Indignant that Minnesota mayors would dare oppose his scheme to balance the state’s budget, Gov. Tim Pawlenty has lashed out at the city of Albert Lea. However, Mayor Michael Murtaugh and the other Minnesota city officials who stood with him at a recent press conference were right: the governor should stop shifting the state’s budget problems on to the backs of property taxpayers and local governments.

Because the governor refused to compromise with the Legislature on a method to solve the state’s $6.4 billion structural budget deficit, he now gets to tackle the problem all by himself using his authority to unilaterally cut state spending. All Mayor Murtaugh and the other city officials are seeking is basic fairness in how the governor solves the state’s budget mess.

Pawlenty has complained that Albert Lea is receiving too much local government aid from the state. Coming from the governor, this criticism is difficult to understand, given that LGA is distributed under a formula designed by the Pawlenty administration. The governor can hardly argue that funding for his LGA formula is too generous, given that real per capita state funding for LGA in 2009 (prior to any cuts) is slightly less than what it was in 1972 — the first year of the LGA program.

Nor should the governor fault the budget practices of the city of Albert Lea. While it is difficult to compare the finances of individual cities to that of state government, it appears as if Albert Lea has cut its budget more than state government during the six years that Pawlenty has been in office.

Furthermore, information from the state Office of Management and Budget proves that statewide real per capita local government revenue has fallen more rapidly than state government revenue. In short, local governments in general and Albert Lea in particular do not need lectures from Tim Pawlenty on frugality.

But if the budgets of local governments have shrunk, why have property taxes increased so rapidly? The answer lies in how the state has chosen to balance its budget over the last six years.

Adjusted for inflation, state aid to Minnesota communities and schools has fallen by $2.4 billion; in response to this funding loss, local governments have increased property taxes and cut budgets in approximately equal measure. Literally, property taxpayers are paying more and getting less.

While the governor has not increased state taxes (with the exception of a cigarette tax hike), his actions have caused local property tax increases. Furthermore, if the governor cuts dollars to local governments in the manner prescribed in his 2009 budget proposal, property taxes in southeast Minnesota cities will jump by another 5.1 percent (based on nonpartisan state government analysis) at the same time that funding for local services again falls.

Pawlenty seems to think that the dollars that the state allocates to local government are a charity payment. In fact, the state enjoys a near monopoly of two of the largest Minnesota tax sources: the sales and income taxes. The rationale for this monopoly is that the state will distribute a reasonable portion of these resources to communities across the state in a way that will equalize tax burdens and service levels. Mayor Murtaugh has referred to this arrangement by the appropriate term: revenue sharing.

The governor treats the dollars that the state shares with local governments as a slush fund that he can raid in order to avoid the need for a state tax increase. While he might perceive this approach to be in his political interest, it is not in the best interest of property taxpayers and the five million Minnesotans who rely on local services.

The most reasonable approach to the state’s budget dilemma would have been through a balanced approach that involved both spending cuts and tax increases. Given that the governor refused to compromise with the legislature, this option is now off the table.

The governor must now deal with the problem on his own entirely through spending cuts.

In making these cuts, he should avoid his past practice of shifting a disproportionate share of the pain on to property taxpayers and local governments.

Jeff Van Wychen is a Minnesota 2020 research fellow focusing primarily on property tax and state and local budget issues. For the last 23 years, Jeff has been a policy analyst for various local governments and nonprofit organizations. Minnesota 2020 is a nonprofit think tank focused on the issues that matter for Minnesota’s future success: transportation, education, health care and economic development.