Management Report and Recommendations 12/31/1982

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City of Lino Lakes IIManagement Report, Page 2 1 1 1 1 1 1 1 Over the past several years, we have analyzed trends in the financing of local government in Minnesota and how these trends are changing. The changes now taking place are substantial. The financing of Minnesota local government in the 1980's will be substantially different from that of the 1970's. These changes must be addressed by those charged with the responsibility for City operations. This Report has been prepared to identify major changes and to communicate this information to City Councils and Administrators to assist in the future financial management and planning of the City. Minnesota cities (general government operations) are financed by two primary revenue IIsources. These are State aids and local property taxes. State aids paid to Minnesota cities can be classified under two primary categories: (1) tax -levy related aids; and, (2) local government aid (i.e. per capita aid). State tax -levy related aids (primarily homestead credits) are aids to individual property owners rather than aids to cities. City Councils certify the City tax levy Ieach October. Once certified, the County Auditor tabulates that portion which is to be paid by the State (i.e. homestead credits and other tax -levy related credits) and the remaining balance which is to be paid by property owners. These tax -levy related State IIaids (deducted from certified tax levies) do not increase or decrease the amount of revenue a City will receive. They only pro -rate the certified tax levies between the IIState and property owners. Accordingly, when a City Council adopts its annual operating budget, it will generally estimate one amount for local property taxes which includes the tax -levy related State aids. 1 1 The second primary revenue source for financing the general government operations of a Minnesota city is local government State aid. This aid is paid to Minnesota cities in addition to the tax -levy related State aids. Local government aid does represent addi- tional revenue to Minnesota cities. Certified property tax levies and local government aid generally represent the majority of revenue available to finance the general govern- ment operations of a Minnesota city. More important, these revenues are controlled ed by IIState Statutes and are subject to the ability of the State to meet these commitments.