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TO: <br /> <br />Mayor & City Council <br /> <br />FROM: <br /> <br />Pat Kiaers, City Administrator <br /> <br />DATE: May 30, 2003 <br /> <br />SUBJECT: Informational Memo <br /> <br />ArtSoup Festival...The third biannual Elk River community arts festival will be <br />held on Saturday, June 21 from 10 a.m. to 5 p.m. and on Sunday, June 22 from <br />11 a.m. to 4 p.m. in the do~vnto~vn area between Highway 10 and the Mississippi <br />River. Additionally, Community Education will be hosting the Handke Hop on <br />Friday evening. This ArtSoup festival is proving to be a tremendous promo6on for <br />the city.-ArtSoup is the lead story in the May-June 2003 edition of the EDDY, which <br />is attached for your information. <br /> <br />e <br /> <br />Legislative Update...The special session of the State Legislature was concluded <br />late Thursday evening, May 29, 2003. Information is still some~vhat sketchy but I had <br />a very good conversation with Eric Willette from the League of Minnesota Cities <br />staff regarding the tax bill on Friday morning, May 30, 2003. Attached for your <br />information is part of the most recent League of Rlinnesota Cities - Cities Bulletin that <br />reviews the tax bill. The House version of the tax bill was also approved by the <br />Senate. The tax bill did not include a ~vage freeze or a reverse referendum provision. <br />The tax bill does impose a levy Limit for one year (2004) for cities over 2500 <br />population and the bill allows for cities to replace up to 60% in state aid losses. <br />However, the lev7 limit excludes any of the typical growth adjustment factors for <br />such things as inflation or increases in households. Exclusions of the growth factors <br />will impact Elk River as we are, as we all know, a growing city. The tax bill also <br />preserves the defined "special levies" and accordingly, the city debt for the pavement <br />rehabilitation program can be considered a special levy outside of our levy limit. <br /> <br />Regaxding cuts in state aids, please see the attached chart from the League of <br />Minnesota Cites. For 2003, the city will see no reduction in the market value <br />homestead credit ('MWHC) program. The reduction in local government aid (LGA) <br />for the city goes from $937,272 to $293,134. This is consistent with the Governor's <br />proposed reduction of $644,138 in 2003. <br /> <br />In relative terms, there is good news for the city in 2004. Again, the MVHC program <br />is not cut. The LGA reduction is the same in 2004 as in 2003. The city will again see <br />a reduction in the amount of $644,138 in 2004. This is dramatically different than the <br />Governor's proposed reduction of $1,292,865 (for both LGA and M-v'HC) in 2004. <br />The Governor's proposal was to cut 100% of our LGA and M-VHC funds. It should <br />be noted that the city does lose $644,138 in LGA in both 2003 and in 2004. <br />However, in 2004, the city can recapture through a property tax increase, 60% of the <br />2004 r.eduction. This 60% of $644,138 equals $386,242. Accordingly, if the city <br />chooses to increase its property tax to recapture its LGA loss, then the net loss will <br />"only" be $257,656. This means that we still will be starting our 2004 budget at a <br />lower level than the adopted 2003 budget but the situation is not nearly as <br /> <br /> <br />