Agenda - Council - 12/20/1983 - Laserfiche WebLink

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I I I I I I I ! i I I I I I I I (b) Including the pr]or year LGA in the initial determination of the revenue base bears no rational relationship to fiscal need (i.e., property tax relief). Prior year's LGA is not a surrogate for prior year property taxes since cities levying at their levy limit cannot by law replace lost LGA revenue through increased property tax levies. As advised by the Office of the State Auditor, over 90% of levy limit cities have been taxing at their levy limits in recent years. (c) Thus it is not possible to conclude that had a city received less LGA in the past, it would have made up the difference by increasing its property tax levy. Rather, including the prior year LGA in the revenue base further perpetuates the grandfathering of LGA received and distorts the fiscal need of a city by producing a revenue base amount in excess of the amount a levy limit city can legally levy. (d) Our study has led us to conclude that the local revenue base as determined under tbe various LGA formulas is not an accurate measurement of fiscal need. This is implied by the strong positive relationship that exists between the amount of LGA a city received in each year from 1980 through that estimated for 1984, and the amount of LGA received in tbe immediate prior year, as indicated by our correlation analyses. - 8 -