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LGA cut clears first committee

Published (1/21/2011)
By Lee Ann Schutz
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Gary Carlson, standing left, intergovernmental relations director for the League of Minnesota Cities, and Patricia Nauman, executive director of Metro Cities, wait to testify before the House Taxes Committee Jan. 19 about the “Phase I Budget Proposal” that would reduce tax aids and credits and payments to cities. (Photo by Tom Olmscheid)A move to put on the fast track a bill that would make last year’s reductions to local government aid permanent has minority members of the House Taxes Committee questioning why so fast.

Part of a package of reductions announced Jan. 18 by House and Senate Republican leaders that would reduce the projected state $6.2 billion state budget deficit by $1 billion, HF129 would:

• make permanent all pay-2010 aid and credit reductions to local government;

• reduce the renter’s tax credit from 19 percent to 15 percent;

• repeal the political contribution refunds; and

• limit payments to claimants under the sustainable forests incentive program.

“My goal here is to make the numbers look better in the February forecast,” said Rep. Greg Davids (R-Preston), the bill’s sponsor and committee chairman.

Approved 11-7 by the committee, the bill’s next stop is the House Ways and Means Committee. A companion, SF82, sponsored by Sen. Claire Robling (R-Jordan), awaits action by the Senate Taxes Committee.

The bill proposes to make permanent the $304 million reduction to fiscal year 2011 local government aid that was part of the 2010 budget-balancing legislation. However, the same legislation, which has been certified for fiscal year 2012 would bring the aid level back up to $928 million. The freeze at the $690 million level, some say, will result in massive budget cuts for cities and counties and higher property taxes.

Because the session is only in its third week, Rep. Paul Marquart (DFL-Dilworth) said there is time to consider other options. He recommends looking at ways to improve efficiencies, redesign how government works, zero-based budgeting and listening to the public before proposing more tax increases. A motion to refer the bill to the House Property and Local Tax Division was defeated.

There’s big difference between short-term and permanent cuts, said Rep. Jim Davnie (DFL-Mpls). He said cities set their levies for the fiscal year assuming the money this bill would cut would be restored.

“One Legislature cannot bind another Legislature to action,” countered Rep. Mark Buesgens (R-Jordan). “The 86th Legislature made some really bad budget decisions. Promises were made by a Legislature that no longer exists.”

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