Management Report and Recommendations 12/31/1988

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City of Lino Lakes, Minnesota Management Report, Page 3 Prior system Homesteaded property owners see homestead credit as a reduction of taxes due on property tax statements and such amounts were distributed to taxing jurisdictions in which the homestead credit reductions occurred. Revised system ti Revised system (after 1989) Revised system (after 1989) Homesteaded property owners will continue to see a "homestead credit" on property tax statements, however, these amounts will not correlate to amounts paid by the State to local taxing jurisdictions. Cities will receive transition aid in lieu of homestead credits. The 1990 transition aid will be based on 1989 property taxes and net tax capacity rates. Transition aid will be frozen at 1990 levels. Considering growth and inflation, this freeze will, in fact be a reduction of State funding. Targeted Cities (primarily non -metro cities) will receive disparity reduction aid. The 1989 disparity reduction aid will be based on 1988 gross taxes and gross tax capacity rates. Disparity reduction aid will be frozen at 1989 levels. Metropolitan suburban cities receive one -half of one percent of this aid ($300,000 of $54.3 million) In addition to the above changes, the local government aid formula (LGA) has been revised by 1988 legislative actions. The 1989 increases in LGA vary dramatically between cities. The City of Lino Lakes is scheduled to receive a 42% increase in 1989 LGA. A key aspect of the revised formula is the number of households as follows: 1988 households 2,276 Base revenue guarantee factors per household: Initial factor $160 $150 times base 10 logorithm of households (the greater the number of households, the greater aid per household) 354 Total per household guarantee $514 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1