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a) Modifying Minn. Stat. § 275.065 to <br />clearly and fully exclude cities of <br />population 500 and under from the <br />budget and levy hearing <br />requirements; <br />b) Reinstating the exception to the tax <br />hearing and notification requirements <br />for cities with more than 500 residents <br />with a proposed levy increase below <br />the implicit price deflator (IPD); and <br />c) Moving the proposed levy certification <br />deadline for all instrumentalities of <br />local government and special taxing <br />authorities to September 30. <br />In order to assist local officials with the <br />challenge of explaining legislative changes <br />to the property tax system, legislators <br />should attend and be encouraged to <br />participate in local government budget <br />hearings in their districts. <br />FF -17. General Election <br />Requirement for Ballot Questions <br />Issue: Under current state law, when cities <br />are required to seek voter approval on a <br />ballot question or where statutes allow <br />voters to petition for an election on a council <br />action (reverse referendum), these referenda <br />can generally be held at a general or special <br />election. This flexibility allows cities to <br />respond to local circumstances in a timely <br />manner. <br />During the 2015 legislative session, the <br />House omnibus tax bill included language <br />that would have required referenda on most <br />ballot questions be restricted to the <br />November general election. If enacted, this <br />requirement could limit the ability of cities <br />to respond to unanticipated events or to <br />undertake projects in a timely and cost- <br />efficient manner. <br />Response: Cities should be allowed to <br />conduct elections on ballot questions at a <br />date and time set by the city council and <br />that complies with existing election <br />notification statutes. <br />FF -18. City Fund Balances <br />Issue: As a component of a prudent <br />financial management plan, cities maintain a <br />fund balance composed of cash flow funds, <br />savings for projects, and rainy day reserves <br />to maintain high level bond ratings and to <br />minimize borrowing costs. Although the size <br />of a city's fund balance should be <br />determined through local financial needs <br />and local preferences, some cities are being <br />criticized for maintaining "excessive" <br />reserves. <br />The Office of the State Auditor (OSA) <br />report measures city fund balances on <br />December 31, shortly after the city receives <br />its largest sources of revenue from the <br />property tax and state aid distributions. <br />Measuring at this time, however, yields a <br />picture of a high fund balance even though <br />the city will spend down these funds to cash <br />flow the next five to six months of its <br />operations. <br />Response: The state should respect local <br />decisions on adequacy of local fund <br />balances. The League of Minnesota Cities <br />opposes any attempt to divert local <br />reserves to benefit the state budget. <br />FF -19. Local Option Sales Tax and <br />City Revenue Diversification <br />Issue: Under current state law, the property <br />tax is the only generally accessible form of <br />local tax revenue for cities. Even with the <br />restoration of $80 million in LGA funding <br />by the 2013 legislature, state aid funding <br />remains below the 2002 funding level. <br />Allowing cities to diversify their revenue <br />stream would help prevent rapid additional <br />future reliance on the property tax. <br />League of Minnesota Cities <br />2016 City Policies Page 103 <br />