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League of Minnesota Cities urges lawmakers to preserve LGA, expand local tax tools as cities face rising costs
Summary
Representatives of the League of Minnesota Cities told the House Tax Committee that cities face rising demand, older infrastructure and workforce shortages, and asked lawmakers to protect local government aid, modernize tax tools such as local sales taxes and TIF, and consider indexing aid to inflation.
Representatives of the League of Minnesota Cities told the House Tax Committee that cities are seeing rising demand for services, workforce and recruitment challenges, and aging infrastructure, and that state policymakers should preserve and strengthen tools that let cities respond without unduly increasing property taxes.
Beth Johnston and Pierre Ouellette presented the League's legislative priorities for the session, highlighting continued support for Local Government Aid (LGA), broader local sales-tax authority for regionally significant projects and modernization of tax increment financing (TIF) tools.
"The league is a statewide association representing 841 of 856 cities across the state of Minnesota," Johnston said, describing the League's membership and its role in coordinating municipal policy and technical assistance.
Why it matters: cities provide many state-mandated services that rely on local revenue. League representatives urged lawmakers to prefer state aid over exemptions or exclusions that merely shift property-tax burdens among local taxpayers.
Key priorities and rationales
- Preserve state'local fiscal relationship and oppose unfunded mandates: The League emphasized that state-imposed new duties without corresponding state funding increase local levy pressure.
- Local Government Aid (LGA): The League praised the 2023 formula revamp and incremental funding increases but said LGA and similar aids have not been indexed to inflation for years and recommended steps to restore purchasing power.
- Local sales tax authority: League witnesses said flexible local sales tax tools allow cities and regions to fund infrastructure and large projects through a voter-approved local revenue source rather than property-tax increases.
- Tax increment financing (TIF) modernization: The League supports updating TIF rules to reflect current economic and project realities.
Cities'specific challenges
Johnston and Ouellette cited rising costs for salaries and materials, recruitment and retention problems for city staff, and the high price of replacing aging infrastructure as primary stresses on municipal budgets. They said these trends make it difficult for many cities to avoid property-tax increases while maintaining services.
The League also described the organizational process that produces its legislative platform: member-city officials and committees deliberate annually to set policy priorities and advise the League's advocacy at the Capitol.
What the League asked for
League speakers asked the committee to: (1) preserve LGA and consider indexing approaches to maintain aid value; (2) support local sales-tax flexibility and sales-tax relief on construction materials in appropriate cases; and (3) consider TIF modernization that aids redevelopment without unintended local tax shifts.
The committee followed with questions from members. The League said it would provide materials and meet with members during City Day at the Capitol and in subsequent briefings.
Ending: League representatives said they will continue to coordinate city-level requests and offered to provide technical assistance to lawmakers and staff as bills proceed.
