LGA Study Group Continues Gathering Info

The group received information from the Department of Revenue, House Research, and Senate Fiscal Research.
(Published Jun 27, 2012)

At its June 15 meeting, the Legislature-appointed Local Government Aid (LGA) Study Group heard presentations covering several elements of the LGA program as well as some alternative models for the LGA formula.

First, Eric Willette and Nick Greene of the Department of Revenue (DOR) led a discussion of several elements of the LGA program, including how to measure need and how to determine a city’s capacity. They also described trends in city tax rates, LGA per capita, and city spending. This information was also presented at the June 8 meeting of the Mayors Tax Reform Advisory Group on LGA.

Following the DOR staff, Pat Dalton of House Research and Jack Paulson of Senate Fiscal Research presented an overview of LGA formula factors and described some ways to evaluate potential factors, including data availability and reliability. They also answered questions about the current formula factors and their origin.

Dalton and Paulson also presented some alternative models to the LGA formula, including a pure per capita distribution method. In a pure per capita method, cities would receive roughly $98 per person. All cities would get aid under the model presented.

Another model described was one in which a per capita amount was adjusted by each city’s tax base multiplied by the average tax rate. This is a similar adjustment on the capacity side that is in the current LGA formula. Finally, another model was per capita aid adjusted by how each city’s tax base compares to the average tax base.

Each of these alternative models results in significant shifting of LGA dollars among cities. The alternatives were presented simply in order to spur discussion and were not directly requested by any member of the group. All of their presentation materials are available on the group’s site.

The next meeting has not yet been scheduled but Rep. Linda Runbeck, chair of the group, indicated that she would like to have a July meeting.

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