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.

Why?

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.