8.1. SR 05-12-2003 - Laserfiche WebLink

Home Browse Search

Xay 05 Z083 14:2Z:BG g~a F~x -> 7G34417425 A&m~n~strator P~ge 884 0£ 084 -FridayFax- A weekly legislative update from the League of Minnesota Cities value homestead credit. Estimates of the cuts will be posted later today on the LMC web site (www,h'nnc.or~). Perhaps one of the least understood components of the House tax bill is the revised levy limits for cities and counties. The bill includes severe levy limits that will be in place for the next two year and these limits will impact ALL cities. The new levy limits are severe for two reasons-- they will not allow cities to increase their property tax for current state aid cuts and the computation would no longer include an inflation adjustment. In previous years, each city's levy limit has been directly tied to LGA. If the city's LGA increased, the city's levy limit would be decreased by the same amount. Similarly, reductions in LGA would result in a dollar-for-dollar increase in a city's levy authority. Under the House plan, each city's levy limit for taxes payable in 2004 would not increase by the amount of the 2003 reduction in LGA. However, any increased cut in state aids in 2004 beyond the cut in 2003 would result in increased levy authority. May 5, 2003 Page 4 developed so that levy limits would not create an incentive for cities to automatically levy to their maximum. Under the House bill, these same cities would lose all but 30 percent of their unused levy limit. In contrast to the Governor's levy limit proposal, the House plan would use the current law definition of "special levies" which are outside of levy limits--including levies for debt service. The governor's proposal would not have classified all debt levies as "special levies" which would have potentially restricted the ability of a city to increase property taxes to cover debt service for some new debt issues. The House Tax Committee's bill will be introduced today as HF 1597. The bill will be sent to the Ways & Means Committee later today and will likely be on the House floor for final consideration early this week. There is still time to contact your representative to express your concerns about the aid cuts and levy limits contained in the House Tax bill. The levy limit calculation also eliminates the inflationary adjustment based on the implicit price deflator--which is now estimated to be slightly more than 3 percent. The only growth in the levy limit would be based on household growth and one- half of the growth in commercial-industrial market value. These two adjustments would only provide very modest levy increases in rapidly growing cities while fully developed cities would receive little, if any increased levy authority. The calculation of levy limits under the House bill also eliminates most of any unused levy authority for cities that did not levy to their limit for 2003. Under current law, cities that are covered by levy limits but who chose to levy at a level less than the limit would preserve any unused levy authority for future years. This feature of levy limits was For mote information on oily legislalive issues, conlac! any member of Ihe League of Minnesola Cities Inlergovetnmenlal Relalions learn. 651.281.1200 or 800.925.1122