Cities and counties across the state of Minnesota won a battle in the midst of an ugly war this week when Ramsey County District Court Judge Kathleen Gearin ordered that Local Government Aid must be paid regardless of a government shutdown.
While Minnesota Gov. Mark Dayton and top Republican lawmakers continued their clandestine-like negotiations Thursday to come to terms over the state's $5 billion deficit, cities and counties breathed a little sigh of relief over Gearin's decision.
"We certainly welcome the court's decision," Marshall Mayor Bob Byrnes said. "Most people agree that it makes sense. The intent of Local Government Aid is to be sure that basic essential services are provided in communities."
"It's excellent news for Marshall as far as knowing that obligations are there for local government aid be paid to cities," Marshall City Administrator Ben Martig said. "Our position has been confirmed that the state was legally obligated to make payments to cities."
Martig said the Legislature can still make changes to the amount of money cities receive through LGA if they come to some sort of budget agreement, so certified LGA funding levels could still be somewhat in jeopardy, he said.
The certified amount for Marshall, which was established in last year's tax bill, is about $2.5 million - half of which the city is set to receive this month. Dayton and the Legislature could cut the amount of LGA to be paid out in July if they reach a budget solution before July 20, but Martig said the judge's decision is an important one nonetheless.
"It's important for now because if we were in an extended shutdown we know we would be funded, because we were told by the state last year it would be paid," Martig said. "It also clearly lays out the process in the future unless laws are changed that give us more direction. It's an important legal determination for cities across Minnesota, not just Marshall."
Martig said the judge's decision does not take away the authority of the governor and Legislature to change the omnibus tax bill, but since cities have taken the brunt of cuts in the past in the form of state aid reductions at least they know payments will be forthcoming in the event of a shutdown.
"Long-term, there's still a lot of concern about Local Government Aid," said Martig. "LGA is an important piece for local government; I don't think property taxes should be a primary source to fund cities."
Martig said it's up to the governor and Legislature to come up with a more responsible omnibus tax bill in relation to local government finances and property taxes. Cities draw in money twice a year through LGA and also through property taxes. Cities have already received property taxes for the first part of the year and Martig said the city has been planning for the worst in case LGA funding would not have been made available. Still, "it makes it a lot easier knowing money is coming to us," he said.
Byrnes said the city is sitting on about an eight-month reserve, so basic core services would still have been provided to city residents, but said there are a number of cities that don't have such reserves to fall back on, so the ruling is especially good news for other areas as well.
Counties also receive two state aid payments per year - one in late July and one at the end of the year. Lyon County Administrator Loren Stomberg said the county didn't have a formal plan for a shutdown but would've used reserves for cash flow during a shutdown.
"It's frustrating," Stomberg said. "Everything that has been going on in St. Paul the last couple of years has been frustrating with the budget issues and reduction in program aid. But like someone said in one of our meetings, it's the new normal."