EDSR INFORMATION #4 05-10-1999 - Laserfiche WebLink

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�- I Senate unveils tax bill . 0 Gary Carlson and Eric Willette Last week,the Senate Property Tax The income tax provisions The TIF grant program originally and Local Government Budget include permanent reductions in established in 1997 to cover shortfalls Division and the Sales and Income the two lower tax rates and expansion created by tax reforms is modified to Tax Division released the provisions of the first two income brackets.The allow TIF authorities to apply for of the Senate omnibus tax bill.The sales tax provisions include a sales tax grants to cover shortfalls created by property tax portions of the bill rebate that mirrors the bill passed by the 1998 tax bill.The grant program include property tax relief for second- the Senate,which is currently stalled is also extended one additional year tier homesteads,utility property,and in conference committee.The bill also through 2002. agricultural land.Tax shifts to home- includes local sales tax authority for The local contribution or LGA/ steads are mitigated through an the cities of Proctor and New Ulm, HACA penalty would be reduced increase in the education homestead and sales tax exemptions for many by 50 percent following any year in credit and increases in the property local construction projects. which the Commissioner ofTrade tax refund program. and Economic Development finds The bill includes a$5 million General 11F provisions that a TIF project generated a defined increase in LGA for many small cities. The Senate Property Tax Division increase in jobs paying at least 125 This provision was proposed by Sen. unveiled the tax increment/economic percent of the poverty level.The Sandy Pappas (DFL-St.Paul) in development article of the omnibus job creation threshold to qualify response to several bills that were tax bill at the committee hearing on would be 40 jobs in the seven-coun introduced to increase LGA for Monday afternoon.The article also metro area,10 jobs in a non-metro- particular small cities.The provision includes numerous,city-specific TIF politan cr than 5,000 popula- accelerates LGA increases for small provisions. tion, a 20 • if located in a cities that are gaining LGA under the The bill would ratify pooling non-metropolitan city greater than current formula,but whose distribu- ofTIF revenues from districts origi- 5,000 population. ern tions are still significantly less than nally created between 1979 and or districts established or those of other small cities with large 1982.Unlike the House bill,the expanded after June 30,1999,TIF amounts of grandfathered LGA. TIF authority would not have to revenues could not be used for the The bill includes general author- decertify the district as soon as all construction of social or recreational ity for cities to establish sidewalk contracts are fulfilled and bonds facilities,including common areas utilities.The bill also repeals Local are repaid. used as a public park or a publicly- Performance Aid,with the 1999 LPA Pooling of increments among owned facility used for social or distribution being folded into cities' districts would be permitted in order recreational purposes. LGA and counties'HACA. to cover TIF district shortfalls created The TIF article originally in- An amendment offered by Sen. by the property tax reforms of 1997 eluded a provision that would have Doug Johnson (DFL-Tower) would and 1998.The pooling authorization authorized all counties to create cap market value increases for homes, would be available to all districts that economic development authorities nonhomestead residential property, were originally certified before the that could operate even within cities. and cabins to the greater of 5 percent enactment of the 1997 tax bill.Pooled Sen.Vickerman (DFL-Tracy),who or the CPI for tax purposes.The increments for tax reform shortfalls was the chief author of the original amendment was defeated on a 6-5 would be deducted before calculating county EDA bill,deleted this provi- vote.Sen.Johnson stated he would the percentage pooling limits for post- sion from the article,consistent with offer the limited market value amend- 1990 districts.Therefore,pooling for an agreement between the League ment again in full tax committee next shortfalls will reduce revenue for and the Association of Counties to week. other pooling activities as well as discuss possible compromises during for in-district activities. the interim.t n� April 28, 1999 Page 3