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Edition:
September 02, 2010
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NEWS
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Monday, December 22, 2008
Legislators may consider sales tax on clothing, food
Local Government Aid slashed; other cuts expected in human services, education
 | | Outgoing Vergas City Council Member Myles Flateland discussed possible Local Government Aid (LGA) cuts during a meeting Friday afternoon with State Sen. Dan Skogen in Vergas. The Hewitt DFLer told the councilman that Vergas and other cities under 1,000 population would not immediately lose any of the previously certified funds. Flateland was the only resident in attendance at the session. Photo by John W. Dermody |
• by John W. Dermody
Would residents like the idea of paying sales tax on food and clothing?
That could be a proposal placed in front of the legislature when it convenes in January.
At a session open to the public at the Vergas Community Center Friday, State Sen. Dan Skogen, DFL-Hewitt, said the proposition could end up being an "either/or" resolution in both the Minnesota Senate and the House of Representatives.
He doubted that both "trial balloons" would pass, but thought many lawmakers would try to use the threat of adopting both possibilities as a way to put a sales tax on one.
Currently, North Dakota has a sales tax applied to clothing but not food; Minnesota has neither. There are a few states who tax food, with Colorado being one.
In the recent past, the legislature has remained solid against adding a sales tax to food and clothing. Many lawmakers have tabbed such a tax as regressive and would simply hurt poor families and persons on fixed incomes.
Still, it was noted that such a measure - if it passed - would not make a large dent in the budget deficit over two years, anyway.
It was speculated that by bargaining to get sales tax on one or the other, that perhaps the overall state sales tax rate of 6.5 percent could (maybe) drop to 5 percent.
A dozen meetings with constituents
Skogen, representing District 10, was the only elected official at the Vergas session, since Rep. Bud Nornes, (R-Fergus Falls), was not able to attend. Nornes is a veteran House member from District 10-A.
Outgoing Vergas councilman Myles Flateland was the only other person at the Friday meeting.
Earlier, Skogen and District 10-B Representative-elect Mark Murdock, Perham, met Thursday afternoon with constituents at Perham's Lakes Cafe. At no time were the legislators optimistic about the coming budgetary work facing state officials.
Prior to the Vergas session, Nornes and Skogen had stopped in Battle Lake and Dalton, then the senator continued to meetings in Underwood, Fergus Falls, Pelican Rapids and Vergas.
Thursday, Murdock and Skogen had swung through Menahga, Sebeka, Wadena, Parkers Prairie, Henning and finally Perham.
Murdock, elected in November to succeed Dean Simpson in the eastern portion of Otter Tail County, will be jumping into his first legislative session in early January.
How will state fund education, cities' needs?
One of the primary topics during the meetings, of course, was money. There were questions from the public about how NOT to spend dollars...and how to make cuts to budgets that have already been planned by both Minnesota cities and the state itself.
As it turned out, topics and related discussions had distinct shifts because the release of news about potential budget cuts was not released at St. Paul until early afternoon Friday. Thus, speculation the first day of the tours became reality the second.
Several constituents asked them Thursday about school funding - how the state formula might be revised - and put forth queries about how much Local Government Aid (LGAs) might disappear when Gov. Tim Pawlenty cranked up his calculator. His figures were expected to be released the next day.
LGA cuts faced by area cities
Thus, about half-way through Friday's circuit, word emerged from the state capitol that some area cities would take a hit on the amount of LGAs they would receive as part of their Dec. 26 payments, which actually was funding that had been earmarked for local budgets for the last half of 2008.
Moreover, most cities had set new budgets required by statute as they looked ahead. Now revising their budgets in light of the state withdrawing funding could become a very difficult task
The paring of LGAs was done by the governor via what is termed "unallotment," because the amounts had previously been set. But that was prior to a budgetary analysis that indicated about $500 million would have to be immediately cut, with lower checks sent to cities this week. Then another slashing of about $4.7 billion will occur in the months ahead in regard to the coming biennium.
The governor subsequently announced Frazee will be slashed by $25,538 (of an original amount certified at $184,025), which Skogen's figures placed at a cut of 4.08 percent. However, the city is still slated to receive its original $16,915 in funds under a "market value homestead" designation.
Concerning other area cities, Detroit Lakes will be cut by $142,581, Perham will lose $64,287, Pelican Rapids' amount will be diminished by $57,259, New York Mills will be cut by $28, 803, and Vergas will not lose any of a total set earlier at approximately $13,000.
Small towns exempt from $100 million cut
The reason for the latter resolution was because Pawlenty exempted cities of less than 1,000 population and counties with fewer than 5,000 persons. The small counties include Traverse, Kittson, Lake of the Woods and Red Lake.
Becker County will be cut by $301,114, while Otter Tail County will lose $476,359.
The amount "taken" from cities and counties amounts to $110 million as it applies to remaining 2008 payments. In many cases, the cuts amounted to approximately 4-5 percent of the total earlier certified as LGAs. With trepidation, some local officials had feared that estimates of the trimming would be as high as 30 percent or more.
Skogen indicated that Minnesota's human services will lose $73 million, college funding will be cut by $40 million, and various state agencies will find another $40 million slashed.
But the cuts for the coming biennium may have to be even larger for the massive deficit being confronted, which is about 90 percent of the aggregate deficit facing Minnesota, Skogen and Murdock agreed.
"It will be difficult, but we will get through it," Skogen said. "These problems are real, and the numbers to recovery are huge."
The elected officials noted that a tentative budget for the state will be available in mid-January, with dollar amounts forecast in February. Then the heavy lifting starts.
Education, other topics on horizon
Skogen said several topics are facing big cuts in 2009. For example, it is expected that education's goal - according to some state sources - will be targeted at 13.3 percent for cuts. He said that figure can't be met without hurting schools severely.
At the same time, he told a Perham audience that was quite small, "Money (alone) doesn't fix the problem."
His reply was to a participant's concern that per-pupil funding is unequal from one district to another.
An idea also expressed was that lake home property is not taxed the same as other properties, thus creating shortfalls.
In any event, he affirmed, "Education is going to be on the table."
The legislators said meetings have come up with "think tank" concepts such as shared transportation systems, centralized food services and perhaps going to a county superintendent system for schools "in an attempt to trim administrative expenses."
It is expected that open enrollment will receive scrutiny, as well. It is possible that not all of the funding "tied" to a student, so to speak, would follow him to his new school when transferring.
"Some of it would stay" (in local schools from which the students transferred), Skogen pointed out.
A hopeful sign from the feds?
The legislator said during the Vergas session that taxpayers will continue to see a "metro vs. rural" faceoff on many issues.
However, he noted there is some optimism concerning proposals that may come from President-elect Barack Obama's administration, with aid to local cities planning infrastructure projects.
"Obama wants a state-by-state stimulus program, so cities may get plans ready," he said.
It may be possible for local governments to put forth their ideas and gain some revenue that will enhance their cities. But he cautioned that much of the speculation is just that - nothing to hang hopes on. So city councils should not go to any great expense to put plans together because nothing is firm at the present time, he added.
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