Long-Term Trend in County Aid Still Down, Despite 2014 Increase

In 2013, Governor Dayton signed into law a major increase to County Program Aid (CPA), effective in 2014. That $40 million increase boosted the CPA funding level by 24 percent. However, in a chart featured in the preceding North Star article, this significant aid increase registered as only a relatively small blip. This anomaly illustrates an important fact: the 2014 CPA increase, while significant, was fairly small in comparison to the aid cuts that preceded it.

First, some relatively minor mitigating circumstances need to be noted. The chart in the preceding article focused on total county aid, not just CPA. Funding for three small aid programs (specifically, the county share of disparity reduction aid, taconite aid, and the agricultural land market value credit) were virtually unchanged from 2013 to 2014. These frozen aid programs had the effect of diluting the increase in total county aid. In addition, that chart examined the change over time after adjusting for inflation* and population growth. Taking these factors into account, the change in total county aid from 2013 to 2014 was still 16 percent in real (i.e., inflation-adjusted) dollars per capita.

More importantly, the chart in the preceding article measured the change in total county aid (as well as county property taxes and total levy plus state aid) from a baseline year of 2002. (The reasons for selecting a 2002 baseline year were noted in the preceding article.) The chart below shows total county aid—as opposed to just the annual change—in constant 2016 dollars per capita each year from 2002 to 2016.

county aid

The 16 percent real per capita aid increase from 2013 to 2014 (from $38.92 to $45.28) is denoted in the above chart by a red arrow. However, this increase looks somewhat small because—like the aid change illustrated in the chart from the preceding article—it is shown on a scale that reflects the much higher level of aid that was received in 2002. The $6.36 per capita increase from 2013 to 2014 did indeed lead to a 16 percent increase in real per capita county aid, but it replaced only eight percent of the total real per capita aid loss between 2002 and 2013. Even after the 2014 aid increase, total per capita county aid was still 63 percent less than in 2002. The small aid increase from 2014 to 2016 was not enough to materially change this figure; real per capita county aid in 2016 remains 63 percent below the 2002 level.

No one anticipates that real per capita county aid will return to the 2002 level in the foreseeable future, since this would require a 2.7 fold increase in current county aid appropriations—something that is highly unlikely given the many competing demands on state resources. However, proposals for smaller aid increases have been advanced.

The 2014 increase in county aid represented a significant increase in state assistance to Minnesota counties. However, even after those increases, real per capita state aid to counties is still little more than one-third of the 2002 level. As demonstrated in the preceding article, the result of the steep decline in state aid to counties over the last fourteen years has been higher property taxes and reduced real per capita funding for county services and infrastructure.

 

 

*The conversion from nominal (i.e., unadjusted for inflation) to constant 2016 dollars in this article and the accompanying chart is based on the implicit price deflator for state and local government purchases. The use of this implicit price deflator was the subject of a February 2016 North Star article.