2006.09.18 EDA Packet - Laserfiche WebLink

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ELLeague of Minnesota C.'ifiea 1 ties Cities promoting excellence Number 23 September 13, 2006 Preliminary levies required to be certified Jeanette Behr,Eric Willette,and Gary Carlson This Friday,Sept.15,cities are required to 11.70 percent from the current it appropriate additional LGA funding. to certify their preliminary property 10.50 percent while the employee rate In August,the Department of Rev- tax levies for the 2007 budget year. will increase to 7.8 percent from the enue notified each city of its 2007 dis- Under state law,a city cannot raise its current 7.00 percent. tribution.Since the program was cut final levy beyond the Sept.15 level Keep in mind that contributions and reformed in 2003,the distribution except for certain limited circum- for the Coordinated plan,as well as of LGA has been much less predict- stances,such as voter approved levies, the Police and Fire plan will increase able and many cities have seen signifi- levies covering the cost of natural again in 2008. cant increases and/or decreases to their disaster costs that occur after the pre- Market value homestead credit LGA from year to year.Even though liminary levy is certified,and levies for funding restored.Beginning in 2007, the overall appropriation of LGA tort judgments that become final after funding will be fully restored for the remains unchanged in 2007,many cit- the preliminary levy is certified. market value homestead credit reim- ies are dealing with large decreases or As a result of these state restric- bursement(MVHC) for 103 cities increases in LGA from 2006. tions,it is important that cities keep that were impacted by cuts imposed In addition,many cities are still several cost factors in mind as they pre- by the Legislature.These cities did not experiencing the effects of the 2003 pare their 2007 budgets.More infor- receive money from this state program LGA formula changes.For some mation about 2007 budgets is available during 2003-2006 due to the fact that small cities,their LGA distribution in the League's Guidelines for Preparing the 2003 Legislature balanced a major under the new formula was signifi- City Budgets information memo,avail- state deficit,in part,by cutting state cantly lower than their distribution able in the Library section of the LMC aids and credits to cities. under the old formula.The 2003 web site at:www.hnnc.org. Under the 2003 cuts,cities that Legislature decided to phase in large PERA employee and employer received little or no local government reductions over a period of years by contribution increases.On Jan. 1,2007, aid (LGA) funding experienced a limiting the annual reduction for small employee and employer contributions reduction in the MVHC reimburse- cities (those under 2,500 population) for employees in the Coordinated ment.Although the 2005 Legislature to prevent large,one-year increases on plan and the Police and Fire plan will temporarily extended the MVHC property taxes.The annual LGA reduc- increase.These changes were enacted reimbursement cuts for these 103 tion for many small cities is equal to during the 2005 legislative session in cities for the 2005 and 2006 budget 5 percent of their original 2003 certified order to address funding deficiencies years,the 2006 Legislature did not LGA(before the 2003 budget-balanc- in these two plans. extend the cuts.The 2007 Legislature ing cuts). The PERA Coordinated plan will meet prior to the distribution Rising operating costs.Although rate for employers will increase to of 2007 MHVC reimbursements,so fuel costs have dropped in recent 6.25 percent from the current 6.00 it is possible that the cuts could be weeks,prices are still significantly percent.For the employees,the extended for 2007 and beyond.To higher than last year.These increased contribution rate will increase to date,we have heard of no proposals to costs could directly impact building 5.75 percent from the current 5.50 extend the cuts. and facility operating costs,vehicle percent. LGA appropriation has not been operating costs,and road construction In the Police and Fire fund, increased.The 2006 Legislature did employer contributions will increase not change the LGA formula nor did Continued on page 3