Agenda - Council - 12/16/1980 - Laserfiche WebLink

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LOCAL' GOVERNMENT AID DISTRIBUTIONS The basic initial objective of the LGA distributions is .stated in the Minnesota Dept. of Revenue Publication dealing with these distributions. It succintly states "THE INTENT OF LOCAL GOVEKNMENT AID IS TO PROVIDE PKOPERTY TAX RELIEF FOR ALL PROPERTY TAXPAYERS". One would assume that the intent would necessarily be to provide that relief FAIRLY as among property taxpayers. This issue of the MLOSC Newsletter has as its central purpose to display the extent to which this "relief" is provided FAIRLY as among propecty taxpayers throughout Minnesota. Back~6und: The flrstLocal Government Aid distributions in 1972 and 1973 replaced the Exempt Property Reimbursement and Sales Tax per capita aids that were enacted by the 1967 legislature as part of the Tax Reform and Relief Act of 1967· In 1973, the following aids were also incorporated for cities into the Local Government Aid Minimum distributions: -Cigarette and Liquor Tax "aids" -Bank Excise Tax "aids" -Railroad and Telephone Gross Earnings Tax "aids", and -Mortgage Registry Tax "aids". Until 1980, the metropolitan 7 county area was treated ms~t entity for calculating purposes, while for the rest of the State each~County was consi~ereg-a separate_entity~ W~t~ the changes.by-the~1979 legislature, the dzstrzbutions have been treateo on a Statew~de basis for the years 1980 and 1981, although the underlying calculation bases have not changed. The formula has remained basically the same for all cities, using a 3 year average mill rate, a property sales ratio (ratio 75 assessed valuation to actual property sales value) and population. Until 1980, the result o~ · - ............ lied to the Statewtde distribution multi, lying.these, three z~or~ w~ C~ e~o~o..~ for-1929)~' For~t0wn- figure. (as 'for example,-~59 per-capita ......... ships,' the calculation was essentially the same~ When the~distributi°ns were calculated, the County governments, with some excePtions, received previously determined amounts,~ with the~balance then being-distributed according to formula.factors. Although this area is seemingly complex, it is comparatively simple. It is ~rucially important that each city take the time to understand the mechanzcs because of the gross disparities which exist and continue to grow· The Minnesota League of Small Cities has developed a computer capability to examine and display the results to make them understandable for small city officials, members of the legislature and also the Executive branch of the State Government who are not fully conversant with the mechanics and the end results· The following factors of disparity are present and deserve close attention by all those concerned with fairness and equitab,ility in the LGA distri- butions. ,