Wednesday, July 22, 2009

Taxing St. Peter to pay for St. Paul
It's not unusual for any Minnesotan to visit friends and relatives, to work, and/or to play in cities other than their city of residence on almost a daily basis. Is it reasonable, then, for Minnesotans to expect nearly the same quality of street maintenance, police protection, drinking water and other public services from city-to-city throughout the state? Local government aid (LGA) for cities was initiated more than 35 years ago, in part, to ensure that level of consistency. League of Minnesota Cities executive director Jim Miller addresses this issue in a commentary, shown below, that was originally published earlier this summer in Minnesota Cities magazine.

Why tax St. Peter to pay for St. Paul? This was the eye-catching title of a recent letter to the editor in the Star Tribune wherein the writer criticized local government aid (LGA) as an unwarranted example of wealth transfer. He posed the question of why, for example, citizens in Pine City should pay more in taxes to support services in Edina. He added that if residents in any community want services, they, not others, should pay for them.

In reality, the LGA program is intended to benefit those cities with relatively lower property wealth, not the reverse. Moreover, because the LGA appropriation is part of the much larger state budget setting dynamic, it is simplistic at best to generalize that residents in one community pay for services in another. In fact, state funding for all programs involves wealth transfer. (Complete article in pdf format...)