Agenda Packets - 1987/09/14 - Laserfiche WebLink

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'Q01 RS-3. Elimination of Levy Limits A Largely to compensate for expected rises in local levies, the 1987 Legislature imposed an extremely stringent three percent levy limit on cities for payable 1988. This levy limit, applied also to small cities, is severely limiting cities' abilities to compensate for cuts in state and federal financial aid as well as making it nearly impossible to deal with rising costs resulting from various state mandates, including comparable worth and the newly-imposed'six percent motor vehicle excise tax. Although the legislature provided for an appeals process allowing certain adjustments to cities' 1988 levy limit bases, it appears the Revenue Department will not provide to cities the adjustments which the law permits. Despite assurances made during the legislative session that tightened levy limits would only be imposed for one year, the new law actually imposes additional levy limit restrictions in future years as well. These additional restrictions include the arbitrary lowering of the five percent inflation cap to three percent and the permanent inclusion of smaller cities under the levy limit law. If such stringent levy limits are continued, then the legislature should continue to provide for an appeals process. Levy limits have made it difficult for many cities to adequately plan for, and respond to, changing conditions. Federal cutbacks, rising insurance costs, costs of comparable worth salary adjustments, and other factors force cities to adjust their budgets and levies. Levy limits prevent some cities from ujing property taxes as a source of revenue to provide for adequate reserves or absorb increased costs. Local elected officials are accountable to the public and should be entrusted to responsibly use their taxing authority. Cities exist in a very dynamic, changing environment. They are expected to quickly respond to changing federal policies, state mandates, court rulings and market forces, such as those affecting tha: insurance industry. Statewide limits artificially constrain the options available to elected officials and are too inflexible. Given uncertainties in state and federal financial aids, and the diverse problems and circumstances faced by cities, levy limits are unworkable. These limits are inconsistent with the principles of local self-government and accountability and should therefore be repealed. - 55 -