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C <br />RS-7. Elimination of Levy Limits (B) <br />Cities in Minnesota must comply with multiple limits on their ability to <br />levv taxes. These limits make it difficult for many cities to adequately plan <br />for and respond to changing conditions. Federal cutbacks, skyrocketing <br />insurance costs, costs of comparable worth salary adjustments, and other forces <br />often require cities to re-examine their budgets. Levy limits prevent some <br />local officials from using property taxes as a source of revenue to provide for <br />adequate reserves or absorb increased costs. <br />Local elected officials are accountable to the public and should be <br />entrusted to responsibly use their taxing authority. Cities exist in a very <br />dynamic, changing environment. They are expected to quickly respond to changing <br />federal policies, state mandates, court rulings, and market forces such as those <br />currently shaking the insurance industry. Statewide limits artificially <br />constrain the options available to elected officials and are too inflexible. <br />All cities are subject to a per capita limit outlined in M.S. 275.11. <br />Certain levies are allowed outside this levy limit, but these special levies <br />differ from those contained in other limits. <br />' Statutory cities are further constrained by a nillage limit on their <br />general purposes levy found in M.S. 612.251. Special purpose levies are allowed <br />outside of this levy limit. Home rule cities may have levy limits 1n their <br />charter. Their charter limits may be affected by M.S. 426.04 if it is less than <br />13 1/3 mills. Iron Range home rule cities in which more than 25 percent of the <br />assessed value consists of iron ore have special provisions in the statute. <br />Policy makers are most familine with the percentage limit in M.S. 275.51. <br />The 1983 Legislature exempted cities with fewer than 5,000 residents from this <br />limitation. This was a positive step, however, cities of all sizes should be <br />trusted to use their taxing authority. <br />Given uncertainties in state and federal financial aids and the diverse <br />problems and circumstances faced by cities, uniform limits are impractical. <br />These limits ate inconsistent with the principles of local self-government and <br />accountability and should therefore be repealed. <br />-65- <br />