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i - <br /> y <br /> U LLm E I N <br /> association of <br /> metr oiitan <br /> municipaiitiee <br /> June 15 , 19 -38 <br /> TO: Mayors and Managers <br /> RE : CONSTITUTIONAL CHALLENGE TO 1988 OMNIBUS TAX BILL <br /> The Association of Metropolitan Municipalities ' (AMM) Board of <br /> Directors would like your input and advice on a 'matter of some <br /> urgency and potential major city impact . The AMM Board of <br /> Directors is considering a request from the Municipal 'Legislative <br /> Commission (MLC) to participate in a legal challenge to a portion <br /> of the 1988 Omnibus Tax Bill . <br /> BACKGROUND: <br /> The MLC which is composed of 15 metropolitan suburbs has voted to <br /> pursue a legal challenge to the ' disparity reduction aid ' provided <br /> as part of the 1988 Omnibus Tax Bill . The lawsuit will challenge <br /> • the ' disparity aid ' based on Minnesota Constitution Article X , <br /> Section I , which reads in part : <br /> ' Taxes shall be uniform upon the same class of subjects <br /> and shall be levied and collected for public purposes - - ' <br /> ( emphasis added ) <br /> Article 4 , Section 26, Subd - 3 of the 1988 Omnibus Tax Bill <br /> establishes a "disparity reduction aid" which has the effect of <br /> "buying down" local government mill rates to approximately 128 <br /> mills . The cost of this program is $63 . 2 million in 1989. If t�:e <br /> combined mill rate of schools , counties and cities exceeds 126 <br /> mills , the State will provide disparity aid to local units of <br /> government to be used to reduce the mill rate to 128. <br /> This policy is not in itself unconstitutional . However , the me-: nod <br /> .ne Legisiature adopted to distribute disparity aid can create a <br /> nonuniform tax on the same class of subjects by the same ;.axin6 <br /> autnority and therefore may be constitutionally flawed . <br /> A nonuniformr, tax result can occur because disparity aid is <br /> distributed to local units of government but the aid cannot be V�eJ <br /> to lower the tax rate citywide or countywide or throughout the <br /> school district but rather it can be used only to lower the tax <br /> rate within a portion of a city , county or school district . <br /> • <br /> -1 - <br /> i-3 uni.ersity avenue east, st. paul, minnesota 55101 (612) 227-4008 <br />