State of MN Financing Local Government in the 1980's

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Special Report of VRT & CO. Page 8 STATE FINANCIAL RESOURCES APPLIED TO /FOR LOCAL GOVERNMENT State and local government in Minnesota truly are financial partners. A substantial portion of the State's General Fund budget is devoted to collecting taxes at the State level and then paying State aids to local government jurisdictions and direct payments • for the benefit of local school districts (i.e., teachers retirement, Minneapolis retirement, police and fire retirement). However, an overview of State budget data • shows clearly that the partnership is not an equal partnership. For the 1981 -83 biennium, local government jurisdictions were "asked" to "do their part" to assist the State in solving its budget situation. This results in a 6% increase in State aids from the previous biennium. Actual State aids were reduced by 15% from the January, 1981 proposed budget. This occurred while State government "did their part" with a 17% increase from the previous biennium and approximately the same as the January, 1981 proposed budget. Local government jurisdictions (at the expense of higher property taxes) "did their part" to offset the State budget "balancing" problem while State government "did its part" by limiting its increases to 17 %. WIN However, the State's 1981 -83 Biennium is now history and the State's budget situation is apparently resolved. The 1983 -85 Biennium is now in process and the outlook is better. The State budget has been "balanced" and the State is (wisely) building a reserve balance. State financial resources applied to or for the benefit of local government jurisdictions have been increased by 14% from the previous biennium but still 3% below the January, 1981 proposed budget. Meanwhile, State financial resources applied to /for the benefit of State government have been increased by 29% from the pre - vious biennium and 29% over the January, 1981 proposed budget. In addition to this 29% increase in expendable resources, the State has used $306,123,000 or 4% of its 1981 -83 financial resources and $330,176,000 or 3% of its 1983 -85 budgeted financial resources to build a reserve balance in the State's General Fund. Details of State financial resources applied to /for local government are presented on the next page.