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included communities under 5,000 population in its levy limit legislation. The City has been informed that the probable maximum tax levy increase to fund the City's general fund in 1990 will be 3%. This equates to less than $20,000 in 1990 to be shared by all departments of the City, including fire, law enforcement, road maintenance, and general administration. To put things into perspective, this tax increase will be less than the amount of increase approved for the governor's personal expense account in 1990. LOCAL GOVERNMENT AIDS IN SERIOUS JEOPARDY One of the key elements in the governor's proposed tax reform is to eliminate local government aids to cities. Although the formula used in determining local government aids for various municipalities is somewhat confusing, the source of this revenue can be simply explained. The State of Minnesota is recipient of income tax, sales tax, liquor tax, cigarette tax, gas tax, and numerous other taxes paid by Hugo residents. Local government aid is a form of revenue sharing that returns a small portion of these taxes to the various municipalities with said money to be used to keep real property tax down. In his tax reform message, the governor has indicated that he would like to eliminate these aids to cities and redistribute it to school districts and counties. The City of Hugo will receive approximately $150,000 in LGA in 1989. This equates to slightly less than the City's $167,000 road maintenance budget for 1989. TRUTH IN TAXATION UNWORKABLE After numerous pleas from cities and counties, the Governor and Commissioner of Finance have now agreed that the originally adopted truth in taxation law passed in 1988 is unworkable. Major amendments to the law were proposed in the tax bill vetoed by the governor earlier this summer. In vetoing the bill, the governor said that cities and counties would not have to comply with truth in taxation in 1989 as the law is unworkable. We would anticipate that amendments to the bill will be passed in a special session this fall making the budget process a very lengthy and costly one in 1990. We should point out that in passing the truth in taxation legislation, only cities, school districts, and counties were included, and the State again exempted themselves from this process. If, however, citizens of Hugo were interested in how the State is spending its money in 1990, call the following number to secure a copy of House File #372. Chapter 335, call 296-2314. BULK RATE U.S. POSTAGE PAID HUGO, MN 55038 PERMIT No. 21 Occupant