The Minnesota Department of Revenue has posted the certified local government aid (LGA) distribution amounts for 2023. The overall appropriation for LGA will decline by $5.5 million for 2023 compared to 2022 due to the loss of a one-time, “hold-harmless” supplemental aid increase approved by the Legislature in 2021.
Legislative inaction on bills reduced LGA funding
During the 2022 legislative session, the Legislature debated but did not pass a bill developed by the League of Minnesota Cities, Metro Cities, the Coalition of Greater Minnesota Cities, and the Minnesota Association of Small Cities that would have updated the nearly decade-old LGA formula. That update was based on a statistically derived set of factors to reflect new fiscal and demographic data on cities and would have increased the LGA appropriation by more than $34 million.
The Legislature also debated a second, less comprehensive bill to simply extend the 2021 supplemental hold-harmless additional aid for a second year. However, the absence of an agreement over several otherwise unrelated spending bills resulted in the failure of the Legislature to pass a tax agreement that, had it passed, would have prevented a loss of LGA to at least 150 cities in 2023.