Chanting Points Memo: “LGA Cuts Are Destroying Minnesota!” (Part III)

There are a little over five million Minnesotans. 

About 4.3 million of them live in “cities” of widely-varying sizes and government types, from plucky Montevideo up to metropolitan Minneapolis, from conservative Mound to neo-Wobbly Duluth.

These cities have a few things in common.  They levy property taxes to pay part of their municipal bills – and many of them spent much of the past forty years laundering their spending through the state via “Local Government Aid”. 

In their approach to the next election and the run-up to this November (which, for the DFL, will almost surely be as  much a matter of running against Pawlenty as anything), the DFL is banging on the ideas that…:

  • cuts to Local Government Aid shredded budgets and gutted infrastructure throughout Minnesota, and
  • Minnesota cities need to “pay their way”.

So let’s look at how Minnesota “pays its way”, according to data from the League of Minnesota Cities.

From 2002 to 2009,. Local Government Aid to all Minnesota cities fell 15%. 

  2002 2009  Initial 2009 after Unallotment $ change % Change
Total City LGA $564,990,952 $526,141,547 $481,521,933 ($83,469,019) -15%
Total City Levy $1,060,248,330 $1,689,917,723 $1,689,917,723 $629,669,393 59%
Total LGA+Levy $1,625,239,282 $2,216,059,270 $2,171,439,656 $546,200,374 34%

 You might ask “what about the changes between 2002 and 2009?”  It’d be a fair question; while I am focusing on the big picture here – the gross movement during the Pawlenty Administrion, the fact is that LGA started at $564 million in 2002, dropped to $464 million in 2003, dipped into the $430-million range through ’05, and held in the $480-millions until 2009, when the original amount ballooned back up to $526 million, before Governor Pawlenty’s unallotment shaved it back into teh $481 million range, roughly where it’d been throughout his second term.

But check out the second line – the total property tax levies from all cities.  In every year of the Pawlenty Administration, they rose by at least $100 million. 

As a result, while total LGA was off 15%, or about $83 million, for the period (and maybe $3 since the start of Pawlenty’s second term, even with unallotment and the removal of the “Minnesota Value Homestead Credit” (in which the state stopped paying cities and counties back for a credit on taxes for high-value homes – which affected suburbs with high property values vastly more than the Big Three cities of Minneaoplis, St. Paul and Duluth – of which more in a bit.

Those numbers are for all cities.   And throughout Minnesota, hikes outstripped cuts by a factor of 7.5 to 1 (683 milion to 85 million), even after unallotment.

Now, let’s look at the Big Three – Minneapolis, Saint Paul and Duluth.

Minneapolis’ population grew by 2% during the Pawlenty years – while property tax levies rose 93% to cover a post-allotment drop of 28% in LGA payments; the city’s total revenue zoomed up 35% during the Pawlenty years.  Hikes outstripped LGA cuts by almost 4 to 1.

  2002 2009 2009 with unallotment $ change % Change
Mpls LGA $111,567,143 $88,786,411 $80,249,971 ($31,317,172) -28%
Mpls Levy $121,910,797 $235,717,416 $235,717,416 $113,806,619 93%
Total LGA+Levy $233,477,940 $324,503,827 $315,967,387 $82,489,447 35%
Mpls Population 382,446 390,131 390,131 7,685 2%

 Saint Paul didn’t fare quite as well; nearly doubling the property tax levy to its stagnant population  only compensated the 22% drop in LGA with an overall quarter hike in LGA/property tax revenue.  Hikes outstripped cuts by almost 3 to 1.

  2002 2009 2009 with unallotment $ change % Change
StP LGA $73,554,056 $62,600,018 $57,569,445 ($15,984,611) -22%
StP Levy $45,857,683 $89,254,277 $89,254,277 $43,396,594 95%
Total LGA+Levy $119,411,739 $151,854,295 $146,823,722 $27,411,983 23%
StP Population 287,260 288,055 288,055 795 0%

 Duluth’s LGA, with unallotment, dropped by one percent over the Pawlenty Administration, and supplies more of the city’s budget than the property tax levies – which rose 70% – do.  Note that while Local Government Aid was virtually unchanged even with Pawlenty’s unallotment, and the loss of MVHC revnues had little effect given the city’s depressed housing values, property taxes went from about a third of the total LGA/tax venue mix to a little less than half; the overall take rose by 15%, even though Duluth’s population shrank.

  2002 2009 2009 with unallotment $ change % Change
Duluth LGA $29,635,152 $30,730,443 $29,200,998 ($434,154) -1%
Duluth Levy $9,062,723 $15,437,590 $15,437,590 $6,374,867 70%
Total LGA+Levy $38,697,875 $46,168,033 $44,638,588 $5,940,713 15%
Duluth Population 86,125 85,220 85,220 (905) -1%

So let’s compare the state’s Big Three cities with the rest of the state.

The population of Minneapolis, Saint Paul and Duluth grew by about a percent during the Pawlenty years, while all the rest of Minnesota’s cities grew by 8% – greater than the population of Saint Paul.  The Big Three cities’ state of the state’s population shrank by 1.2%, to just under 18% – less than one in five Minnesotans:

Populat6ion 2002 2009   Gross change % Change
Big 3 Population 755,831 763,406   7,575 1%
Total city Pop 3,993,198 4,315,637   322,439 8%
Big 3 % of Pop 18.9% 17.7%      

 But how do the finances break out?

