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MAYOR <br />Michael L Fahey <br />COUNCIL <br />Beverly Scalze <br />Jim LaVaile <br />Matt Anderson <br />Rick Montour <br />515 Little Canada Road, Little Canada, MN 55117-1600 ADMINISTRATOR <br />(651) 766 -4029 / FAX: (651) 766 -4048 Joel R. Hanson <br />Email: cityhall @ci.little- canada.mn.us <br />MEMORANDUM <br />TO: Mayor Fahey and Members of the City Council <br />FROM: Joel Hanson, City Administrator <br />DATE: August 17, 2001 <br />RE: 2002 Budget Issues <br />As you know, the State of Minnesota made substantial changes to our property tax <br />system. These changes include: <br />School Funding <br />*Elimination of the general education levy for schools. This feature of the law <br />will reduce property taxes statewide by a new of $900 million. <br />*Existing and future referendum levies for schools will remain, but will no longer <br />be applied to agricultural and and cabins. <br />State Aids <br />*Major revisions to the local government aid (LGA) formula. <br />*Elimination of homestead and agricultural credit aid (HACA). <br />Homestead Credit <br />*Implementation of a new formula for a market value based homestead credit. <br />Levy Limits <br />*Levy limits return for the next two years. <br />*Adjustments for reductions in state aids are included in the levy limit formula, as <br />well as special levies for debt service, economic development abatements, PERA <br />cost increases and a few other miscellaneous items. <br />State Property Tax <br />*Implementation of a state property tax on commercial, industrial, and cabin <br />properties. <br />*This new tax will generate approximately $592 million in revenue for the State. <br />Page 99 <br />