Minneapolis keeps Minnesota afloat: quick facts about the City’s budget and LGA

Unfortunately, some politicians at the Capitol who bash Minneapolis don’t seem to have the facts about how the City’s budget and record of fiscal responsibility. Here, then, are some quick facts about Minneapolis’ budget and the Local Government Aid that we receive that should help you answer anyone who tries to tell you — incorrectly — that the City of Minneapolis is “dependent” on the State of Minnesota.

  • Local Government Aid is designed to help cities across Minnesota deliver core services, not just to residents but to everyone who works in or visits those cities — and to keep down the cost to property-tax payers of delivering those services.
  • The core services of public safety and public works that LGA supports are paid for out of the City’s General Fund, which represents only 29% of the City’s overall budget.
  • Therefore, the amount of LGA that Minneapolis receives must be compared the City’s General Fund, not to the overall budget.
    • To compare the amount of LGA that Minneapolis receives to the size of the overall budget is misleading.
  • LGA is not a handout: The City of Minneapolis is a net donor to the State of Minnesota. It is not “dependent” on the State; it keeps the State budget afloat.
    • In 2011, Minneapolis will send $380 million in sales taxes collected here directly to the State.
    • In 2011, Minneapolis will also send $75 million in commercial-industrial property taxes collected here directly to the State.
    • In 2011, even if there are no cuts, Minneapolis will receive $87.5 million in LGA from the state.
    • Therefore, in 2011, Minneapolis will send $367.5 million more to the State from just two taxes collected here than it will receive in Local Government Aid.
  • Since 2002, Local Government Aid to City of Minneapolis has been cut a total $297 million, including $54 million in last three years.
  • The burden of paying for basic services (public safety, public works, public health, etc.) has shifted onto property taxes.
    • In 2003, State Aids (mostly Local Government Aid) supplied 40% of Minneapolis’ General Fund revenue while property taxes supplied 29% of the revenue. 
    • In 2010, State Aids are supplying just 23% of General Fund revenue (based on certified LGA) while property taxes are supplying 44% of the revenue.
  • The burden of paying property taxes has shifted dramatically onto homeowners due to State law changes, decline in commercial property values.
    • In 2001, Minneapolis homeowners paid 33% of all City property taxes collected.
    • In 2011, homeowners are paying 56% of all City property taxes collected.
  • The City of Minneapolis spending is 7% less than it did 10 years ago, after adjusting for inflation.
  • The City of Minneapolis has 10% fewer full-time positions than 10 years ago.
  • Since 2002, the City of Minneapolis has paid down $130 million in debt and last year restored the City’s AAA credit rating.

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