LGA News: 2012 Payments and 2013 Certification Hitting Cities This Month

Cities impacted by recent natural disasters and those with cash flow needs may be eligible to receive an early distribution of December 2012 LGA.
(Published Jul 25, 2012)

Cities that have fulfilled the uniform financial accounting and reporting obligations with the Office of the State Auditor should have received the first half of their 2012 local government aid (LGA) distribution on July 20.

These payments should be one-half of the original 2012 certification amounts indicated in notices that were distributed to cities last July. The second half of the LGA payment will occur in late December.

By the end of July, cities should receive information from the Minnesota Department of Revenue (DOR) about their 2013 LGA distribution. The certification notices are required under state law to be distributed before Aug. 1 each year. The certification notice will include information on the formula factors and the computation of LGA.

According to the Department of Revenue, information on the 2013 LGA certifications will be posted on the DOR website in the near future.

Early distribution of December LGA
With the number of natural disasters in Minnesota this year, officials in affected cities should be aware that in addition to other federal and state disaster assistance programs, there is a procedure for cities to receive an early distribution of their December 2012 LGA payments.

State law (Minnesota Statutes, section 477A.015) provides that when the Department of Public Safety (DPS) commissioner determines that a local government has suffered financial hardship due to a natural disaster, the commissioner of Public Safety shall notify the commissioner of Revenue, who shall make payments of aids which are otherwise due on Dec. 26, as soon as is practical after the determination is made, but not before July 20.

The statute does not specify how the financial hardship determination is made by the commissioner of Public Safety or whether cities must formally request the early distribution to address financial hardships related to the natural disaster. In 2007, Gov. Tim Pawlenty directed the Public Safety commissioner to examine the situation in southeastern Minnesota, and subsequently, the DPS commissioner notified the Revenue commissioner that a hardship existed in the affected areas, which triggered expedited LGA and county program aid payments totaling $25.1 million—$18.2 million to 58 cities and $6.9 million to seven counties in the declared disaster area.

The League has contacted the Department of Public Safety, the Department of Revenue and the governor’s office to see if a similar determination will be made for cities and counties affected by the severe storms and flooding that occurred during the period of June 14-21, 2012, which resulted in a presidential major disaster declaration (DR-4069) on July 6. That declaration included the counties of Aitkin, Carlton, Cook, Crow Wing, Dakota, Goodhue, Kandiyohi, Lake, Meeker, Pine, Rice, Sibley, and St. Louis.

The early distribution statute is not specific to presidential major disaster declarations, and we will provide cities with more information on how to request an early distribution of December 2012 LGA payments to assist with the financial implications of the severe storms and flooding, including events that occurred before and after the June 14-21 storms.

In addition, current law provides that a local government may make a request to the commissioner of Revenue that an early distribution of LGA is necessary to meet the city’s cash flow needs. The statute does not require that the cash flow need be related to a natural disaster. The early payment is at the discretion of the commissioner, who may pay all or part of the LGA payment due on Dec. 26 at any time after Aug. 15. Requests for early distributions for cash flow needs should be submitted to the commissioner of Revenue.

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