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League of Minnesota Cities <br />~~ <br />i Cities Bulletin <br />Number 16 <br />April 21,1995 <br />House tax bill restores some aid cuts <br />Doesn't include property tax freeze <br />As expected,_the House.bill is <br />tough on TIF. The bill wntains <br />provtstons included in H.F. 147, <br />Representative Dennis Ozment's (IR- <br />Rosemount} TIF restriction bill. It <br />includes the expanded "but-for' test, <br />the developer repayment provisions, <br />and a narrower definition of soil <br />condition districts. The bill would <br />expand TIF reporting and disclosure <br />requiremenu, and would allow a <br />project to be exempt from the LGA/ <br />HACA penalty if a city elects to make <br />a qualifying local contribution. The <br />bill would also require early <br />decertrfication of districts by limiting <br />the use of reventies to costs defined in <br />a ijualify'ing plan b~ Decem <br />1995. The bill also restricts revenues <br />to covering arep yment of debt issued <br />before July 1, 1995, and certain other <br />limited uses. The bill would require <br />the Met Council to study the use of TIF <br />in the seven county metropolitan area. <br />The tax bill does not contain any city <br />specific TIF provisions. <br />The bill eliminates the taa-exempt <br />status of interest on certain Qv_ernmen- <br />tal botiiis. However, this provision <br />app~'ears to be less onerous than the <br />original language of H.F. 1380. As a <br />rule of thumb, the bill does not remove <br />Gary Carlson <br />The House Tax Committee took up <br />their 1995 omnibus tax bill with a <br />mixture of good and bad for cities. The <br />bill restores $57 million in LGA and <br />HACA cuts originally proposed by the <br />Governor, and does not include a <br />property tax freeze. The bad news is <br />,r.- that the bill would not restore the $20 <br />million payable 1996 aid reductions, <br />and contains numerous TIF restrictions. <br />The Committee met on Friday, <br />Apri121, after this edition of Cities <br />Bulletin went to press. We received a <br />copy of the bill late Thursday and <br />completed a cursory overview. Next <br />week's Cities Bulletin will include a <br />detailed review of the bill, including <br />any amendments or floor action. <br />The House bill will restore the $57 <br />million in proposed 1995 LGA and <br />HACA cuts that were included in the <br />Governor's budget recommendations. <br />However, the bill will not restore the <br />payable 1996 aid reductions of $20 <br />million proposed by the Governor and <br />will take the entire $20 million from <br />HACA. The bill changes the distribu- <br />tion of those curs to include counties <br />and special taxing districts. <br /> <br />Page 3-Nominations open Page 4-A chilling effect <br />Nominations are now open for The Senate property tax freeze <br />LMC board and officer spots. would affect city residents in <br /> many ways. <br />the exemption for property tax sup- <br />ported bonds. <br />The constitutional amendment to <br />take education finance off the property <br />tax (see page 7) is not part of the tax <br />bill. Other items that are part of the bill <br />include a senior citizen,propetty tax <br />deferral, acircuit-breaker credit for <br />cabin owners, a increase in the ciga- <br />rette tax, and the creation of a local <br />-----.. <br />government eff_iciency:and effective- <br />ness review panel.[1l1B <br />