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Home My WebLink AboutDave Kennedy Memo re Section 7.03 - July 14, 2006 -1LIakyj[Q.7_10IDili LTJ TO: Scott Riggs FROM: Dave Kennedy DATE: July 14, 2006 SUBJECT: Mounds View Charter: Proposed New Chapter 7 You've asked for my comments on the proposal being developed by the City Charter Commission to amend Section 7.03 of the Charter relating to taxation. The amendment is so extensive that I can only offer some general comments at this time. The amendment must be studied and analyzed much more thoroughly before submission to the voters for approval or to the Council for adoption by ordinance. I will point out some technical problems in the amendment below that will correspond to the numbers marked on the text itself. General Comments I don't think it advisable to repeal the present text of 7.03 which is a general grant of authority to set up any kind of taxing system not otherwise prohibited. Granted there are precious few such local taxes still available, but a Charter looks to the future and such authority might come in handy someday. Retaining the language does no violence to the rest of the proposal. The substance of the amendment is a system of levy limits for ad valorem taxes and, presumably, a number of fees and fund reserves. The state does not presently impose levy limits on cities but it has in the past and may in the future. It is probable, but not certain, that state imposed levy limits would pre-empt the limits proposed and they surely would if the Charter permitted higher limits than the statute. The amendment should probably state clearly that it applies only in the absence of state limits. (Levy limits could conceivably apply to the fees in Subdivision 2 since the 2006 tax legislation now treats "fees" as "taxes". Article 13, Section 15, Laws 2006, Chapter 259) If this proposal is to be submitted to the voters, the Commission should be aware that the City Council must fix the form of the ballot question in language "... sufficient to identify the amendment clearly". I think framing the ballot question for this complex amendment will be quite difficult. As a general matter the text of the proposal is quite long and should be edited accordingly. Many provisions may be dropped entirely as pointed out below. 293823v1 DJK NW210-4 Specific Comments (See numbers on text). 1. This first sentence is unclear and unnecessary. The City has the powers described and its class is set by law. 2. The "resolution" is the annual tax resolution sent to the County in the manner prescribed by law. It should say "The City's annual resolution to levy ad valorem taxes ..." 3. Suppose the CPI + 3% is 10%. I assume the limit would still be 6%. This could be crippling to the City in inflationary times. 4. I assume "Said index" refers back to the CPI. But is the 6% index based on the same CPI or a 12 month average? This should be clarified (unless I'm reading it incorrectly). 5. "Within the City" is superfluous. 6. When is notice given? Two days? Two weeks? 7. As pointed out above, framing a ballot question will be a formidable task. 8. What is a lay citizen? 9. Is the resolution the ballot question? 10. How does this tie in with the truth in taxation schedule? 11. What is a "special levy"? 12. Sales and use taxes are authorized by a general law that requires a special law and voter approval. At present they can't be modified locally. 13. What is a "valuation table"? 14. How is this "majority" calculated? 15. I think, given the language of this subdivision it will be extremely difficult to determine what fees are limited by this amendment. 16. This last sentence is superfluous. 17. This paragraph D is superfluous. I don't think there's any doubt about the meaning of the term "City" under the Charter and this language does nothing to clarify it, if clarification were needed. 293823v1 DJK W210-4 18. This paragraph E is superfluous. Section 7.12 refers to emergency debt certificates the issuance of which are totally governed by statute. See Minn. Stats., Sec. 475.754. 19. This limitation on reserves should be considered most carefully. Neither statute nor this Charter authorize them but they are commonly created and maintained and Moody's (and to some degree Standard & Poor's) place great weight on a City's reserves in assigning credit ratings. My feeling is that Moody's would not look favorably on this provision (or indeed on the whole proposed amendment). 