08-24-1983 Council Agenda - Laserfiche WebLink

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JEROME M. HUGHES President of the Senate Room 328 State Capitol St. Paul, Minnesota 55155 (612) 296-4183 Mr. Joseph G. Chlebeck Clerk, City of Little Canada 515 Little Canada Road Little Canada, MN 55117 Dear Mr. Chlebeck: Senate State of Minnesota August 3, 1983 Now that the 1983 legislative session is over, I am taking this opportunity to explain the 1983 local government aid portion of the tax bill which was enacted. Earlier this year you expressed your concerns over a more equitable distribution of aids and suggested other changes, including the elimination of the grand- father provisions of the aid formula. I would like to point out the areas in which your concerns and those of your colleagues were addressed. Quite frankly, the local government aid formula was the center of intense controversy during the session as lawmakers wrangled with the need to reduce future state expenditures while continuing to provide adequate assistance for education and other vital human services, as well as maintaining property tax relief. The focus of our property tax efforts was justifiably to target relief in order to equalize the tax burden across the state. The final version of the tax bill, as you already know, makes minor modifica- tions to the system itself, which essentially maintains the concept adopted in 1979. By far, the most significant change made was the elimination of the "grandfather clause" which had guaranteed that no local government could receive aid reductions from year to year. In addition, the new bill provides that local governments themselves will be able to levy for the reduction amount in order to maintain services. The grandfather elimination and increased local levying authority have been offset by an aid loss limit which guarantees that reductions to any city will not result in an increase in property taxes for more than three - quarters of one equalized mill. For an average property owner, this will mean a tax increase of less than one percent, or about $8 to $10 in gross taxes on a $60,000 home. The local government aids system, I believe, inherently attempts to minimize any encouragement to local governmental units to become high spenders because it was, after all, originally established with reference to a prior year -- that is, established in 1979 for the levy made and aids calculated in 1978. E" u CONINI11"1'P:ES • ('hairm;m. Election. ;Hid Lou,. • Rule, and : \dmnn.trauon • Finance • F:duenuon