East Grand Forks city official hopeful for modifications to local government aid formula
HF 1377 would modify how LGA is calculated, modify LGA provisions, modify Mahnomen property tax reimbursement program aid and would increase the appropriation for LGA along with County Program Aid.
EAST GRAND FORKS – After losing local government aid each year due to a unique housing situation, East Grand Forks City Administrator David Murphy said he is hopeful legislators will pass a bill related to LGA during this legislative session.
If passed, HF 1377 would modify how LGA is calculated, modify LGA provisions, modify Mahnomen property tax reimbursement program aid and would increase the appropriation for LGA along with County Program Aid.
The bill, authored by Rep. Dave Lislegard, D-Aurora, received its first hearing in the House Property Tax Division on Feb. 8.
“I think it will be successful. What form it will be improved in, I don’t know,” Murphy said. “It’s still on the floor and there are revisions being offered. So who knows what it’ll really end up like. I think they’ll pass something just because I think they’re going to have to. They can’t really keep ignoring it forever.”
LGA, and the need to tweak the current formula, has been a recurring agenda item for East Grand Forks city officials when they attend Legislative Day each year. A large part of how LGA is calculated is based on a city's pre-1940s housing. For East Grand Forks, Murphy said a “major factor” that has caused the city to lose LGA each year is because the catastrophic 1997 flood took out more than half of the older homes in the community.
While increases to LGA and County Program Aid were approved during the 2019 legislative session, both programs remain funded at around the same level as in 2002. During last year’s session, the LGA calculation formula was not tweaked.
In East Grand Forks, LGA goes into the city's general fund. Murphy said LGA is meant to offset property tax for cities that have more residential property than industry.
“(Those cities) end up having to tax their residents (for) the housing more than, say, a city that has more industrial and commercial,” he said.
The amount of LGA East Grand Forks has received this year has steadily declined from what the city received in 2019. For 2023, the city has received $2,233,625, which is close to the $2,223,326 received in 2022 and $2,222,057 in 2021. In 2020 and 2019, the city received $2,310,807. Murphy said the city got special legislation to freeze the 2019 LGA amount so that it would be the same in 2020.
East Grand Forks isn’t the only city watching LGA-related news in the Legislature. In a press release sent last week by the Coalition of Greater Minnesota Cities, several cities and counties across the state are pressing for more aid.
“For cities, LGA helps us provide the public safety, libraries, parks and recreation, safe streets, and water and wastewater services that our residents and businesses rely on,” Olivia, Minnesota, Mayor Jon Hawkinson said in the press release. “LGA helps make for thriving and strong communities in every corner of the state.”