20. The first two sentences are superfluous. There can be no reserves of tax increment and nothing here affects development agreements. 21. This subdivision is superflouous. Bond obligations may not be impaired under any circumstances, and bonds may not be issued for current expenses. See Minn. Stats., Section 475.52, Subdivision 1. 22. This subdivision merely states a fact and is superfluous. Also, the term "referendum" should be "initiative". In addition, this whole amendment contradicts Chapter Section 5.01 which precludes the use of initiative and referendum in matters involving levy of taxes. 23. There should be an effective date that allows the City administration enough time to adapt to these new limitations if adopted. I hope this is helpful. Please excuse the extraneous marks on the draft. 293823A DJK W210-4 Mounds View Charter Commission �J I CHAPTER 7 l TAXATION AND FINANCES Resolution 2006-06 Dated June 13, 2006 Section 7.03. System of Taxation. Subjeet to the state eanstitl Rion, and exeept as kwbidden by taxation. This ftAarit f-to provide. by ordinanee fbr a system of laeal it or by state law, the Gotmeil sha4f Subdivi ion 1 The City of Mounds View shall have In addition -to the powers granted by this Charter- all the powers to raise money by taxation pursuant to the laws of the State of Minnesota published data of the Consumer Price Index for all Urban Unnsumm in the Minneapolis St Paul metropolitan area as defined by the U.S. Department of Labor Bureau of Labor Statistics A) Adopt a resolution declaring the necessity for an additional tax levy and spec ify;na the purposes for which such additional tax levy is required B) hold a public hearing with a published noticlin the City's official newspaper, City — newsletter, and if available the City web site s sting forth the contents of the resolution described in SubdiyisiQn 2A C) D) Subdivision 3. Anv other fel sDeciatlevp created. or-i-fcreased • •�ii4- a •tjt City of Mounds View 4000/ Mounds View Charter Commission Resolution 2006-06 Dated June 13, 2006 B) For the purpQses of this SQQIiQn, the, tQrm "fee" does not include: Filipg for Office fee, ]2a& or recreational 12ar-ticil2ati-on fees, charges for j2hoto-covying, sales of munidmiligggr stgrg- products. Building and Zoning Permil.Qr Inspection and Planningfees, or civil, criminal and banking fines and other darges collected in cases of restitution.oy-.vi6lation Qff law or contract, The term "fee" does not include charges collected by the direction ofthe State, County or other taxation authoriM or as a result of joint powers agreements, -The term "&g! also does not i ! i•. n•&Qs, ligggr license fees, cable•n service fee includingannual licen��T-ees for the operation of a regulated business, and any miscellaneous.fees for • saffety related Code enforcementand. other •••• y • materials routinely provided by the City to its itizens or other members of the public whiLch by law, must be limited to. the actual cQst of the service being provided. TheTerm "fee" shall not include any special assessments made under Minnesota Statutes Section 42.9as C) For the purooses of this Section "fee increase" includes a new tax or fee a mnnPtary increase in an existing tax or fee a tax or fee rate increase. an expansion in the legal etined by the State, all its departments personnel ommi ions and governing bodies adopted by Ordinance appointment or proclamation and are ory i ed to ex r is the "Powers of the City" as defined by the State or this Charter. "City" shall nt include any governing body solely owing its existence to separate constitutional or statutory author' outside of the Charter and not as a result of Council action Ordinance appointment or proclamation regardless of whether that other governing body has jurisdiction or performs duties and sffvices within the boundaries i E) This Section does not a12p1v to anyanecific emergency measure authorized in Chapter 7 Section 7.12. fund' wd-!-,x=ndiIures- The Council may raist.a fund's reserve beyo d 50%12rQvided-L I . the -Council designates by resolution and holds a public hearing reviewing the purpose of the ase and the Cijy fQIIQ)ys such proposed increase with the steps outlined in fee- 2. Drthat the Council modifies and adopts by r=lution the Five Year FinaUQjaj Plaa. as Chal2ter 7, Section 7.05, specifying the fund reserve j2u.wQsQ and the City follows such promsed collectiQn- of such increased •n • City of Mounds View Mounds View Charter Commission Resolution 2006-06 Dated June 13, 2006 lew, fee, or other method used by the City for rai ins monev. City of Mounds View