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to meet energy policy goals. The state <br />should clarify that cities may use public <br />utility franchise agreements to advance <br />energy policy goals. Additionally, state <br />efforts should recognize that state energy <br />agency technical expertise should be <br />made available to cities at no cost. <br />FF-15. State Restrictions on Local <br />Budgets <br />Issue: During the 2013 legislative session, <br />levy limits were imposed on cities over <br />2,500 population for one year. Levy limits <br />replace local accountability with a state <br />judgment about the appropriate level of local <br />taxation and local services. Additionally, <br />state restrictions on local budgets can have a <br />negative effect on a city's bond rating due to <br />the restriction on revenue flexibility. <br />Levy limits also fail to account for the <br />decertification of tax increment financing <br />districts. Upon decertification, the property <br />taxes that were formerly collected and used <br />to support the public improvements in the <br />TIF district can no longer be collected at the <br />same rate and used to support ongoing <br />general city operations. <br />Response: City councils are elected to <br />make decisions about local budgets and <br />meeting community needs and despite <br />four years of deep cuts in state aid and <br />credit reimbursements, recent city levy <br />increases have been well below the <br />previous ten-year average. It is <br />inappropriate for the Legislature to <br />undermine local decision -making and <br />accountability through the continued <br />imposition of levy limits or proposals such <br />as the "taxpayers' bill of rights." The <br />League of Minnesota Cities supports the <br />principle of representative democracy <br />that allows city councils to formulate local <br />budgets without state restrictions. <br />FF-16. Tax Hearing and <br />Notification Process <br />Issue: Cities must set a preliminary levy by <br />September 30, which is the levy used to <br />compute the parcel -specific property tax <br />notification forms. With only a few limited <br />exemptions (e.g., voter -approved levies, <br />levies for natural disasters and levies for <br />certain tort judgments), this preliminary <br />levy, by law, becomes the maximum that <br />cities can levy the following year. As a <br />result, cities may be unable to budget for <br />unforeseen needs that arise after September <br />30. <br />The 2009 Legislature eliminated the <br />separate tax hearing requirement and <br />replaced it with a requirement that the public <br />be allowed to speak at a regularly scheduled <br />meeting on the budget and tax levy. These <br />changes erroneously repealed an exception <br />to the tax hearing and notification process <br />for cities adopting their levies at or less than <br />the current rate of inflation. <br />With the major property tax changes enacted <br />by the Legislature in 2011, city officials <br />have found it difficult to explain to local <br />taxpayers not only the effects of their budget <br />and levy decisions but also the separate <br />effects of the actions of the state Legislature. <br />Response: Cities should have the <br />authority to increase the final levy from <br />the preliminary levy with the approval of <br />the commissioner of the Department of <br />Revenue, to meet additional, unforeseen <br />and uncontrollable needs, including <br />arbitrator awards resulting from labor <br />negotiations, the impact of new and <br />existing federal or state mandates <br />including administrative rules, or other <br />non -discretionary budget factors. <br />The tax hearing and notification law <br />should be carefully reviewed to assure <br />League of Minnesota Cities <br />2015 City Policies Page 101 <br />