State of MN Financing Local Government in the 1980's

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Special Report of VRT & CO. Page 7 STATE FINANCIAL RESOURCES APPLIED TO /FOR STATE GOVERNMENT VRS. OTHER PURPOSES State financial resources applied to /for the benefit of State government totaled $3,417,648,000 representing 46% of total resources applied for the 1979 -81 State Biennium. These costs were expected to increase to $3,978,725,000 with the 1/81 Proposed Budget for the 1981 -83 Biennium. Actual State financial resources applied to /for the benefit of State government totaled $3,994,858,000. An additional $306,123,000 was applied toward the State's reserve balance at June 30, 1983. State financial resources applied to /for the benefit of State government versus local government and local taxpayers (property tax relief paid directly to local tax- payers) were /will be for the 1979 -81; 1981 -83; and, 1983 -85 State biennium (i.e., budget periods) as follows: Time Period • 1979 -81 Biennium (Actual) Local Government and Local Taxpayers State Government Amount % of Amount % of (In $1,000's) Total (In $1,000's) Total $ 3,991,153 53.87% $ 3,417,648 46.13% • 1981 -83 Biennium: - 1/81 Proposed Budget 4,762,017 54.48 3,978,725 45.52 - Actual 4,000,256 50.03 3,994,858 49.97 • 1983 -85 Biennium (Appropriated) 4,686,680 47.64 5,151,380 52.36 The above data illustrates how the State resolved its 1981 -83 budget "balancing" problem. It was done by: (1) reducing the State's financial commitment to local govern- ment and to local taxpayers; (2) increasing the level of taxation at the State level (sales tax and income taxes) and local level (property taxes); and, (3) no reductions to overall financial resources applied to /for the benefit of State government.