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MINU"TES <br />CITY COUNCIL <br />DECEMBER 5, 2001 <br />implementation of changes in a new property tax levy fa' businesses and <br />cabins, reallocation/reductions in State aid to cities, and the imposition of levy <br />limits on cities. <br />With regard to education funding, the State eliminated the general education <br />levy for schools beginning in 2002. This reduces property taxes statewide by a <br />net of $900 million with the State now funding this portion of school spending. <br />Schools can continue to levy for transportation and referendum authorized <br />levies. The metro-wide transit levy was reduced with the State picking up <br />transit funding through a portion of sales tax revenue on motor vehicles being <br />dedicated to cover transit costs. The result of these changes is that the transit <br />tax rate is estimated to decrease from 4.88 to 1.594. <br />The Administrator reported that the state property tax levy begins in 2002 and <br />applies to commercial, industrial, and cabin property. It is estimated that this <br />levy will generate $592 million. In the first year this money will be dedicated <br />to the State's general fund. After that, any increase will be dedicated to new <br />education reserve account. "The Administrator further reported that the City's <br />Homestead and Agricultural Credit Aid (HACA) has been eliminated. This cut <br />amounts to $416,370 or 22% of the City's total levy. Local Government Aid <br />(LGA) for Little Canada will be $77,770 during 2002, a decrease of $8,130. <br />Little Canada receives 6°i lowest amount of State aid of Ramsey County cities. <br />The Administrator reported that as a result of the State's property tax reforms, <br />the predicted impact on residential homes is a 10% to 25% reduction in <br />residential taxes dependent on the value of the home. <br />The Administrator presented a graph showing the City's debt service levy from <br />1994 through 2003, noting the debt service levy amount drops to $0 in 2003. <br />Given the opportunities elimination of the debt service levy presents, the City <br />convened a Debt Levy Reduction Committee to study and make <br />recommendations relative to this issue. The priorities that the Committee <br />focused on were tax stabilization, tax reduction, and capital improvement <br />funding. <br />"f he Administrator presented a slide showing tax rankings for Ramsey County <br />cities noting that in 1999 Little Canada was ranked as the 7°' highest. After <br />adopting the recommendations of the Debt Levy Reduction Committee that <br />ranking for 2001 dropped Little Canada to the 7°i lowest taxed city in Ramsey <br />County. <br />With regard to the 2002 tax rate, the key factors are the loss of $416,370 in <br />HACA funds and the reduction in class rates which shrinks the tax base. For <br />2002, the City's gross levy is up 3.98% and the net levy is up 41.76% (this <br />increase would have been limited to 6.66% without the loss of HACA). The <br />z <br />