Local Government Aid
Our Chisago County cities have just completed establishing their proposed budgets for next year. After public review during Truth in Taxation hearings, usually in December, these budgets can be adjusted, but not increased.
A Minnesota city has many sources of revenue, the two largest usually being property taxes and Local Government Aid (LGA).
Rep. Jeremy Kalin (D-17B), as we have noted before here and here, touts that he was "Fighting for Property Tax Relief." He laments that "...property tax hikes will continue another year" because Governor Pawlenty vetoed the bill. Kalin promises to "...deliver real property tax help for our area."
Of course, Kalin is not being honest. Surprise, surprise! "Property tax relief" comes at the expense of sales taxes and income taxes paid by you. The very ones who pay city property taxes, pay sales taxes and income taxes to the state, which gives your tax money to the cities in the form of LGA.
So the state takes money little by little from you throughout the year during each purchase and from your paycheck and gives it to the city. Then when you pay your property taxes twice a year, it doesn’t feel as bad as if you would have to pay all of it to the city on your own. Whatever taxes you pay now would essentially double in May and October if LGA did not exist. It’s called "feel good" taxation and Kalin wants you to "feel good" so you vote for him.
LGA began in 1971. Since 1991, counties have no longer received LGA. LGA payments to townships ceased in 2002. LGA payments to cities have been increasing to the present.
Check out this web site. Select your city to see the LGA payments it received from 2002-2007.
Cities get used to LGA and would not know how to budget without it. How did our parents and grandparents ever fund city property taxes without LGA prior to 1971?
If townships and counties can fund their budgets without LGA, then why can’t cities? If we, as taxpayers, are able to pay township and county taxes on our own, without LGA, then why can’t we pay city property taxes on our own?
If local taxpayers were truly responsible for all that a city expends, without LGA, then our local city budgets would be much lower. We would not be fooling ourselves about the amount of property taxes we actually pay. LGA is a hidden tax that shields city council members from tremendous heat from local taxpayers. LGA destroys council member accountability.
Kalin, forget your kind of "property tax relief" through LGA. I want my kind of property tax relief through making my council members fully accountable for how much of my money they spend. LGA should be abolished for cities. A side benefit would be that Kalin couldn’t crow so loud.