02-13-2002 Council Agenda - Laserfiche WebLink

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tut 6',vx veeairrnxm 145 University Avenue West, St. Paul, MN 55103 -2044 Phone: (651) 281- 1200,(800)925 -1122 TDD (651) 281 -1290 LMC Fax: (651) 281 -1299 LMCIT Fax: (651) 281 -1298 Web Site: http: / /www.lmnc.org Governor's Proposed Local Aid Cuts: Frequently Asked Questions Note: This document reflects some of the questions we have received over the past several days. Although our responses are based on our careful reading of the supplemental budget materials, we have not yet seen a draft of the legislation. Some of the details of the governor's proposal could change before the bill is introduced. Q: How does the governor's plan impact cit /es? A: The governor is proposing two distinct aid cuts for 2002. The first cut is called a "growth- based" cut and is based on the increase in total levy and aids in each city. Larger increases in levy plus aids will generally result in larger cuts although there are adjustments for rapidly growing communities. The second cut is called a "uniform" cut that will reduce each city's aid by 2 percent of its 2002 levy plus aids. Q: My city /ost most of its LGA and all of its hACA under the 2001 tax bill. Are we insulated from these cuts? A: Probably not. The cuts would first be made from LGA and then from the state reimbursement to your city for the new market value homestead credit. Q: kV/yet is the rationale for the governor's 'growth -based cut?" A: The governor has suggested that some of the large proposed property tax increases is an indication that some cities can afford more pain because they are raising more total revenue. Q: Our city council reduced the fina /property tax levy in December. Will this action affect the cuts? A: Yes, the estimates that have been prepared by the Department of Revenue are based on the September 15 preliminary property tax levies for