Agenda Packets - 1986/11/03 - Laserfiche WebLink

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RS-6. State Funding to Cities (B) Property tax relief should _ontinue to be a high priority. Policy makers must recognize that any cuts in funding for cities will likely result in higher property tax lev..ls. For nearly two decaLac, the state has appropriately assumed a role in reducing property tax burdens. A longstanding commitment for such relief has been made to both the public and municipalities. The state must not renege on that promise by proposing reductions in local government aid. Tax and government financing reforms enacted during the past two decades have dramatically shifted the mechanisms for raising revenue away from local government and toward the state. Local governments have thus become heavily dependent on state -collected revenue. With passage of the 1967 Tax Reform and Relief Act, the 1971 Omnibus Tar. bill (the so-called "Minnesota Miracle"), and later tax legislation, the state obligated itself to lower property tax burdens, levy increased sales and income taxes, and use the increased revenue from such yam„ taxes to assume a larger share of the costs of delivering local government services. Q.,• As a trade-off for providing, aid to local governments the state imposed levy limits on local governments end prohibited them from imposing new or increased sales or income taxes. Given such constraints on the taxing abilities of local government and the state's long-standing commitment to provide property tax relief, the League believes it would be wholly unfair to reduce state funding for local governments, particularly at a time when cities' costs are rising and their tax bases are shrinking. -64-