County Program Aid

Just as there is Local Government Aid (LGA) for cities, so there is County Program Aid. We have already reviewed the LGA for the ten cities in Chisago County. Now consider the state aid to Chisago County government. Statewide, for 2009 there is $42 million LGA and $28 million County Program Aid, for a grand total of $70 million for all 87 counties and 853 cities in the state.

Here are the historical amounts of state aid received by Chisago County. Data is taken from here and here.

Chisago County will receive $367,597 more County Program Aid in 2009 than in 2008 ($2,251,681 - $1,884,084). However, some of that was a projected increase under the old law. The County will receive a $259,826 increase in County Program Aid over the projected amount under the old law ($2,251,681 - $1,991,855).

The 2003 aid allocated to Chisago County under a 2002 Democrat controlled House was cut by the Republicans in 2003 to balance the $4.2 billion state deficit. It was reduced the following two years before it was increased.

The Dems controlled the House in 2007 and 2008, but provided only modest increases for the County. The projected increase for 2009 was significant, but greatly increased by the Democrats under new law.

They want you to believe they are very generous and the Republicans are stingy, but compare the current numbers to previous numbers. The 2009 amount of $2,251,681 still does not rise to the level of the certified aid in 2003 and just tops the level of what was paid in 2003.

Rep. Jeremy Kalin reports, ". . . the legislature increased state aid to Chisago County and area cities more than $425,000 to reduce property tax bills. We also added $25 million more for direct homeowner property tax rebates." So I take it he is saying there is a combined $450,000 more state aid to Chisago County government and its ten cities. Look at Chart 1.

If Kalin is using the 2008 aid figures, then he understated the amount of new aid by $217,000 ($667,000 - $450,000).

If Kalin is using the 2009 projected figures under the old law as a starting point, then he overstated the amount of new aid by $68,000 ($450,000 - $382,000), as illustrated in Chart 2.

In either case, combined, the County and cities receive more state aid. I point out the above disparity with Kalin’s stated figure to draw attention to the imprecision and lack of documentation in Kalin’s reports to his constituents. (I may be missing some aid numbers, but I do not know what they are.)

Undoubtedly, many of his readers are not interested in supporting details. However, many of us are. Simple footnotes or additional explanations would serve him well to provide supporting documentation for his assertions. There is plenty of space on his web site to do just that.

It appears he has understated the amount of new dollars in the case above. On the other hand, he may not want us to know about some of the details, as we have noted previously, because the new LGA law actually hurts several cities in the county.

More on LGA for Chisago County Cities

The state takes taxpayer dollars and provides Local Government Aid (LGA) to cities. The data in the charts below is found here and here and comments on it in a previous post.

The new LGA law provides $299,687 more to the ten cities than the 2008 certified amounts. This is a 15.6% gain over 2008 LGA, a significant gain. Together, Chisago County cities will receive 0.71% of the new $42 million statewide LGA.

The 15.6% gain of $299,687 LGA looks impressive when considered as a combined group of cities. However, while six cities have LGA gains, three cities break even and one city goes in the hole. The significant gains are concentrated on three cities (Stacy, North Branch and Rush City).

Column C in chart 2 lists the projections for 2009 that would have been the case under the old LGA law compared to the 2008 LGA.

If the old LGA law were carried into 2009, there would have been less money distributed, but eight cities would have gained LGA and two Chisago County cities would have lost LGA. The old formula made a more equitable distribution of LGA to more cities in Chisago County.

Chart 3 compares the new 2009 LGA amounts for each city to the amounts that were projected under the old 2008 LGA law for 2009.

The new LGA law provides $122,093 more dollars (299,687 - 177,594) to the ten cities than was projected under the old 2008 LGA law for 2009.

Chisago County cities will receive 0.71% of the new $42 million statewide LGA. Under the old law, the cities would have received 0.42% of the new $42 million statewide LGA. So the new law gains 0.29% more of the $42 million.

However, the new LGA law takes away money from six cities that would have been gained under the old LGA law. Six cities fared better under the old law (Chart 3). Three cities (Stacy, North Branch and Rush City) fare significantly better under the new law (Chart 1). Four cities (Harris, Taylors Falls, Wyoming and Shafer) are significantly hurt under the new law (Charts 1 & 3).

