Republicans in the Minnesota House are proposing to dramatically cut state aid to metro cities and counties. The proposal, released by House Property Tax Committee Chair Linda Runbeck, cuts $300 million in Local Government Aid. It proposes to phase out LGA to metro suburban cities that receive Local Government Aid by the end of the biennium. It also proposes eliminating LGA for Minneapolis, St. Paul and Duluth by the end of 2015.
Rural cities will mostly be spared from the LGA cuts. That’s a key signal that House GOP leadership is working to insulate rural members from heavy criticism over LGA cuts. City officials across Minnesota are taking a Three Musketeers strategy when it comes to LGA (“All for one, one for all”). Rural mayors say they won’t support LGA cuts to metro cities.
State aid to counties, in the form of County Program aid and the Market Value Credit, would also be eliminated in some cases.
The proposal also cuts a tax credit for renters and eliminates the political contribution refund.
The total cuts in state aids and credits are nearly $800 million over the next two years. The plan is the first specific glimpse that shows how Republicans in the House intend to erase the state’s projected $5 billion budget through spending cuts.
House Republicans intend to release the omnibus tax bill later today. It will include $300 million in tax cuts for low and middle income earners.
City and county officials and Governor Dayton are sure to criticize the measure. They have long argued that cuts in state aid will dramatically increase property taxes. Dayton is proposing to raise income taxes on Minnesota’s top earners to balance the state’s budget.
You can read the full House Property Tax spreadsheet here.