The big three, even with a 22% post-unallotment cut, get a third of the state’s Local Government Aid – double the population’s proportion of the revenues:

Big 3 LGA $214,756,351 $182,116,872 $167,020,414 ($47,735,937) -22%
All others LGA $350,234,601 $344,024,675 $314,501,519 ($35,733,082) -10%
Big 3 % of LGA 38.0% 34.6% 34.7%    

Divided up by resident, this means that residents of the Big Three get, even after the unallotment cuts, two and a half times as much Local Government Aid per-capita than the rest of the state’s cities.

  2002 2009 2009 ost unallotment Change %change
Big 3 per capita LGA $284.13 $238.56 $218.78 ($65) -23%
All others LGA per capita $10.19 $96.85 $88.54 ($20) -18%

And the Big Three’s property tax revenue hikes – 93%,  almost $164 million over the Pawlenty years – outstripped their net LGA cuts (almost $48 million) by 3.4 to 1. 

What does this mean?

The Hikes Beat The Cuts: While the DFL caterwauls endlessly about the damage the cuts in LGA did, the hikes in property taxes statewide outstripped the LGA cuts by 7.5 to 1.   Without unallotment, that would have been closer to 16 to 1.  Bear in mind that this is money that goes to government – not merely to maintain it but to grow it – as opposed to anything useful, like growing our private sector or putting your kids through college.

Pay Your Own Way?  While Local Government Aid was originally intended to subsidize smaller, poorer governments in outstate Minnesota, so that their schools and infrastructures could compete with those of the once-wealthy Twin Cities, that’s been totally stood on its head during the past generation.  Minneaopolis, Saint Paul and Duluth get 2.5 times as much Local Government Aid per capita than the state’s smaller cities.


Because the Big Three cities are basket cases after generations of unfettered DFL control.

The DFL would have you believe there’s no alternative.

We’ll look into that on Monday.

20 thoughts on “Chanting Points Memo: “LGA Cuts Are Destroying Minnesota!” (Part III)

  1. Pingback: Tweets that mention Shot in the Dark » Blog Archive » Chanting Points Memo: “LGA Cuts Are Destroying Minnesota!” (Part III) --

  2. Mitch,

    Are your figures accounting for inflation? If not, they’re approaching useless unless you agree the “Gov” should be turning back the inflation born increases in revenue as well given that you’ve turned back the clock on the expense side. As an illustration, where have those inlfation increases gone if not to LGA? Don’t those then represent much more than keeping up with costs of living levl increases in those program?. Try adjusting for inflation and see what you get in terms of cuts. One other comment, levies clearly have increased, obviously that would be to adjust for impacts to effective cuts to LGA.

  3. Are your figures accounting for inflation?

    I mentioned yesterday that the increase was ahead of inflation for the past ten years.

    Which is more than private sector wages have done lately.

    As to “approaching useless” – nope. For starters, there is nothing that says that in times of economic trouble government income MUST stay ahead of inflation; that’s absurd.

    And at any rate, it’s logically void – inflation affected all parts of society, including (especially) those who paid the taxes – whose wages are NOT keeping up with inflation these days.

    Wishing that my figures “approach useless” is a far cry from showing it to be true.

  4. So the “Big Three” cities include Duluth (population ). FYI – there’s another city down in the SE part of the state with a population of 101,659. Perhaps the Big Three should become the Big Four.

    I’d be interested in seeing corresponding figures for Rochester.

  5. I see I forgot to paste the actual number in for Duluth’s population – 85,220

  6. So the answer to ToAG is no, I’m not comparing constant dollars and if I was writing a term paper in King Banaian’s class, he’d send it back to me to do over.

  7. I don’t need to compare constant dollars if I note that inflation has risen by x percent in eight years, which happens to be y percent less than the increases in overall funding.

    Take not the name of King Banaian in vain. It never ends well for you.

  8. If you are looking at long term trends, 2001 would be a better starting point – the 2002 LGA expenditures included a big jump for the cities that get a lot of LGA.

    Also, 55% of the state gets no LGA at all anymore. In the 70s, LGA was a straight revenue diversification effort – every city got $25 per person to begin with, and it rose to $50 per person before they started playing games with the distribution and choosing winners and losers in the formula.

  9. Wendy – you’re right, it might have been. I chose the Pawenty Administration’s timeline, which may be a tad arbitrary, but I didn’t pick the left’s memes…

    We’ll be touching on the parts of the state that got no LGA on Monday.

  10. Coon Rapids is nearly as large as Duluth. Very well might surpass it after the Census.

    Mitch to get to Coon Rapids follow Snelling North to the end hop on 694 West, Merge to the right and follow 10 West exit at Foley or Round Lake Blvd.

  11. Oberstars district is going to extend from International Falls to Hugo before he leaves office.

  12. Mitch probably needs directions K-Rod he doesn’t get out of St Paul much.

  13. Pingback: Shot in the Dark » Blog Archive » Alliance For A “Better” Minnesota: There Are No Facts

  14. Pingback: Shot in the Dark » Blog Archive » DFL To Minnesota Taxpayers: “4+0=3, Winston”

  15. Pingback: Shot in the Dark » Blog Archive » Called To Account

  16. Pingback: Shot in the Dark » Blog Archive » Where Did You Hear It First?

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.