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League of Minnesota Cities How to estimate your 2011 levy limit Page 3 FAQ: 2011 Special Levies Q: Are there special levies that we should consider for the first time? A: Yes. There are several special levies that cities can take advantage of for the first time. These are special levies to allow cities to recoup the amounts of LGA and/or MVHC reimbursement that were unalloted by the Governor AND the amounts of LGA and/or MVHC reimbursement that were cut by the Legislature in the supplemental budget bill of 2010 Q: If we used a special levy in 2010, do we have to use it again in 2011? A: Technically, the answer is no. However, the Department of Revenue makes adjustments to your levy limit base once you start using a special levy (i.e. your base is reduced). If you opt to stop using a special levy, the Department will NOT restore your base. Therefore, it is in the city's best interest to continue to use a special levy once it starts. Q: Do we have to use special levies? A: No. They are optional, keeping in mind the answer above. If your city is going to use one or more special levies for the first time in 2011, there may be special calculations you need to do in order to estimate your levy limit base (see below). Q: If we use special levies for the first time for pay 2011, what information do we need to provide to DOR? A: For most of the allowed special levies, the Dept. of Revenue needs baseline data. When you decide to start using a given special levy, the Department will use the information provided by cities on the property tax levy report. This report was due to the Department in December of 2009. If you are concerned that your city's report was incomplete or inaccurate for any reason, you need to contact the Department in order to work with them on calculating an accurate baseline. Cities will need to submit form PT280 by September 30th to the Dept. of Revenue. That form indicates which special levies a city intends to use. Q: Do we need to submit any forms to the Dept. of Revenue? A: Yes. Cities will need to submit form PT280 by September 30th to the Dept. of Revenue. That form indicates which special levies a city intends to use. Q: Should we use special levies? A: It depends. The use of special levies is optional. Keep in mind that the inflationary increase on the limited levy is just 1.68% (note that this figure will be finalized in early July using the data available at that time and may change slightly). If you are going to see an increase of less than the inflationary increase PLUS the other 2 percentage adjustments for household growth and commercial -industrial growth in a category of spending that could be a special levy, it may be of more benefit to NOT treat that category as a special levy. This way, you retain those dollars in the calculation of your levy limit base.