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~> <br /> <br />7~34417425 ~d~inis'tva%ar Page 001 0f 0B2 <br /> <br /> -FridayFax- <br />A weekly legisIai'ive update from the League o/Minnesota Cities <br /> <br />Budget Reconciliation <br />Contra{tree: Offers offer <br /> <br />optimism <br /> <br />On Thursday evening, the Budget <br />Reconciliation conference commktee <br />considered an offer from the Senate that would <br />cover the remaining $439 m£1llon state budget <br />deficit for the current biennium and would <br />begin to address the 2004-05 projected biennial <br />shortfall. This morning~ the House responded <br />with their version ora compromise, The Senate <br />proposal was described as "baby steps" by <br />House chair Kevin Goodno while the House <br />proposal was descr{bed as ~*mosquito steps" by <br />Senator Doug Johnson. <br /> <br />Yesterday's Senate offer included $245 million <br />in one4{me savings by refinancing <br />transportation projects originally financed in <br />2000. The p[an~s other major components <br />include a one-time shift of school aid payments <br />that will save more than 5310 million this <br />biennium and the controversial increase {n the <br />cigarette and tobacco taxes that would generate <br />an additional 5313 milt{on tn revenue this <br />biennium and more than $453 million tn 2004- <br /> <br /> April 12~ 2002 <br /> Page 1 <br />million from cuts in environment and natural <br />resources programs. <br />On the posk{ve side,, neither the House nor the <br />Senate offers contain any cuts tn LGA or the <br />market homestead credk reimbursement, <br />However,, most of the Senate tax provisions <br />appear to have been dropped by both the House <br />and Senate~ These dropped provisions <br />apparendy {nclude the LGA increase for small <br />cities; the appropriation of $10 million for TIP <br />grants,~ the local sales tax authority for half a <br />dozen communities and modifications to levy <br />[{mits that would have provided a marginal <br />{ncrease tn levy authority in 2003. <br /> <br />The one provision that appears to still be alive <br />would provide a new pipeline aid to areas of <br />the state where the 2001 property tax class rate <br />changes dramatically reduced the available tax <br />base. This aid would most notably help <br />counties in Northwest Minnesota that <br />experienced large tax shifts to homes and farms <br />this year. <br /> <br />Senate members reacted by clMming that the <br />House offer represented very little movement <br />toward a compromise. Senate members also <br />expressed concern that the House offer would <br /> ~¼~- ~t~t~ w;th very little budget reserve <br /> <br /> <br />