Agenda - Council - 02/08/2021 - Laserfiche WebLink

Home

Agency. The language and the purpose of these statutes have evolved through the years. When states first began adopting these tax incentives in the 1960s, they hoped to encourage utilities, industrial plants, and others to install pollution control equipment. Gradually, as regulation increased, states adopted the exemptions to help companies offset the cost of the equipment. This tax benefit erodes local tax bases. In 2013, more than $1.8 billion of personal and real property for electrical generation was exempted from the market value of utilities. The incentive value of this benefit is low because utility companies are required to install the equipment anyway. In addition, these companies frequently recover the cost of the equipment through rate riders granted by the Public Utilities Commission. Allowing the pollution control equipment exemption places the cost of this equipment on the citizens of the host community, rather than the purchasers of electricity. Response: The pollution control exemption places an undue burden on host communities without incentivizing the environmentally responsible behavior that it was originally created to encourage. The League of Minnesota Cities supports narrowing or eliminating the pollution control equipment exemption for investor owned electric generation facilities. The League would also support allowing utilities to continue to recover their costs relating to the pollution control equipment by spreading those costs to electricity users. FF-16. Local Elected Officials Authority to Establish Local Budgets Issue: In 2015, the House omnibus tax bill included a reverse referendum provision that 139 would allow a small number of voters (ten percent of those voting in the last general election) to petition for a referendum on a general city property tax levy increase. The outcome of the election could reverse the decision of the local elected officials on the local budget and property tax levy after months of planning and public hearings. As recently as the 2013 legislative session, the legislature imposed levy limits on cities over 2,500 population for one year. Levy limits replace local accountability with a state judgment about the appropriate level of local taxation and local services. Additionally, state restrictions on local budgets can have a negative effect on a city's bond rating due to the restriction on revenue flexibility. Levy limits also fail to account for the decertification of tax increment financing districts. Upon decertification, the property taxes that were formerly collected and used to support the public improvements in the TIF district can no longer be collected at the same rate and used to support ongoing general city operations. Response: Local elected officials are elected to make decisions about local budgets and meeting community needs. The League finds that it is inappropriate for the Legislature to undermine local elected officials decision -making and accountability through the continued imposition of levy limits or by enacting proposals such as a reverse referendum requirement or the "taxpayers' bill of rights." The League of Minnesota Cities supports the principle of representative democracy that allows local elected officials to formulate local budgets without state or other restrictions.