Management Report and Recommendations 12/31/1988

Home Search

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 City of Lino Lakes, Minnesota Management Report, Page 2 1988 LEGISLATIVE ACTIONS The 1988 legislature approved sweeping changes in the property tax system and State aid distribution structure. The changes intensify competition between local governments for State funding. The new legislation effects the distribution of State aids to Minnesota cities. The cities with strong tax base valuations will receive less State funding. This generally has the greatest adverse effect on metropolitan suburban cities. As in past years, the distribution of State funding of cities creates a rivalry between three factions: 1) Minneapolis/St. Paul; 2) non -metro cities; and, 3) metropolitan suburban cities. The tables and graphs which are presented in the following section of this report reflect a multi- year history of property tax versus State aid funding of the governmental operating funds of the City. In the short term, a number of suburban metropolitan cities will receive increased State funding of operations. As the long -term effects of the 1988 legislative actions unfold, however, the property tax funding of operations is anticipated to increase for suburban metropolitan cities. If the projected decreases in State funding of operations occur And if property levy limitations continue to be restrictive, certain suburban metropolitan cities may face a budgeting dilemma. Several new terms and concepts which are a result of the 1988 legislative session are summarized as follows: Prior system Taxes spread to property owners based on assessed valuations. Taxes levied divided by assessed valuations equalled mill rates. 1 Revised system Taxes spread to property owners based on tax capacity valuations. Taxes levied divided by tax capacity valuations equal tax capacity rates.