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City Administrator Whiting stated that he was familiar with other City Managers and Council • Members who, upon reviewing these activities, were concerned with the anti-city attitude that appears to have developed wrthm the Legislature. He inquired if Senator Novak would speak to this issue. Senator Novak stated that this was not his personal view and that he thought local and municipal government was probably the most effective government, and "the best buy for the buck, with the exception of the legislature." He stated, however, he had heard this expressed by others including Legislators. He stated that over a continuum of 10 to 20 years, going back particularly to the Perpich years, there had been some changes in law. He stated one of these was changes was that the salaries of all local government officials would be frozen at a level no higher than the governor's salary. He stated this seemed to particularly pose a problem for school districts and the hiring of school superintendents, and the districts became pretty creative in working around this. Senator Novak stated what many people do not seem to understand about the state budget, is exactly where the state dollars are spent. He stated he thought there was a perception on a segment of the public, that the vast majority of state dollars collected in state income taxes are spent to pay the salaries of state employees performing state functions, for example, the Department of Natural Resources official, the Department of Transportation highway worker, or the Health and Human Services social worker. He stated that the reality of this is over the last 25 years the percentage of the state budget that is actually spent on the salaries and benefits of state employees has shrunk significantly as a percentage of the state budget, and at present is approximately 12 percent. • Senator Novak stated the vast ma~onty of state dollars that are collected and spent, are spent on formulas that direct money back to local governments, principally school districts, counties, and cities. He stated the rest of the dollars that generally make up the budgets of local governments are those levied locally through the property tax. He stated that combination of these state general fund dollars and local property tax dollars, along with fees, make up the budgets of local government. He stated, in some people's view, the real growth in government, highly opposes in the 1980's and 1990's, was at the local level, not the state level, and yet, much of the "heat" for this was being taken at the state level. Senator Novak stated this began to play out in campaigns, largely inaccurate, in terms of people defending themselves against attacks on "big government" and what that really meant, and where the growth of government really was. He stated that most objective studies of that period of time indicated there was substantial growth in the number of employees at local levels of government, and not significant growth in the numbers of actual state employees. He stated this data for that comes from the United States Department of Labor and various other national collecting points. He stated he thought, out of that data, came attention that developed particularly with the first state budget crises. Senator Novak stated that the state's word had always been good, in terms of its relationship to local government, and oftentimes the state's promises were high, however, were kept. He noted the increase in state aid to public schools by 20 percent in the 1970's. He stated this was part of the Minnesota Miracle, when they shifted from property tax to income tax and were later criticized for 18 C:\ADMIN\MINUTES\CC\8-09-99.CC