01-10-2007 Council Agenda - Laserfiche WebLink

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Local Government Aid - House Research Page 3 of 5 The cities that have received these adjustments are: • for 1995, a permanent increase of $40,000 to the city of Pillager; • for 1996, a permanent increase equal to their one -half or their 1995 formula aid amount for some cities that had to mat payments in 1992 or 1993 for sewer and water infrastructure costs that exceeded their total annual levy; • for 1998, a permanent increase of $20,000 to the city of Proctor; • for 1999, a permanent increase of $200,000 to the city of Oak Grove; • for 1999 -2008, a temporary increase of $450,000 to the city of Coon Rapids; • for 2000, a permanent increase of $150,000 to the city of Warroad; • for 2000, a permanent increase of $200,000 to the city of St. Francis; • for 2000 -2002, a temporary increase of $225,000 to the city of Baxter; • for 2000, a permanent increase of $102,000 to the city of Pine Island; • for 2001, a permanent increase of $32,000 to the city of Kelliher; • for 2001, a permanent increase of $7,200 to the city of Darwin; • for 2001, a permanent increase of $45,000 to the city of Osseo; • for 2002, a permanent increase of $50,000 for the cities of Hopkins and Chaska; • for 2002 -2011, a temporary increase of $50,000 for the city of Osseo and $150,000 for the city of Newport; • for 2002, a permanent increase for larger outstate Minnesota cities (see below); and • for 2003, a permanent increase of $200,000 for the city of Hermantown. Return to ton Adjustments to city LGA made during the 2001 legislative session The 2001 tax bill included a major restructuring of the property tax system. As part of the restructuring, the following changes were made to the city LGA program: • the city LGA appropriation was increased by an additional $140 million above the built -in inflationary increase • the " grandfathered" city aid base was permanently increased for cities in outstate Minnesota with a population of 10,00L or more; and • the average city tax rate used in the formula was increased to reflect the elimination of city HACA. The extra LGA appropriation of $140 million was to partially offset the elimination of $200 million in city homestead and agricultural credit aid (HACA). $115 million of this additional money is distributed via the formula with the remainder used to increase the city aid base for larger for larger outstate cities. HACA payments were based on tax base losses that jurisdictions experienced due to class rate compressions in the 1990s; the distribution of this money under the LGA formula is not the same as the distribution under the old HACA program. The 33 cities outside of the seven - county metropolitan area with a 2000 population each received a permanent increase in the non - formula (grandfathered) portion of their LGA. This accounted for $25 million of the extra LGA appropriation. The amount of increase each city received was equal to the lesser of: • $60 multiplied by their population in excess of 5,000; or • $2.5 million. Rgiurn to top Future changes in city LGA The current city LGA formula is based on data and analysis from 1990. Changing the formula was discussed during the 2001 legislative session. however, the consensus was to hold off on developing a new formula until 2000 census data becomes available. The current estimate is that this data will be released in the summer or early fall of 2002. In the meantime the legislature set aside $14 million for LGA reform beginning in 2003. This $14 million set -aside was eliminated during the 2002 http://www.house.leg.state.mn.usihrdlissinfoihistliza.htm 115/2007 -12-