Agenda Packets - 1997/04/07 - Laserfiche WebLink

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J V North Metro Mayors Association �}� Basic Tax Reform Principles March 1997 The 1997 Legislature is in the process of considering various two reform proposals. The IP North Metro Mayors Association recalls historical tax reform efforts and hopes to avoid some of the negative impacts that local government experienced. • The pre-1967 environment found local units of government sharing in the states' cigarette and liquor tax. • In 1967 this was modified to include a share of the sales tax. • In 1971, local governmental aids, fiscal disparities and levy limits became law. • In 1991, the Trust Fund was established and lasted just a couple of years. • Currently cities receiving approximately 20% of all property taxes collected. Cities are concerned that they will be used as the vehicle to raise the necessary funds to accomplish tax reform across the state. The North Metro Mayors Association sets forth herein several basic principles that it believes are essential in order to achieve a well balanced tax reform package this year: 1. The burden of state-wide education needs to be taken off of the property tax payer. 2. The revenue streams of fiscal disparities, and local government aids must be maintained. 3. Tax Increment Financing as a redevelopment tool must be preserved. 410 4. Levy limitations have not worked in the past and should not be imposed now. 5. If cities face significant cuts in their current revenue producing stream, there must be a transition aid program to phase in the negative impacts of tax reform measures. 6. Even with tax reform, cities will still be faced with the most regressive and most unreliable source of funding, i.e., the property tax. This will especially be true for older cities with low, flat or slow grow tax base. 7. Cities should not be required to have referendums for raising revenue to meet general fund operating requirements. 8. Cities should not be mandated unless there are funds available to implement the mandate(s). NMMA recognizes that education costs need to be removed from the property tax and paid for out of general funds. The method used to achieve this objective must however be structured in a way that allows local units of government to continue to deliver services that citizens want and desire in an accountable manner. The facts are clear, many cities throughout the state are property tax base poor. But for the fact of fiscal disparities (metro area) and local governmental aids (state wide) these cities would not be able to deliver services or stimulate economic development without dramatically increasing property taxes. On these basic tax reform principles, the North Metro Mayors Association is unified and 110 will call on its elected delegation to support its position. U:\NM MA\LEG I SCOM\PREP\TAXPOLI C.DOC