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This tax benefit erodes local tax bases. In <br />2013, more than $1.8 billion of personal and <br />real property for electrical generation was <br />exempted from the market value of utilities. <br />The incentive value of this benefit is low <br />because utility companies are required to <br />install the equipment anyway. In addition, <br />these companies frequently recover the cost <br />of the equipment through rate riders granted <br />by the Public Utilities Commission. <br />Allowing the pollution control equipment <br />exemption places the cost of this equipment <br />on the citizens of the host community, rather <br />than the purchasers of electricity. <br />Response: The pollution control <br />exemption places an undue burden on <br />host communities without incentivizing <br />the environmentally responsible behavior <br />that it was originally created to <br />encourage. The League of Minnesota <br />Cities supports narrowing or eliminating <br />the pollution control equipment <br />exemption for investor owned electric <br />generation facilities. The League would <br />also support allowing utilities to continue <br />to recover their costs relating to the <br />pollution control equipment by spreading <br />those costs to electricity users. <br />FF -14. State Support for Municipal <br />Energy Policy Goals <br />Issue: The State of Minnesota has adopted <br />an energy policy focusing on the promotion <br />of energy efficiency and the expansion of <br />renewable energy with the goal of achieving <br />a reduction in carbon generation through <br />reduced use of fossil fuels. Minnesota cities <br />share this goal, but already strained budgets <br />and reserves at the state and local level have <br />limited the ability of the state to assist local <br />units of government in furthering specific <br />projects that support the overall state goal. <br />In addition, institutional knowledge and <br />capacity of most cities limits their ability to <br />explore energy efficiency or renewable <br />energy projects, even projects whose energy <br />"payback" could finance project capital <br />costs. <br />Response: The League of Minnesota <br />Cities calls on our legislators and state <br />executive agencies charged with <br />accomplishing the state's energy policy <br />goals to assist cities, townships and <br />counties with tailored efforts to identify <br />appropriate energy efficiency and <br />renewable energy projects for <br />undertaking at the local level. State law <br />should allow and support utility grant <br />and loan programs and Property <br />Assessed Clean Energy Programs, both <br />publically and privately funded. <br />The state should create a grant and loan <br />program to offset start-up capital <br />expenses for projects identified where the <br />savings in energy costs can offset capital <br />project costs or where projects are needed <br />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. Local Elected Officials <br />Authority to Establish Local <br />Budgets <br />Issue: In 2015, the House omnibus tax bill <br />included a reverse referendum provision that <br />would allow a small number of voters (ten <br />percent of those voting in the last general <br />election) to petition for a referendum on a <br />general city property tax levy increase. The <br />outcome of the election could reverse the <br />decision of the local elected officials on the <br />local budget and property tax levy after <br />months of planning and public hearings. <br />League of Minnesota Cities <br />2016 City Policies Page 101 <br />