03-14-1988 - Agenda Packet City Council - regular meeting

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11KE League of Minnesota Cities February 12, 1988 MEMORANDUM 183 University Ave. East St. Paul, MN 55101.2526 (612) 227.5600(FAX: 221.0986) TO: Mayor, Managers, Clerks FROM: Donald A. Slater, LMC Executive Director SUBJECT: "State of the Cities, 1988^ The League recently completed its second annual -State of the Cities" report (enclosed) to provide state policy makers with an assessment of trends in federal and state aid to Minnesota cities as well as information about cities' spending and taxing levels. The report finds that Minnesota cities continue to face economic stress as they struggle :o maintain adequate service levels while coping with extremely large cuts in federal aid and the prospect of diminishing assistance from the state. The main findings of the report include: + Federal aid to Minnesota cities has declined 48 percent in real dollar terms over the 1978-86 period. • Minnesota's state government has been unable to substitute through the local government aid and other property tax relief programs for the federal assistance cities lost over the past decade. State aid in 1986 stood at a level only slightly higher --1 percent higher in real dollars-- than it was in 1978. • City spending cannot be blamed for large increases in property and other local taxes. As of 1986 (the latest available State Auditor's data), per capita city spending in real dollars was one percent below per capita city spending in 1978. • As further evidence of the budget restraints on cities, the number of city employees dropped a dramatic 24 percent between 1980 and 1985, more than three times the rate of decrease of any other state or local government governmental unit in Minnesota. • Between 1978 and 1986, city property and other local taxes rose 22 percent in inflation -adjusted dollars. Less federal and state assistance, not rising city spending, has required Minnesota cities to rely more heavily on property and other local taxes.