Agenda Packets - 2012/02/27 - Laserfiche WebLink

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Item No: 07B Meeting Date: February 27, 2012 Type of Business: Council Business City of Mounds View Staff Report To: Honorable Mayor and City Council From: James Ericson, City Administrator Item Title/Subject: Resolution 7902 Supporting No Change to the Fiscal Disparities Program Introduction: The North Metro Mayors Association (NMMA) recently adopted a resolution that urges the Governor and Legislature to oppose any change to the Fiscal Disparities law. The NMMA further requested its member cities’ city councils to adopt similar resolutions. The Council reviewed the resolution at its work session on February 6, 2012. Discussion: The Fiscal Disparities legislation was adopted in 1971 and first implemented in 1975. In a nutshell, the intent of the legislation was to share up to 40% of new commercial and industrial tax base growth within the seven-county metro area. The aggregated tax base is then redistributed based on whether each community’s fiscal capacity per capita was higher or lower than the metro average. The benefit of the program was to equalize tax base growth, thus reducing the need for cities to compete against each other as well as to level the playing field so that fully-developed communities (such as Mounds View) or communities with limited commercial / industrial tax base (such as Mounds View) would still benefit by growth in other communities. The program has long been viewed as a successfully innovative approach to regional growth and development. In recent years however, there have been proposals floated that would change the funding and distribution formula, either to eliminate the program or reduce the amounts contributed or to reallocate portions of the pooled C/I tax base for other purposes. Mounds View, like most of the member NMMA cities, is a net “gainer” from Fiscal Disparities, meaning, the City receives MORE from the pool than we contribute. In 2012, Mounds View is scheduled to receive $93,600 from the program. If the legislation were to be repealed, the City would have to increase its levy by about 2.5% to make up the difference. Bruce J. Katz, vice president at the Brookings Institution and founding Director of the Brookings Metropolitan Policy Program, indicates the following regarding legislation such as Fiscal Disparities: Regional tax-base sharing “…is not only socially and politically healthy for a region; it also discourages wasteful public subsidies to lure businesses from cities to suburbs and vice versa.” Representatives from the North Metro Mayors Association, Bob Benke and Joseph Straus, will be attending the Council’s meeting to answer any questions it may have relating to the NMMA resolution or the Fiscal Disparities Act of 1971.