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City Aid Certification for 2009 I. New Legislation  Local Government Aid (LGA) for cities for 2009 is distributed and certified based on current LGA statutes including any changes enacted during the 2008 legislative session. II. Issues and Information: For LGA payable in 2009, the total appropriation increases by $42,000,000 to $526,148,487. The data used in calculating formula aid for 2008 is used in calculating formula aid for 2009.
 Other items you should be aware of for 2009: Taconite aid is no longer part of a city's revenue capacity. Also, for cities with a population of 2,500 or more which had a population of less than 2,500 in any of the previous five years (2002-2006), the city revenue need is adjusted by a transition factor. As mentioned above, the appropriation for 2009 LGA increases by $42,000,000 to $526,148,487. State cost deductions are repealed effective for 2009 LGA. The city aid formula is summarized below and more detailed examples are provided. A city by city summary of LGA amounts and an explanation of factors used in the formula are also provided. In general, city aid distribution for 2009 has three parts:
I. Formula Aid The 2009 Local Government Aid (LGA) formula compares each city’s expenditure need to its ability to pay, or revenue raising capacity. The difference between a city’s expenditure need and revenue raising capacity is referred to as its gap. Those cities with a positive gap, indicating that their spending needs are greater than their revenue raising capacity, receive a share of the LGA distribution. As mentioned above, the factors used in determining a city's formula aid for 2009 are the same factors used in determining 2008 formula aid. Expenditure Need The large city formula for cities with a population of 2,500 or more includes the following five variables multiplied by the respective coefficients:
The small city formula for cities with a population of less than 2,500 includes the following four variables multiplied by the respective coefficients:
As noted above, for cities with a population of 2,500 or more which had a population of less than 2,500 in any of the previous five years (2002-2006), the revenue need is adjusted by a transition factor. For 2009 LGA, the revenue need transition factor applies to 8 cities. Also for 2009, the revenue need cities of 2,500 population or more cannot be less than $285 per capita. The revenue need for all other cities remains the same as the revenue need used in 2008 LGA. City Revenue Capacity A city’s ability to pay, or revenue raising capacity, is calculated by multiplying a city’s net tax capacity by the statewide average city tax rate. For 2009, taconite aid is no longer included in the revenue capacity. II. Base Aids City Jobs Base For 2009, cities with a population of 5,000 or more receive a city jobs base aid. A city's jobs base is equal to the product of 1) $25.2, 2) number of jobs per capita, and 3) the city's population. The jobs base is subject to certain adjustments and limitations. Small City Aid Base Cities with a population of less than 5,000 receive a small city aid base equal to $8.50 per capita. City Base Aid (certain cities as defined by statute) In 2009, $26.5 million in city base aid is set for 49 cities. City Formula Aid For 2009, a city's formula aid is equal to the sum of 1) a city's jobs base plus 2) a city's small city aid base plus 3) a city's unmet need. Unmet need is the difference between 1) revenue need times population and 2) net tax capacity times the tax effort rate, multiplied by the need increase percentage. The need increase percentage for 2009 is .8547472. Total Preliminary City Aid A city’s total preliminary aid is equal to the sum of the City Formula Aid (jobs base plus small city base plus unmet need) and the City Base Aid. III. Minimum – Maximum Adjustment For CY2009, the maximum LGA for all cities is equal 35 percent of the city's payable 2007 net levy plus the city's 2008 certified LGA. For cities with a population of 2,500 or more, the minimum LGA is the greater of 2008 LGA minus 1) $300,000, 2) 10 percent of the city's 2007 net levy, or 3) $10 times the city's population. For cities with a population of less than 2,500, the minimum LGA is equal either 1) the city's 2008 LGA or 2) zero (if all the city's 2008 LGA came from the small city aid base). Total 2009 LGA A city’s total LGA in CY2009 is equal to the Total Preliminary City Aid plus the Minimum/Maximum Adjustment Examples Note: You will need Adobe Acrobat Reader software to view and print the following document: Large city examples (population 2,500 or greater) Small city examples (population less than 2,500) City Aid Certifications for 2009 The following is a spreadsheet summarizing aid amounts by city:
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