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HOMESTEAD AND AGRICULTURAL CREDIT AID (HACA) EQUALIZATION AID Background - HACA The HACA program replaced the former homestead credit program beginning in 1990. .............. The program was changed to uncouple local spending from the state's cost for the old homestead credit. Under the homestead credit system, increases in local property tax-I~9ie~Tesulted in increased homestead credit cost to the state. Under HACA, local levies do not directly affect the calculation of HACA and thus, the state can more precisely control the state cost. HACA provides aid to all local governments that levy property taxes for lost tax base due to class rate reductions. Compensating local units for the impact of class reductions prevents the shifting of property taxes to other types of property. For taxes payable in 1994, the state will reimburse several classes through the HACA program. These include class rate reductions for one to thr~ unit apartments and certain subclasses of agricultural, commercial, and indusn-ial property. The 1993 Legislature eliminated thc HACA growth adjustment for cities. This growth adjustment would have provided additional HACA to communities based upon growth in the number of households. As a result, HACA for rapidly growing cities, such as the City of Ramsey, will not grow as fast in the future. Background - Equalization Aid After 1993, equalization aid have been eliminated and the 1993 amount paid to each city will be folded into the LGA distribution. The following graph shows the levels of HACA and equali~tion aid received from 1989 through 1993 and the certified 1994 amount of HACA only.