Rep. Ann Lenczewski (DFL-Bloomington), chair of the House Tax Committee, announced a plan last Friday to create jobs in various sectors. The full press release can be found here. Of note, the plan would boost Angel Investment and Historic Rehabilitation tax credits, while allowing cities more flexibility with using TIF. As the press release mentions, the jobs legislation will be put on the fast-track in the committee process.
Winona Frozen River Film Festival, Jan. 27-31
Enjoy acclaimed films, books and lectures focused on environmental issues, sustainable communities, extreme sports, adventure travel and diverse cultures at Winona’s 5th annual Frozen River Film Festival. This year’s many works include Under Our Skin, Chickens of the Sea and The Blue Notebook. View the entire 2010 film lineup. The festival will be held January 27-31, and more info can be found here.
While you’re in Winona for the festival, experience the spectacular wintertime beauty of the Mighty (frozen) Mississippi and surrounding bluffs! Plus, get to Winona Friday to sample the Fringe Festival, an eclectic mix of arts and live entertainment plus unique promotions in historic downtown Winona.
State Auditor finds that reliance on property taxes grows when LGA cut
This week, State Auditor Rebecca Otto released her office’s annual report on city finances. The press release for the report can be found here and the full report can be found here.
The State Auditor’s key finding is that cities are responding to cuts in state funding programs, such as LGA, by relying more and more on property taxes. In fact, between 1999 and 2008, the report notes, revenues derived from property taxes have jumped 37% when adjusted for inflation.
But cities aren’t just increasing property taxes to combat reduced state aid and other economic factors such as declining property values. According to the State Auditor’s report, both city revenues and expenditures have decreased 7% between 1999 and 2008, when adjusted for inflation. This means that cities are spending less than they did 10 years ago, and as costs for items such as fuel, health care, and road maintenance balloon beyond inflation, a city’s dollar today doesn’t stretch as far as it did in 1999.
Moving forward into the 2010 legislative session, LGA and the viability of Minnesota’s communities will be a main topic of debate, to which the State Auditor offered the following caution:
The State is facing a large budget deficit. If the Legislature and Governor further cut local government aids, this will continue the trend of a greater reliance on property taxes,” Auditor Otto said. “I will meet with Legislative leaders to share this very important information for consideration in budget negotiations.
Important info for cities regarding unallotment lawsuit ruling
As you may have heard by now, Judge Kathleen Gearin of the Ramsey County District Court issued an order granting a temporary restraining order in the unallotment lawsuit. This lawsuit was filed in October by a group of low income individuals who had suffered as a result of the unallotment of the Minnesota Supplemental Aid Special Diet Program (MSASD) and the Renters Property Tax Refund Credit. The Court found that the Governor’s July unallotment actions violated the Minnesota Constitution, but the relief ordered is very narrow. It will not have an immediate effect on cities, but it will likely have a longer term impact on cities.
To understand the implications of this decision for cities, it is important to understand what the Court’s order and supporting memorandum did and did not do: Read more…
Start of 2010 Legislative Session
The 2010 legislative session kicks off February 4 at the state Capitol. Drafting a bonding bill and bridging a $1.2 billion budget gap for the current biennium (and a $5.4 billion deficit for the next biennium) will be chief among lawmakers’ tasks.
CGMC Legislative Action Day
Please mark your calendars for CGMC’s 2010 Legislative Action Day, which will be held Wednesday, February 17. Typically this is an all-day event with a meeting at Flaherty & Hood offices, followed by time to lobby legislators at the Capitol and a reception and dinner at Mancini’s with legislators from around the state. Further details and registration materials will be sent to members when available. As the state faces a staggering budget deficit, the upcoming legislative session will prove to be pivotal for LGA and other CGMC programs. CGMC members must make their voices heard early and often with their legislators, so please make every effort to attend this event.
Mayors respond to governor’s decision to spare LGA from December unallotment
St. Paul Mayor Chris Coleman and Wadena Mayor Wayne Wolden, spokesperson for the Coalition of Greater Minnesota Cities, released the following statement in response to Governor Pawlenty’s decision to spare LGA from December unallotment:
We applaud and thank Governor Pawlenty for recognizing that Minnesota cities have hit the financial edge and additional cuts would jeopardize public safety and do further harm to our fledgling economy.
Over the past year we have done everything we can to speak out for cities across the state to show how critical services like police, fire, snowplowing, libraries and property taxes have been affected by continued cuts to local government aid.
Over the past seven years Minnesota cities have lost $754 million in LGA and the consequences have been profound-a 64% increase in property taxes and significant cuts to core services like police, fire, snow plowing and libraries.
As a major winter storm is bearing down on us, the critical role our cities play in the lives of our citizens is no more apparent than today. Across the state, cities are battling the storm by plowing streets, dropping salt and doing everything we can to protect the safety of Minnesota families.  All of us know that this comes at a cost.
We look forward to working with the governor and the legislature in the upcoming session to ensure our cities will continue to be protected.
Signs point to disproportionate LGA cut
Today’s budget forecast projects that the state is facing a $1.2 billion deficit for the current 2010-2011 biennium and a $5.4 billion deficit for the 2012-2013 biennium. Documentation on the budget forecast is available here.
To close the current biennium’s $1.2 billion budget gap, Governor Pawlenty noted in a press conference today that he would prefer to work with the legislature on the final solution. However, the governor also cited that because the December 2009 LGA payment is due in a matter a weeks, it will likely be impacted regardless of the legislature’s input. This means the December LGA payment could be reduced through unallotment, delayed, or a combination of both.
In response to this news, