Pawlenty will not cut LGA this month

Gov. Pawlenty issued a news release saying he will not cut aid to local governments this month. Many city officials were concerned that a cut to Local Government Aid payments would lead to service cuts and increase property taxes. Pawlenty sent this letter to city and county officials. Here’s the release from Pawlenty’s office:


~ In letter to city and county leaders, Governor says future payments could be reduced ~

Saint Paul – Governor Tim Pawlenty today wrote to city and county leaders to inform them he does not intend to take executive action to reduce local aid payments later this month.

Last week, state budget officials announced a $1.2 billion deficit for the current two-year budget period. Governor Pawlenty stated he will work with the legislature to resolve the shortfall, but had said because of the timing of payments, that a portion of the December local aid payments could be unalloted.

In his letter, Governor Pawlenty said, “Given the imminent expected payment of December local aid, I have determined that additional local aid program cuts, if any, should be focused on future payments.” The Governor noted that if the legislature is unable to pass appropriate budget reductions, future aid payments would likely be reduced.

Approximately $437 million in local aid payments are scheduled to be sent to cities and counties later this month. Those payments include local government aid (LGA), county program aid (CPA), market value homestead credits (MVHC) and other local aid programs. LGA and CPA payments are delivered in two separate payments in July and December. MVHC payments are sent out in October and December.

Funding totals for those programs in 2009 were:

· Local government aid (to cities): $481.5 million

· County program aid (to counties): $194.9 million

· Market value homestead credits (to cities, counties and townships to reduce property taxes): $197.1 million

Approximately 45 percent of the state’s population, 2.4 million Minnesotans, lives in communities that receive no LGA payments. In 2009, 92 cities with a combined population of nearly 1.4 million people and the state’s townships, with 980,000 residents, received no LGA.

Governor Pawlenty has requested that legislative leaders start committee hearings immediately to craft budget reductions that could be enacted promptly at the beginning of the legislative session that gets underway on February 4, 2010. The Governor has also ordered state government agencies to begin holding back a portion of their spending for possible cuts.