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As recently as the 2013 legislative session, <br />the legislature imposed levy limits on cities <br />over 2,500 population for one year. Levy <br />limits replace local accountability with a <br />state judgment about the appropriate level of <br />local taxation and local services. <br />Additionally, state restrictions on local <br />budgets can have a negative effect on a <br />city's bond rating due to the restriction on <br />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: Local elected officials are <br />elected to make decisions about local <br />budgets and meeting community needs <br />and despite four years of deep cuts in <br />state aid and credit reimbursements, <br />recent city levy increases have been well <br />below the previous ten-year average. It is <br />inappropriate for the Legislature to <br />undermine local elected officials decision- <br />making and accountability through the <br />continued imposition of levy limits or by <br />enacting proposals such as a reverse <br />referendum requirement or the <br />"taxpayers' bill of rights." The League of <br />Minnesota Cities supports the principle of <br />representative democracy that allows <br />local elected officials to formulate local <br />budgets without state or other <br />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 />that the legislative intent is reflected in <br />the statutes. <br />Specifically, the League of Minnesota <br />Cities supports the following: <br />League of Minnesota Cities <br />2016 City Policies Page 102 <br />