Agenda Packets - 1985/01/02 - Laserfiche WebLink

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RS-2. PROPERTY TAX REFORM (A) (cont'd) should not be jeopardized by state imposed changes in the tax structure. ' Likewise, enterprise zone businesses have been recruited based on a commitment that they would receive a preferential classification ratio in the calculation of their property tax obligations. These development districts should be protected from any negative consequences of tax reform. The tax increment financing plan in effect at the time that legislation is passed should be the basis for determining remedies. Any reduction or elimination of the state homestead credit program should not be implemented unless the freed state dollars are dedicated to property tax relief. Consideration is being given to reducing or removing the homestead credit in favor of greeter reliance on the circuit breaker. Implementation of such a system might jeopardize the ability of some homeowners to make their May property tax obligations or be able to afford higher escrow account payments on their mortgages. It is recommended that if such a system is implemented that homeowners apply for it early in the year and have it credited against their tax bill in both the May and October payments. Perhaps the application for circuit breaker could be sent out with the property tax statements. RS-3. ELIMINATION OF LEVY LIMITS (A) The League of Minnesota Cities recommends that the Minnesota Legislature10 re eal the lev limit lawa in M.S. 2,5.51, M.S. 275.11, M.S. 426.04, and M.S. 412.251. Cities in Minnesota must comply with multiple limits on their ability to levy taxes. These limits are confusing and complex to administer. All cities are subject to a per capita limit outlined in M.S. 275.11. Certain levies are allowed outside this levy limit but these special levies differ from those contained in the other limits. Statutory cities are further constrained by a millage limit on their general purposes levy found in M.S. 412.251. Special purpose levies are allowed outside of this levy limit. Home rule cities may have levy limits in their carter. Their charter limit may be affected by M.S. 426.04 if it is less than 13 1/3 mills. Iron Range home rule cities in which more than 25 percent of the assessed value consists of iron ore have special provisions in statute. The percentage limit in M.S. 275.51 is the one the majority of cities are most constrained by and the one most policy makers are familiar with. The 1983 legislature exempted all cities with less than 5,000 residents from this limitation. This was a positive step, since this levy limit law, with all its special levies and frequent changes and exemptions, required cities with relatively simple budgets and small staffs to engage in time-consuming, costly, and complex efforts to operate within the complexities of the law. The League feels that all cities should be trusted to responsibly use their taxing authority. The League continues to oppose levy limits because they apply is uniform state-wide restrictions to cities and are too inflexible. The current -42-