Management Report and Recommendations 12/31/1989

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City of Lino Lakes, Minnesota Management Report, Page 5 Using the above table, LGA for The City of Lino Lakes for 1989 and 1990 is determined as follows: 1989 1990 Initial aid increase $82,761 $6,625 Additional aid increase under alternate formula 15,992 0 Prior year aid 232,472 331,225 Reduction for State demographer costs (13) (268) Initial aid 331,212 337 ,582 Aid transfer to schools (3.4% of net tax capacity) 0 (148.175) Final Aid - 1989 legislation 331,212 189,407 1990 legislative cut (1.53% of revenue base) 0 (26304) Adjusted LGA $331,212 $163,103 The 1990 Legislature made further reductions in LGA to cities. The Legislature reduced LGA by 1.53% of the revenue base. This cut occurred after City budgets were adopted and the operating year was one third elapsed. The Legislation does not provide a replacement revenue source. The 1990 legislature also approved potential LGA and HACA cuts related to tax increment districts formed after April 30, 1990. Homestead and Agricultural Credit Aid (HACA) is the replacement of the Homestead Credit program. For payable 1990, HACA is computed as follows: Payable 1989 Gross Taxes - (Payable 1989 Tax Rate x Payable 1990 Net Tax Capacity x .9767) Beginning with payable 1991, HACA payments will reflect increases in the Consumer Price Index and increases in the number of households. Tax Base Equalization Aid, (which is new for 1990), is a program that targets aid to low tax base cities. Tax Base Equalization Aid will work similar to HACA whereby the county auditor will deduct the aid from the amount of taxes certified by the city. Payments of Tax Base Equalization Aid will be made on July 20 and December 15, 1990 from the Department of Revenue. The City of Lino Lakes is scheduled to receive Tax Base Equalization Aid in 1990 of $49,684. In addition to changes in the State aid structure, the 1989 Legislature repealed all city levy limits beginning with payable 1992. The 1990 Legislature extended the repeal to 1993. The State Legislature will have the opportunity to change and/or repeal this action during its 1991 and 1992 sessions.