3.0. SR 12-08-1993 - Laserfiche WebLink

Home Browse Search

Wail 2 9 1993 League of Minnesota Cities 3490 Lexington Avenue North St. Paul, MN 55126 (612) 490-5600 . MEMORANDUM TO: FROM: City Clerks and Managers Jim Miller {)....:- IY/ ~ Executive m1ector DATE: November 24, 1993 Potential 1994 state aid cuts RE: Although the November 23 state budget forecast projected a $414 million surplus for the state's general fund, the Local Government Trust Fund did not fare as well. In fact, the new forecast projects that the LGTF will face a $44.3 million shortfall by the ~d of the biennium. Under current law, local government aid and homestead and agricultural credit aid payments scheduled for July and December of 1994 will be cut if the LGTF deficit is realized. ~ . According to State Revenue Commissioner Morrie Anderson, any necessary cuts will not be based on the November 1993 forecast. The final determination for cuts will be based on the March 1994 state budget forecast and on any legislative actions that might modify the status of the LGTF. He also specified that these potential cuts will not affect the December 1993 aid distributions. The LGTF shortfall is due to two developments. First, the expectations for sales tax revenue growth for the current biennium have been substantially lowered. The second, and more significant > development is related to recent legislative actions. Beginning this biennium, the legislature added the property tax targeting program and the homeowner's circuit breaker to the LGTF. These transfers will cost the LGTF at least $126 million, which will significantly reduce the money available for city programs. At the same time, these transfer. have effectively added at least $126 million to the state'. general fund surplus. Although cities generally agreed to live with the fluctuations in the LGTF, we " have strongly opposed legislative actions that have increased the number of non-city programs funded by the LGTF. According to our best estimates, the $44.3 million LGTF shortfall would result in 1994 aid reductions equal to approximately 2 percent of each city's 1993 certified levy plus 1993 LGA and 1993 taconite aid, for taconite cities. Therefore, do not use the 1994 certified levy to estimate the impact of these cuts. Any reduction could not exceed the amount of LGA and HACA your city is scheduled to receive in 1994. . The current LGTF forecast does not paint an optimistic picture for the remainder of the biennium. We encourage you to consider the impact of potential cuts before you set your final 1994 > levies and discuss this issue with your taxpayers at your truth in taxation hearing. If you have any questions, please contact Gary Carlson at the League offices.