The old law was more equitable to more of the cities in Chisago County. Even though the new law provides more money, the distribution of that LGA is significantly inequitable.

Rep. Jeremy Kalin (D-17B) has touted his accomplishments in property tax reform. While he was part of securing $42 million LGA money statewide, he failed to make sure that the distribution formula was equitable to all ten cities that he represents. His vote for the new LGA distribution formula significantly helped three cities and significantly hurt four cities. That is nothing to brag about.

Furthermore, Kalin has locked these cities into this mode for the next two years. The new LGA formula provides a 2% increase for 2010 and a 4% increase the next year (see page 1 here). Consider these projections in Chart 4.

In 2010, both North Branch and Lindstrom will receive at least as much LGA as projected for 2009 under the old LGA law.

But even after the scheduled increases through 2011, Harris, Taylors Falls, Wyoming and Shafer will still not have received as much LGA as projected for 2009 under the old LGA law. These are the cities most hurt by Kalin’s vote for the new LGA distribution formula. It certainly appears that the old Republican distribution formula was much more equitable to the cities in Chisago County than the new Democrat distribution formula.

An Empty Hand and a Lid

Rep. Kalin claims on his web site on August 12, 2008,

". . . [W]e took significant steps toward Property Tax Reform, limiting property tax levy increases to just 3.9% a year, and increasing the direct property tax rebate fund by $25 million."

With his vaunted property tax reform, Kalin came to the 10 Chisago County cities with an almost empty hand, bringing a mere $122,093 more LGA for all 10 cities.

Six of the cities, Harris, Lindstrom, North Branch, Shafer, Taylors Falls and Wyoming, will lose LGA under the new 2008 LGA law, because Kalin’s empty hand swooped in and swiped money from these municipalities.

But that is not all he did. He then voted to clamp a 3.9% lid on local levy increases. So now those 6 cities that lost some LGA, are limited to a 3.9% levy increase for 2009, 2010 and 2011. Talk about a straight jacket! Taxpayers may like the imposed levy cap to keep their tax load down, but it could be tough for a city to fund needed projects, effectively causing taxes to mushroom after the 3 years.

Kalin calls this scenario property tax reform. He doesn’t trust local elected council members to hold the line on property taxes, so he thinks the state legislature should dictate their actions. Kalin and Olseen substituted their decisions for every elected official and every citizen who attends Truth in Taxation hearings to hold a council accountable for its proposed budget.

Kalin can vote to spend $6.6 billion on transportation (and raise taxes the same amount), but he can’t trust locals to make a responsible levy.

He can brag about giving Chisago County $15 million for roads and bridges, but then hog tie local governments so they may be restricted from doing street reconstruction.

He tells us how wonderful he’s been to give out $42 million in LGA (and tax us for that money) and then tells locals they have a lid on how much property tax they can raise.

Kalin’s version of property tax reform is you pay property taxes and you kick in other taxes to the state so he can give it back to you as a wonderful gift called LGA which was reduced for 6 cities in Chisago County.

This rookie legislator has demonstrated his ardent belief in statism and socialism—depend on the state to redistribute wealth and don’t trust the locals with their own money. In his desperate attempt to foster state control, he ended up hurting those whom he represents by swiping LGA and then slamming a lid on our own ability to raise our own local taxes.

This is not the actions of a fiscal or responsible conservative. It’s time to replace him with a true conservative, Don Taylor.

Property Tax Relief: Kalin Style

One of Rep. Jeremy Kalin’s (D-17B) legislative goals was to secure property tax relief. Looking at his literature, updates and press releases reveals property tax relief and property tax reform is a dominant theme, for example, here, here, here and currently, where he says:

"And we took significant steps toward Property Tax Reform, limiting property tax levy increases to just 3.9% a year, and increasing the direct property tax rebate fund by $25 million."

His own campaign manager exulted in finally gaining property tax relief through Kalin’s efforts. The new 2008 local government aid (LGA) law provides $42 million more for Minnesota cities that will be payable in 2009. $42 million is a significant amount. Why, to hear Kalin and Vitalis tell it, Kalin gave us RELIEF!!

But that relief is not all what it is cracked up to be, as we have previously noted. In that post we noted that 4 cities in Chisago County gained LGA while 6 cities lost LGA for a combined gain county-wide of $121,093. That’s not much relief!

