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Governor's proposal would bring new money to Hastings

Governor Mark Dayton's state budget proposal has a lot of people talking in St. Paul. While much of the focus has been given over to how the governor would change state sales taxes, there's another aspect that could - if approved - mean major help for Hastings.

Dayton's proposal includes an increase to local government aid (LGA) starting in 2014, with an emphasis on improving support to older suburban metro cities like Hastings. LGA is money granted to cities by the state to help pay for city services. Hastings has not received any LGA funds since about 2008, said Mayor Paul Hicks.

Under current state law, Hastings is due to receive $63,844 in state aid in 2014. If the governor's proposal passes the legislature, Hastings would get $257,327 in 2014, and it would be projected to increase over the next few years. In 2018, the governor's proposal would provide $1.146 million to Hastings, compared to $34,468 under current law.

Besides the increase to LGA funding, Dayton's budget proposal includes a $500 property tax rebate for Minnesota homeowners. In Dakota County, the change would reduce property tax rates 10.4 percent on average.

If the proposal is passed, it would allow the City of Hastings to ease the property tax burden on its residents.

"Those types of additional revenues coming into the city definitely would help decrease our property tax," Hicks said.

He said that he believes reducing property taxes is a top priority for the city council, and that additional revenue would be used to maintain current employment levels and reduce property tax.

Surviving the crisis

Since the financial crisis began in 2008, Hastings has had to learn how to be more efficient without any help from the state.

"We've been dealing for the last several years with virtually no government aid," Hicks said.

When LGA funds began to dwindle in the early 2000s, city growth made up for the difference.

"The city's growth at that time helped offset some of the LGA losses because we were expanding our tax base," Hicks said. "...Once we got to 2008, when we had practically no LGA and home values went down, that's what made it really challenging."

Since then, the city has reduced its employment levels and reduced the amount of money going into capital equipment, and other reductions were made as well.

"Wherever we could find savings, we did," Hicks said.

While Dayton's proposal is still subject to changes, it at least indicates that the governor recognizes the partnership between the cities and state, and it would also help stabilize funding levels for cities all over.

"We wouldn't have this roller coaster effect," Hicks said.

Other proposals

Also included in Dayton's budget proposal is a reduction of the state sales tax from 6.875 percent to 5.5 percent. He is proposing expanding sales taxes to a range of services, including car repair, haircuts, attorney's fees and such. Clothing purchases over $100 would also be taxed.

For businesses, a two-year property tax freeze is proposed.

There's also an increase to school funding. For Hastings Public Schools, the governor's proposal would increase funding by $350 per student, for a total of $1.6 million.

Dayton's proposal to increase taxes on wealthy Minnesotans would affect 1.7 percent of the population in Dakota County.