Management Report and Recommendations 12/31/1998

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Maw Honorable Mayor and Members of the City Council City of Link Lakes Page 27 Corporate Subsidies New regulations on business subsidies awarded by state and local units of govemment are established. A new definition of "business subsidies" is created and several exemptions are granted, including the following: • Business subsidies under $25,000; • Assistance generally available to all businesses; • Public improvements to buildings or lands owned by the state or local govemment that serve a public purpose and do not principally benefit a business; • Assistance for cleaning up polluted land; • Assistance to businesses providing job readiness and training; • Assistance for housing, pollution control, and energy conservation; _ • Assistance provided to renovate old or decaying building stock, if the assistance does not exceed 50 percent of the total cost; • Industrial revenue bonds; and, • Assistance relating to redevelopment where the recipient's investment in the purchase of the site and site preparation is 70 percent or more. Business subsidies may not be granted until after the grantor has adopted a policy that includes criteria for awarding business subsidies at a public hearing. The policy must include the wages to be paid for — jobs created. Business subsidy recipients will be required to enter into an agreement, signed by both the grantor and grantee(s), which includes a number of specific requirements such as the amount and type of the subsidy; the public purpose (other than increasing the tax base), the subsidy's goal, etc. - There are also specific reporting requirements that must be followed. MOW Authorization Required for Tax Rate Increases Authorization required for tax rate increases Chapter 243 (as amended by Chapter 249) includes a requirement that all cities over 500 population and all counties must pass a resolution indicating if the levy for the subsequent year will result in a tax rate increase. The provision is based on a Missouri law, and was suggested after concems were raised in the House tax committee that cities and counties were claiming they were freezing the tax rate when, in fact, the levy was increasing but being offset by tax base growth. Under the law, the county auditor is required to provide information to affected cities and the county board that will allow the local govemment to calculate what its tax rate would be in the coming year if the levy was held constant. Essentially, a baseline tax rate is computed based on the prior year's levy and the current year tax base. The county auditor is required to provide this information by October 1 of each year. The city council or county board must hold a public hearing and adopt a resolution if its levy will result in an increase in the tax rate over the baseline tax rate. The resolution must be filed with the county - auditor by October 20 of each year. If a city or county fails to file this resolution by October 20, the county auditor may not spread a levy that would result in a higher tax rate unless the increased rate is due to either a change in the general obligation debt levy, or a reduction in tax capacity due to a classification change, property exemption, court judgment, or county error. The levy and tax rate are adjusted to exclude levy for general obligation bonds and fiscal disparities.