04-14-2011 Charter Packet - Laserfiche WebLink

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Page 2 that applies to the sum of the city's property tax levy and LGA. The levy limit law states that the allowable increase is the lesser of 3.9 percent OR the change in the implicit price deflator (IPD) for state and local governments, a measure of inflation. The IPD measures changes in the price of goods and services that local governments typically purchase. 2. Cities that choose to levy less than the limit will not be penalized in subsequent years. Unused levy authority from one year rolls over to the following year. 3. The levy limit law includes more than 20 "special" levies for specific purposes that are not covered by levy limits, such as debt service levies. In many cases, if a city declares a special levy for 2011, an amount equal to the levy for that purpose must be subtracted from the city's 2010 property tax levy before the levy limit is calculated. Then the full amount of the 2011 levy for that purpose can be levied above the city's levy limit. 4. Under current law, there is an interaction between LGA and levy limits. Cities that will receive an LGA increase in 2011 will have their levy limit reduced by the amount of the LGA increase. The reverse also holds true. Cities that lose LGA will receive additional levy authority under levy limits to replace the loss of LGA. Reasons levies might exceed the limit 1. City levy increases can exceed the limit percentage for two reasons: a. There are small adjustments above the limit percentage for the annual growth in households and annual growth in taxable market value as a result of new commercial/industrial construction. b. Cities may also levy one or more special levies (e.g., debt levies) above and beyond the levy limit. 2. Local governments, including cities, certify their preliminary levies by Sept. 15. These figures are used to calculate proposed tax statements for the Truth in Taxation process. An individual homeowner's property tax bill may increase more than the final levy limit percentage for several reasons: a. The home's value increased faster than the overall value of all property in the city, or the home's value decreased more slowly than the value of all property in the city. b. The total tax bill also reflects the proposed tax levies of the county, school district, and/or any special districts, each of which makes its own levy decisions. Counties are subject to the same levy limits as cities. c. The city levied for one or more of the special levies that are allowed above and beyond the limit. d. The city gained additional levy authority from the household and commercial/industrial adjustments. Resources on property taxes LMC Resources on levy limits and property taxes Governing and Managing section of web site: www.lmc.org Other resources on why property taxes change Association of MN Counties web site: www.amc.org