1997 flood still affects state aid to East Grand Forks
Almost 22 years after the Flood of 1997, East Grand Forks officials and Minnesota experts on Local Government Aid say the natural disaster still limits how much money the town receives from its state.
LGA is funding the Minnesota Legislature sets aside each year from its general fund to help local governments pay their operational costs.
Amounts are distributed to eligible Minnesota cities based on a statistical formula evaluating several factors, including age of infrastructure, property values, strength of tax base and the prevalence of pre-1940 housing.
"When the formula is calculated, East Grand Forks actually takes a hit because we lost a lot of that (housing) in the flood," said City Administrator David Murphy.
Older housing can indicate the prevalence of tax-exempt properties, which are a drain on city resources, said Gary Carlson, a lobbyist from the League of Minnesota Cities. Aged housing also points to older streets and other infrastructure, which require costly upkeep.
"When East Grand Forks lost some of that housing down by the river, I would have to bet that was all older housing," Carlson said. "So the city is then suddenly deemed to not have a lot of older housing and therefore they're less in need of state assistance."
This will be the city’s first year requesting a change to what it receives in LGA based on pre-1940 housing, Murphy said.
"We weren't really aware of what was causing it, up until now," Murphy said. "We knew that the LGA budget was being cut so we knew we were getting less for that, but how the calculations actually work is news to us."
LGA decreased in 2003 when the Minnesota Legislature cut about $150 million from the program's appropriations for the following year. Cities have spent those years pushing the Legislature to restore state LGA funding. The state's 2019 appropriations for LGA are about $52.4 million less than it was about 16 years ago, according to information from the League of Minnesota Cities.
"The only other real source of revenue most cities have for general operations is the property tax," said Carlson. "And so as LGA has not kept up or actually has been cut, it puts additional pressure on the property tax that is paid by homeowners, property owners and renters. Cities have continued to look for restoration of that (LGA) money, in the hopes that it will help reduce the pressure of the property tax."
From a budget of more than $534 million for 2018, state numbers show East Grand Forks received about $2.4 million, almost $88,000 less than it received in 2017.
The city will receive another $88,430 less in 2019, even though the state decided to freeze its LGA budget for this year.
For the time being, Murphy said he is optimistic for the outlook of LGA funding
"We really don't know what's changing here yet; with this year, all we know is what the governor's stated opinion has been," he said.
Murphy and several other organizations advocating for local government and higher LGA have highlighted incoming Gov. Tim Walz's public intentions of raising the LGA budget.
"The governor coming in is an outstate governor," Murphy said. "LGA tends to be more beneficial to outstate cities than it is to metro cities, and (Walz) has stated he's in favor of increased funding to LGA."