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St. Paul, Minn.

Who gets LGA and why?

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Local Government Aid (LGA) was established by the state Legislature in 1971 to help Minnesota cities bridge the gap between the cost of services and the ability to raise revenue.

Money from the state's general fund is distributed to cities based on a formula that includes factors such as income, population decline, age of housing, vehicle accidents, and crime.

Some cities rely on LGA for a significant part of their annual budget, while other communities get nothing at all.

LGA has been a volatile source of revenue for cities over the years. Changes by the Legislature over the years have alternately reduced, revised, restored, and sometimes frozen appropriations.

During periods of economic downturn, cuts to LGA are common. At the end of 2008, Gov. Pawlenty used his statutory authority to cut or "unallot" $66 million in LGA aid to cities before the end of the current fiscal year. Further cuts are expected in the next two-year budget.

RESOURCES

The history of Local Government Aid to cities
Source: League of Minnesota Cities

Key information about LGA
Source: League of Minnesota Cities

LGA glossary
Source: League of Minnesota Cities

Factors Influencing City Finances
Source: Minnesota Office of the State Auditor, 2006

Special report on LGA
Source: Minnesota Office of the State Auditor, 2003