who was a lightning rod for the fiscal right wing of the GOP when she ran Eagan, is keenly aware of one immutable rule from Economics 101, something a lot of local government figures and pundits have forgotten - subsidize something, and the subsidy will get spent. Fast. And people will ask for more.

Local Government Aid, of course, enables cities to spend more money, while hiding the taxation within the state's overall tax structure. In other words, the local government gets to have its spending cake, while eating it by shunting the dirty work of collecting the actual money involved off onto taxpayers statewide.

The usual suspects aren't happy about this:

John Sundvor, a lobbyist for the Coalition of Greater Minnesota Cities, said if enacted, such cuts would be mean a combination of service reductions and property tax increases for most cities outside of the Twin Cities metropolitan area.

``It would mean a major devastation to the regional centers in Minnesota,'' he said, noting that cities such as Austin, Worthington, St. Cloud and Rochester fund services including libraries, airports and hospitals that surrounding communities depend on.

In other words; governments of cities that are highly dependant on LGA to support their own spending will have to be accountable to their voters for the money they spend - because they'll have to raise it directly, rather than hiding the taxation. That may not go over so well in Greater Minnesota, where the traditional dictum has always been "make high taxes as painless as possible".

I predicted this last year, around election time, and I'll reiterate it; Pat Awada will be Minnesota's first female governor. She has been the figurehead of Minnesota's swing to the right - and the Auditor position is a traditional springboard to higher office in Minnesota.

Posted by Mitch at February 10, 2003 08:20 PM