So what is the 10 Chisago County cities’ share of the new LGA? Our 10 cities will receive $121,093 of the $42,000,000. That is 0.29% of the total increase in LGA. That’s not much relief! That’s not worth writing home about. That’s not any cause for celebration. That’s not worth all the hoopla from Kalin’s campaign manager.

Kalin and Olseen did not bring home the bacon. The Sugar Daddy didn’t come through. And Vitalis is crowing about little or nothing.

And don’t forget—all the $42,000,000 classified as "tax relief" is paid by you, the taxpayer. Kalin takes your money and hands it back to you as if the state paid for it. And then Vitalis crows that Kalin gave you "tax relief." Some deal!

LGA--Democrat Style

In a letter to the editor, Kalin’s campaign manager, Wade Vitalis, asked and answered a question and made an assertion,

What happened when they [former Republican legislatures] voted to cut local government aid (LGA) to our cities? You got it – our property taxes went up and up and up.

That was then – this is now.

The Democratic legislature has increased LGA to our cities. . . Finally – property tax relief.

Did former Republican legislatures vote to cut local government aid (LGA)? Look at the statewide totals found here on page 30 of the state document for a history from 2002 to 2007.

Cert. 2002 LGA.....Cert. 2003 LGA.....Paid 2003 LGA
$564,982,145........$586,848,950.......$464,941,977

Cert. 2004 LGA.....Cert. 2005 LGA.....Cert. 2006 LGA
$437,466,461........$436,718,087.......$484,558,200

Cert. 2007 LGA
$484,558,200

The 2003 LGA was certified by a Dem controlled legislature, if I remember correctly. The paid 2003 LGA was greatly reduced by a Rep controlled legislature to help offset the $4.6 billion deficit inherited from the Dems.

The Republicans pulled the state back from a deficit to a reserve, which is also reflected in the 2004 and '05 numbers. This was wise stewardship. Then the Republicans increased LGA for 2006 and '07. If Vitalis wanted a fatter LGA check for cities in this time period, then the state’s financial house would have been much poorer.

So yes the Republicans cut LGA to rescue the state from the $4.6 billion deficit that the Dems helped create by overspending.

The above is for the statewide LGA figures. Click here for the LGA certified to each of the 10 cities in Chisago County between 2002 and 2007. Some cities lost and some cities gained. Click here for the history of any city during this time period.

Next Vitalis claims the 2007-2008 Democrat controlled legislature has increased LGA to the cities and thus given property tax relief. Is this true? Yes it is (see page 25 here). The total statewide LGA was raised from $484,148,487 for 2009 to $526,148,487 which is still short of the $586,848,950 LGA for 2003 certified by a Dem controlled legislature.

So how did the 10 cities of Chisago County fare under Kalin’s and the Dem’s new 2008 LGA law which provided for increased LGA statewide?

..................2008....2009 projected..2009 new law
Center City....$46,226......$42,999.........$46,226
Chisago City...$111,816.....$69,501....... $124,501
Harris...........$156,013.....$171,700.......$156,013
Lindstrom......$156,606.....$172,388.......$169,483
North Branch..$349,538.....$431,592.......$429,229
Rush City.......$518,419.....$562,892.......$674,075
Shafer..........$136,520.....$172,878.......$141,622
Stacy...........$224,356.....$237,376.......$280,592
Taylors Falls...$195,970.....$211,708........$195,970
Wyoming......$22,560....... $22,584........$0

Center City, Chisago City, Rush City and Stacy gained a combined $212,626 from the Dem’s new LGA law. All the rest of the cities lost a combined $90,533 of LGA money compared to the 2009 projections based on the old law.

This is nothing to brag about. Vitalis’ unqualified "yes" is disingenuous. Kalin and Olseen did not "bring home the bacon" for all the cities they represent. They lost for the majority of the cities in Chisago County, while gaining a total of $122,093 county-wide. For all the work the Dems did on the new LGA law, this is nothing for Kalin and Olseen to write home about.

Meanwhile, Vitalis will not be paying state aid money from his left pocketbook to his right property tax pocketbook because he did not benefit from the new LGA law. In the end, he still didn’t get relief! What a shame!

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.