Agenda - Council - 01/12/1982 - Laserfiche WebLink

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I I I I I I I I I I I I I I I I I I I 2. Property Tax Distribution from County. Under current law counties need not distribute property tax collections to cities until 30 days after the settlement date of property tax payments to the county. The county does not pay interest on collected but undistributed funds until 45 days after the settlement date. After that time, the county must pay interest, but only at 8%. Further, all counties should be required to pay interest' on all monies not distributed by the 15th of the month. The interest rate shall be one based on a standard which provides a more reasonable rate of return. VI-1 l. Alternative Revenue Sources (A) V1-12. Dedicated State Sales Tax as a Revenue Source for Cities (A) For cities to be able to budget and plan in rational and orderly manner, cities must have a reliable and predictable source of revenue other than the property tax. The experience with state aid delays and cutbacks in the past two years has demonstrated that the current local government aid system is neither reliable nor predictable. The current system subjects cities to the dual un- certainty of not knowing whether the state's revenues will be adequate, and not knowing how the legislature and governor wi[[ choose to allo- cate funding cutbacks when revenues do fall short. All indications in 1981 are that past levels of financial support for cities from both the state and federal government are decreasing or at least not growing. It is therefore especially important that Minnesota cities have the ability to raise revenues locally. The property tax, although an important and valuable local revenue source, should not have to bear the entire burden in mak- ing up for state and federal cutbacks or in meeting increased local expenditure needs. Under a system in which cities derive a substan- tial part of their revenues from state sources, cities must expect that when state revenues fall short, cities' state aid funding will also de,line. However, cities must have assurance that they will not be forced to absorb a disproportionate share of a revenue shortfall. As a corollary, it is also reasonable for cities to expect state funding for local government aid to increase in proportion to increases in state revenues. Cities should have a variety of options for ob- taining revenues locally so that each city can: choose a mix of revenue sources that would be most fair and productive in that community. Therefore, the LMC recommends that the legis- lature expand the ability of cities to raise revenues in the following ways: 1. Local option hotel, motel, admissions and amusement taxes. M.S. 477A.016 prohibits cities from enacting or increasing a local sales or income tax. The statutes should be amended to allow cities the option of imposing local hotel, motel, admis- sions, or amusement taxes. 2. License Fees. Generally, the statutes grant- ing authority to issue licenses or permits do not specify maximum fees. Court decisions provide ample limitations on cities' power to set license fees in that revenues produced must be related to the cost of issuing the license and regulating the licensed business. However, the legislature has set maximum fees for some licenses such as for off- sale liquor, on-sale wine, cigarette and bottle club. The League of Minnesota Cities recommends that the Legislature repeal all maximum fee pro- visions and allow cities to decide locally the ap- propriate fee to charge for such licenses. For these reasons, the League recommends that the appropriation for local government aids be tied directly to a specified share of the state's sales tax collections. (Historically, the state aids appropriation has been equivalent to about 1.Sc of the state sales tax.) The dedication of a share of the sales tax should commence immediate[y, through legislative action, and should ultimately be enacted as a constitutional amendment. The revenues should be distributed to cities on a monthly basis, based on each month's sales tax collection figures. ¥1-13. Mandates (A) One of the most serious problems facing cities is the growth in the number and cost of federal and state-mandated programs, which substitute the judgments of Congress and the State Legisla- ture for local budget priorities. Special bills to address this problem on ~/n ad hoc basis will not provide a permanent or state- wide solution to these problems. The League there- fore supports legislation that would require the state to adopt a policy of "deliberate restraint" on its mandated programs, including a mandatory fiscal note identifying local government costs on any new mandated programs when they are intro- duced in the Legislature and a statement of com- pelling state-wide interest to accompany all state mandates.