Laserfiche WebLink
" <br /> _ --- 1v9fit° <br /> _ <br /> 3490 Lexington Avenue North 0,..123466) <br /> St. Paul,MN 55126 ry°�° R, 41,9 <br /> League of Minnesota Cities (612)490-5600 N pE�1 ?.d N <br /> N Rec�ty oe ``' <br /> December 26 LGA Payments to Increase Mounas‘'e'" \�'°" <br /> November 30, 1992 <br /> "c-jzoz6 (3‘1> <br /> Dear City Official: <br /> Due to stronger than expected sales tax revenues, the Local Government Trust Fund (LGTF) is <br /> now projected to have a surplus of approximately $30 million for the current biennium. Under <br /> current law, this money must be distributed to local governments in proportion to their LGA, <br /> equalization aid and community social services aid for 1992. The resulting aid increases will be <br /> one-time increases that will not be built into the aid base for future year aid distributions. <br /> The Department of Revenue advised us today that the aid increase will be approximately 8.5% <br /> of the total amount of LGA and equalization aid each city was originally certified to receive in <br /> calendar year 1992. This amount will be added to the December 26 payment. At this time, the <br /> Department of Revenue does not intend to notify cities of the amount of the increase prior to the <br /> time checks are mailed for the December payment. <br /> The LGTF is working as intended, with the amount of property tax relief increasing as revenues <br /> into the Trust Fund increase. City LGA was cut in 1991 and 1992, and the sales tax was imposed <br /> on local government purchases in order to balance the state budget. The aid increase this <br /> December will help offset the impact of the state sales tax that cities now must pay, will help <br /> make up for cuts in 1991 and 1992, and will help prevent future property tax increases. <br /> Unfortunately, the timing of the official notice from the Department of Revenue that will <br /> accompany the December payment will be too late for cities to adjust their 1993 levies to reflect <br /> the additional state aid. <br /> How should cities respond? <br /> Even without official notice from the state, some cities may want to reduce their 1993 property <br /> tax levies to reflect the additional revenue they expect to receive in December. Others may want <br /> to spend the money on needed special projects or maintenance that has been deferred. Finally, <br /> others may want to save the money to help reduce their property tax levy for 1994. There is some <br /> risk in each approach. <br /> The most important advice we can offer is for you to clearly document your use of this <br /> unanticipated aid increase. For example,if you decide to reduce your 1993 levy, clearly document <br /> and publicize the amount and reason for the reduction. Similarly,if you save the money to reduce <br /> your 1994 levy, make this decision public and explicit, and earmark the money separate from <br />