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year or two. <br />TAX BASE EQUALIZATION <br />The 1989 Special Session tax bill provided a Tax Base <br />Equalization distribution of $18.9 million split $2.7 million <br />metro and $16.2 million outstate for cities other than 1st. <br />class cities. The distribution was based on a portion of the <br />city only three year average levy reduced by disparity aid and <br />LGA and limited to a maximum increase of 15%. The <br />Equalization Aid formula was for 1990 only but the $18.9 <br />million distribution was then rolled into the regular LGA <br />base, thus grandfathering the distribution for 1991 and <br />beyond. For purposes of the state budget, aids such as LGA <br />for local governments in calender year 1991 are expenditures <br />in the next state fiscal biennium. <br />The Coalition of Greater Minnesota Cities (CGMC) has a <br />proposal to make permanent the Tax Base Equalization formula, <br />increase the percent of levy it applies to, increase the <br />distribution at least to $30 million plus, and to include St. <br />Paul and Duluth. <br />The AMM General Policy position is in opposition to any Tax <br />Base Equalization formula that only considers property wealth <br />and does not consider the level of service or type of service <br />included in the subsidy. The formulas to date have only dealt <br />with property wealth. <br />The 1990 Legislature must solve a budget deficit of over $200 <br />million for the current biennium which could directly impact <br />1990 LGA and HACA distributions and indirectly impact the base <br />for 1991. In addition the 1990 Legislature must establish <br />1991 aid distributions which means they will have to deal with <br />Tax Base Equalization as proposed by the CGMC. Concurrently, <br />the Legislative Commission on Planning and Fiscal Policy is <br />scheduled to do a major analysis of the purpose and basis for <br />LGA, etc. <br />Therefore, it seems that it would be premature to enact any <br />permanent structural change to the aid system prior to the <br />completion of the Legislative study especially one that would <br />create large increased budget tails in the next biennium. <br />Using this reasoning as a basis, the AMM Board of Directors <br />adopted the following specific policy for Tax Base <br />Equalization for 1990: <br />'The AMM Board of Directors supports the grandfathered <br />extension of the 1990 Tax Base Equalization Aid distribution <br />to be included as part of 1991 LGA base, but does not <br />support increased Tax Base Equalization Aid for 1991 nor <br />-4- <br />