Agenda - Council - 01/13/1981 - Laserfiche WebLink

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.. . l~, \)~+ Minnesota's Fiscal Disparities Bill Introduction . The 1971 Minnesota Legislature has passed.a new law. gU3ranteeing every unit of government in the Twin Cities area a share of the total commercial-industrial prop crt}" tax hase, r~'gardlcss of where the future ('om- mercial and industrial growth occurs within the seven- county area. A suburban industrial p:!rk or a central city dep:Htment store both contribute to the metropolitan areawide tax base. Suburban communities no longer need vie for a neW shopping center for tax reasons; all will benefit from the new growth. The passage of the bill is precedent setting as an attempt to face the fiscal problems of metropolitan are=. It has long been noted that re\;sing the property tax system is a fundamental means of improving our capabilities to ensure healthy, land-development practices. Summary of the law All communities will pool 40 per cent of their net growth in commercial-industrial valuation, and each community will receive in retum a shaH~ of that pool. Each community's share is assigned in proportion to its population and is adjusted soothe community n:cei\'es a larger portion if its per capita property valuation is below the metropolitan average and a smaller portion if above the metropolitan average. EsscntiaIl)', the new law introduces the concept of "base-sharing." The only aspect of property tax:nion that is altered is the: procedure for determining the com. munity's valuation or tax base. Taxing units retain their autonomy, no additional tax is imposed, no metro- polit:tn taxing agency is cre:ned, ;md each locality continues to m:tke policy decisions for levying property taxes within its jurisdiction. Background The Fiscal Disp:lrities Bill was passed on July 15, 1971, two }'ears after the bill was introduced into the Minnesota Legislature. The bill's appeal grew out of a recognition that localities have a serious st:tke in the growth of the region asa whole and th.lt whether thef represent the "h:lvcs" or the "ha\'e-nots" they must act . Chapter 24, Minnesot3 Legisblurc, S.F. 10 EXlra Scs~iou, Laws of 1971. V-3-/- as a part of that region. At the same: time, however, it retained local fiscal autonomy. The: purpose of the bill is, at least in part, to dis- courage compctition among localities for high-income- producing 'hnd uses without discouraging communities from maintaining a healthy balance of development. The stated ohjecti\'cs of the act refl.:d these concerns: ' (1) To pw\>ide a \....ay for local governments to share in the resources generated by the growth of the area, without removing any reSources which local govern- ments already have; (2) To increase the likelihood of orderly urban development by reducing the impact of fiscal considera- tions on the location of business and residential growth and of highways. tr:lnsit facilities, and airports; (3) To establish incentives for all parts of the area to work for the growth of the area as a whole; (4) To provide a way whereby the area's resources can be made avaibble within aod through the existing s)'stem of local go\,ernments and local decision making; (5) To help communities in different stages of de\'c1opment by making rt:sources increasingly a\'ailable to communities at those carly stages of development and rcdev::1opment when financial pressures on them are the greatest; (6) To encourage protection of the em'ironment by reducing the impact of fiscal considerations so that flood plains can be protected and land for parks and open space can be preserved; and . (7) To pro\ide for the distribution to municipalities of additional re\"enu.:s generated within the are:l or rrom outside sources pursuant to other legisl:!.tion. . Although opposition from the "prosperous" suburbs was strong. both central city and suburban communities supported pasS3ge of the bill to give their respecti,'e jurisdictions a bigger share of the pie and. in gener:Jl, t.o reduce the inequities created when the benefits of growth are concentratt:d in' only a few communities within the se\'en-count>. area. Effects of the Bill One aim of the act is to reduce the incentiws or import3nce of fiSC;l1 looning. It has traditionallr been a wide5pread practice to zone for high rat:J.bics and con- sequcntly zone our those Ul'CS considered detriment:ll to a fa\'Orable tax base. How much effect such Icgi:.l:1tion will ha\'c on tIle wiHingncss of communities to accept Jow-income h:Jcs:::,;, for c;umple, n:m:lins to be S::Cil, but it Icssell', JIC im?ortancc: of the tax b.ast: argu:uc:nt