Local Government Aid (LGA) is a program that was originally created by the State of Minnesota in 1971 as a means of reducing the disparities in the quality of education, county services and city services between jurisdictions with higher taxable values and lower taxable values. LGA is credited directly into the City’s General Fund, which primarily pays for essential services like Police, Fire, and Public Works, as well as many of the City’s other core functions.
Minneapolis has been the State’s largest recipient of LGA because it is the State’s largest city and provides services to a far greater daytime population than the number of residents who call the city home. However, it is important to note that Minneapolis is a net contributor of revenue to the State of Minnesota — that is, the City sends more money in sales, income and property taxes to the State than it gets back in return.
Following several years of uncertainty in funding from the State of Minnesota in the form of LGA, including the loss of over $70 million from 2008-2011, the State has slightly been increasing the amount of LGA appropriated to the City of Minneapolis from $76.1 million in 2014 to a certified amount of $68.8 million in 2021. Of this amount, the City plans to allocate $68.1 million for its General Fund, $9.2 million to the Park Board, and the remaining $0.2 million to the Municipal Building Commission (MBC). The table below shows the historical certified and actual LGA amounts, as well as the certified LGA levels for 2020 based on current law.