State Aids to Local Governments

Cities, counties, and unorganized territories would see more state aid with proposed legislation heard in the Senate Tax Committee. Since 1972, state aids to local governments have been a critical lifeline for local units of government to provide important services without having to rely solely on property tax payers to support local budgets. During the decade of budget deficits facing Minnesota, state aids suffered dramatic cuts and property taxes skyrocketed. The legislature has spent the last two years rebuilding this important state-local partnership, investing more than $140 million into state aids and $110 million more into direct property tax relief to taxpayers.

Local governments’ needs are ongoing and the Senate continues to work on rebuilding local budgets. New economic factors, such as rapidly increasing agricultural land values, put pressure on property taxes to provide local services. The bills heard in the Tax Committee this week aim to provide more stability to cities, counties, and towns—and taxpayers.

  • A proposed bill would increase Local Government Aid (LGA) payments by $45.6 million to return the total LGA appropriation to 2002 levels, before the decade of massive budget cuts (and property tax increases) began. (S.F. 874)
  • Counties with high percentages of agricultural land have seen their County Aid fluctuate – and often decrease from year to year. One proposal would provide more stability to local budgets by modifying the County Program Aid formula to better recognize land value fluctuations and limiting how much aid could decrease from year to year. (S.F. 1640)
  • Unorganized territories – areas that are not governed by a town board but by a county – do not currently qualify for Township Aid. The committee heard a proposal that would allow counties to receive Township Aid on behalf of any unorganized territories within the county borders. (S.F. 944)
  • Agricultural land whose taxable market value increases more than 10% and more than $1,000 over the previous year would be eligible for a new tax credit. The credit would be applied to property tax bills, and counties would then be reimbursed for the cost through the General Fund. (S.F. 921)
Senate DFL Media