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From: "Karen E. Marty" <kmarty@martylawfirm.com> To: "Caroline Dahl" <denali2010@q.com> Sent: Wednesday, April 6, 2011 5:50:16 PM Subject: Re: Tax Cap Amendment 2nd email Caroline, You have asked two questions. Let me answer the second one first. Why did I recommend using the state law rather than crafting something from another charter to include in Lino Lakes' Charter? I did this because I thought it had a better chance of passage, and a better chance of staying intact in the long run. Look at the Comments I sent along with the draft tax cap language. The other question relates to whether the state law is too full of loopholes to really cap taxes. I spent some time going over the state tax cap law (Minn. Stat. Sec.275.71) and the loopholes (Minn. Stat. Sec. 275.70, subd. 5). The concern you raised appears related to Sec. 275.70, subd. 5(8), which allows a city to correct past "errors" in its levies, up to the levy limit for that year. If desired, I can modify the wording in the proposed tax cap amendment to exclude that levy item. I also have summarized the other 24 loopholes in subd. 5 for you to look at, if you like. They list various items that may be added to the tax levy without regard to the levy limits. They include the following: taxes levied to pay bonds (paragraphs 1, 2, 3, and 4), extra property taxes approved by the voters (5), disasters (7), matching funds needed for state or federal grants or programs (6), repayment of required spending for a state or federal capital project that was not locally initiated (13), police and fire costs (21), various pensions (10 and 15), court, jail, and prosecution -related items (11, 14, and 23), for a storm sewer or lake improvement district (12 and 16), for condemning dilapidated residences (19), to correct "errors" in past years to the extent this does not exceed the levy limits (8), for some very limited items (17 - up to $1 per person for society for prevention of cruelty to animals, 22 - to offset unallotment, 18 and 20 — for counties only, 24 - I -35W bridge collapse, 25 - to offset reductions in state money related to homestead credits), and taxes abated under Minn. Stat. § 469.1815 (9). Like the charters I reviewed, this laundry list of exemptions is troubling, but no list is going to be perfect. If we spend a lot of effort creating a local list, it might become a political battle and never get implemented. That is why I recommended a simple amendment, to avoid such a battle. However, this decision is up to the Charter Commission. You know the City much better than I ever will. Let me know what I can do to assist you in moving forward. Karen E. Marty MARTY LAW FIRM, LLC 3601 Minnesota Drive, Suite 800 Bloomington, MN 55435 ** Note: Bolding and underlining emphasis was added by the Commissioner Subcommittee **