Can we be too efficient?

In honor of the continuing Green Choices Challenge here in East Grand Forks, I decided to “recycle” a message from a previous weekly memo regarding Local Government Aid (LGA). The importance of this topic cannot be overemphasized for Greater Minnesota.

Local Government Aid (LGA) is flat for the third year in a row. Some state representatives will claim victory that they have “held the line” on LGA funding. However, the “same amount as last year” also equates to the same amount as in 2010, which itself was about $600,000 less than previous years. In effect, East Grand Forks has been cut $2 million in LGA funding just since 2008 – and counting…I have attached one slide from a Coalition of Greater Minnesota Cities presentation that shows that LGA would be funded at $817 million in 2012 had the program simply kept with inflation since cuts first began in 2002. The 2012 actual funding amount was $425 million – a cut of 48 percent. For East Grand Forks, to LGA could (or should) have been roughly $3.5-4.0 million, instead it is $2,471,550 for 2013.

Imagine what an extra $1.1-$1.5 million per year could do for a General Fund budget that has held steady at about $8.5 million for the last five budget cycles. All else equal, we could have replaced a 50-year-old pool in two years. Instead, the City Council in East Grand Forks is discussing how to fund a $2-3 million project over 10-20 years without unduly burdening property owners.

However, one may argue that LGA is not in place to build swimming pools. So, using an alternative, $1.5 million represents more than 50 percent of last year’s tax levy (just over $2.9 million). That represents a 50 percent tax increase over the last decade that one can attribute directly to decreased LGA funding.

It is quite clearly a revenue problem. As I mentioned, the East Grand Forks General Fund Budget has been flat for the last five years.* In retrospect, we may have been a little too efficient, in a sense. Whatever one’s opinion on local aid funding, we have clearly done our job locally. Cities, school districts, and counties have made the cuts asked by state officials and residents. Few argue that local governments are flourishing.

But, we have managed to “get by.” We are slowly undertaking capital and equipment replacement that have been long ignored. The “big issues,” like the swimming pool, fire trucks, waste water, and street maintenance continue to be major challenges. As the next budget season looms, our decisions would be much easier if we the additional million dollars that we had years ago.

* The 2012 Budget appears to be higher than 2011 because the Library and the Senior Center rolled into the General Fund in 2012. Without this reporting change, the fiscal years are nearly identical.

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