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W Personal Property Taxation: Electric Utility <br />The Minnesota Department of Revenue has revised its regulations for calculating the <br />taxable market value of electric and natural gas utility property. This affects property taxes <br />paid by investor -owned utilities (IOUs) not only to the state, but also to local governments. <br />Provisions in the previous regulations, such as depreciation limits and prescribed weights <br />for the cost and income approaches to value, helped to preserve the taxable value of this <br />property over the many decades it is in service. <br />IOUs enjoy a guaranteed rate of return on their capital investments, but host cities <br />experience the costs of environmental damage; nuisance and lost economic development as <br />the result of this property. IOUs argued that their property is over - valued and that <br />depreciation limits should be removed. However, changes to the utility property valuation <br />rules will drastically reduce the taxable market value that helps compensate host cities for <br />hosting base load electric generation facilities. <br />Metro Cities opposes changes to the utility property valuation rules that result in a <br />significant decline in the taxable market value of utility property. Metro Cities supports <br />state appropriated aid to cities to keep them financially whole and to compensate for the <br />economic and environmental costs of hosting base load electric generation facilities, rather <br />than through increases in property class rates or other mechanisms. <br />1 -N Sales Tax on Local Government Purchases <br />State law currently requires local governments, with the exception of public schools, <br />nursing homes, hospitals and public libraries, to pay sales tax. The law exempts certain <br />local government units from some specific purchases such as ambulance vehicles and <br />equipment, road and bridge maintenance, emergency rescue vehicles, and others. Metro <br />Cities supports a reinstatement of the sales tax exemption for all local government <br />purchases, since such charges represent a double tax upon our citizens. <br />1 -0 City Revenue Stability and Fund Balance <br />Metro Cities opposes state attempts to control or restrict city fund balances. These funds <br />are necessary to maintain fiscal viability, meet unexpected or emergency resource needs, <br />purchase capital goods and infrastructure, provide adequate cash flow and maintain high <br />level bond ratings. <br />I -P Public Employees' Retirement Association (PERA) <br />Metro Cities supports employees and cities sharing equally in the cost of necessary <br />contribution increases, the standard for the PERA.'General Plan, and a 60% employer /40% <br />employee split, the standard for the PERA Police and Fire Plan. Metro Cities also supports <br />state assistance to local governments to cover any additional contribution burdens placed <br />on cities over and above contribution increases required by employees. Cities should <br />2011 Legislative Policies 5 <br />