Agenda Packets - 1997/03/24 - Laserfiche WebLink

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EU RMKflO ONLY 145 University Avenue West, St. Paul, MN 55103-2044 . League of Minnesota Cities Phone: (612) 281-1200 • (800) 925-1122 Cities prrmotii gexc¢nence Fax: (612) 281-1299 • TDD (612) 281-1290 Price of Government Briefing Paper Issue synopsis/League position: The Price of Government legislation requires that the Governor recommend and the House and Senate adopt targets for the overall percentage of personal income collected by the state and local units of government. These targets are adopted every two years in the odd-numbered, budget setting year. The targets were originally established as a long-term barometer of trends in state and local government revenues. The chief House author, Representative Ann Rest, has insisted that"the law is not intended to be used for making short-term course corrections, like persuading local governments to lower their levies." Nonetheless, since the law was enacted in 1993, the Price of Government targets have been used to criticize local units of government. This past year, the Commissioner of Revenue criticized city officials for increasing the proposed 0 1997 property tax levies beyond the POG targets. In fact, as the law is written, the POG targets do not isolate property taxes, but instead projects total local government revenues. The commissioner's letter is evidence of the confusing nature of the law and the need for clarification. Messages for Legislators: The original intent of the price of government legislation should be reviewed and the clarified. The law should not be used as a short-term limitation on local government levies, but used as a tool to understand the impact of policy changes, demographic changes and other factors that influence local revenue trends. If the long-term planning aspect of the law cannot be clarified, POG, as it applies to local units of government should be repealed. Pending Major Bills/Status: The Governor recommended and the House and Senate have approved POG targets for the upcoming two biennia. The targets adopted by the House and Senate are less aggressive in reducing the overall price of government than the Governor's original proposal. After holding informational hearings on the price of government law earlier in the session, House Tax Chair Dee Long has indicated that she will likely recommend an interim study of the POG law that will hopefully lead to future recommendations on the application of the POG targets. 411) prepared by: Gary Carlson AN EQUAL OPPORTUNITY/AFFIRMATIVE ACTION EMPLOYER