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<br />HOMESTEAD AND AGRICULTURAL CREDIT AID (HACA) <br />EQUALIZATION AID <br /> <br />Background - HACA <br /> <br />The HACA program replaced the fonner homestead credit program beginning in 1990. The <br />program was changed to uncouple local spending from the state's cost for the old homestead credit. <br />Under the homestead credit system, increases in local property tax levies resulted in increased homestead <br />credit cost to the state. Under HACA, local levies do not directly affect the calculation of HACA and <br />thus, the state can more precisely control its costs in this area. <br /> <br />HACA provides aid to all local governments that levy property taxes for lost tax base due to <br />class rate reductions. Compensating local units for the impact of class reductions prevents the shifting of <br />property taxes to other types of property. For taxes payable in 1996, the Legislature did not change any <br />property class rates and therefore, 1996 HACA payments will be approximatley the same as the 1995 <br />distrubution. <br /> <br />The 1993 Legislature eliminated the HACA growth adjustment for cities. This growth <br />adjustment would have provided additional HACA to communities based upon growth in the number of <br />households. As a result, HACA for rapidly growing cities, such as the City of Ramsey, will not grow as <br />fast in the future. <br /> <br />Background - Equalization Aid <br /> <br />After 1993, equalization aid has been eliminated and the 1993 amount paid to each city will be <br />folded into the LGA distribution. <br /> <br />\~ <br />