Agenda Packets - 1987/09/14 - Laserfiche WebLink

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RS-4. Sales and Motor Vehicle Excise Tax Extension !A) __------- t.,net nnvarnments to pav the six percent in 1987, the governor proposed extending the six percent sales and s and other local motor vehicle excise tax to purchases mad, by government units. While rejecting the sales tax proposal, the legislature did accept the motor vehicle excise tax plan, effective with city purchases of vehicles made after May 31, 1987. Forcing local governments to pay the state sales tax amounts to one level of.yoverrment taxing ar.ither. This increased sales tax will directly result in increased local property taxes. In defending the governor's sales tax proposal, the Revenue Department argued that the increased local costs caused by the sales tax would be relatively insignificant, and thus would not necessitcte increased property ague demonstrated taxes. However, a special survey conducted by the Le the governor's plan would have cost Minnesota cities a very h significant amount--$32 million per year, twice the cost estimated by the Revenue Department. Given these findings, it is clear that k imposing the sales tax on local government purchases would increase property taxes. R3 5 State Administrative Costs (B) All state government costs should be subject to the standard appropriation review process and be funded directly by specific state appropriation, not by a broad deduction from property tax relief programs. -vlhiie decisic-S on the necessary staffing and funding levels for state agencies are made by the appropriations committees, tax policy decisions should be handled by the tax committees. When state administrative costs are financed through the local government aid (LGA) appropriation, funds available for property tax relief are reduced, defeating the purpose of LGA. In 1987, such state costs included the unprecedented large sum of $419,200 to fund the state avditor's office and certain Department of Administration functions related to local government. In 1988, $423,700 i,:= due to be deducted from LGA allocations for the same purpos ns. In the case of the state auditor's office, earmarked deduction;: from LGA are being used to finance over 40 percent of 1'ie al'9itor's state -appropriated budget, an inappropriate action in the League's opinion. Furthermore, LGA funds are being used to finance auditor and Department of Administration operations which do not relate to cities, but to all local governments ---counties, school districts and townships. The WA program is largely designed for and used by cities. Other state programs --county income W.sparity aids, school aids-- - 56 -