Twin Cities fiscal ‘food fight’ erupts over fund sharing

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One of the quickest ways to start a legislative “food fight” between Twin Cities metropolitan area representatives is to mention two words — fiscal disparities. It’s a program, started in 1971, where communities with a large commercial-industrial tax base share the property tax dollars collected from the businesses with communities that don’t have that great a tax base.

Take Eden Prairie, for example. That western metro suburb will contribute in fiscal year 2013 about $9.56 million to the pool, according to the nonpartisan House Research Department. Rep. Jenifer Loon is a Republican who represents the area, and was before the House Taxes Committee Thursday with HF537, which would freeze the state’s fiscal disparity program at current levels for a couple of years, so it could be reviewed.

It wasn’t her intent to start a “food fight,” she said, but nonetheless, the back-and-forth began between representatives from metro communities that give and communities that get. And it’s an issue that has no party-line boundaries.

For more on fiscal disparities, read the 2012 report on the program mandated by the Legislature.

This bill would open the discussion on an issue that hasn’t been looked at since its inception, she said.

“I do think this is a program that is ripe for reform. … We’ve had a number of changes in metro area in regards to economic growth. If we place a freeze, it would give us a chance to look at this.”

Through the program, approximately $565 million is shuffled around the metro area annually, said Steve Hinze, House Research analyst.

Although the bill was held over for possible omnibus bill inclusion, Rep. Ann Lenczewski (DFL-Bloomington), the committee chair, is under no illusion that the measure would make it in.

“This is an issue where people get hot very fast,” she said. “Folks have never wanted to deal with this issue — even if you take a sideways look, nobody wants to do thing. She said that some cities receiving local government aid, also receive fiscal disparity funds.

At $18.6 million, Bloomington, which Lenczewski represents, remains the largest fund contributor.

According to nonpartisan House Fiscal Analysis: “The principle behind FD was to discourage unbalanced development, especially the concentration of new development in high property wealth/low-tax areas, and to redress the imbalance between public service needs and financial resource in certain low wealth communities.”

“We are a team,” said Rep. John Lesch, a DFLer who represents St. Paul, one of the greatest beneficiaries of the money at an expected $23.13 million in fiscal year 2013. “If I am a brand new city, I would think I am entitled to all my revenue. Just because you have a growing tax base, doesn’t mean you earned it on your own. There are different amenities that we share. We need to recognize the work that other legislatures did.”

The bill has no Senate companion.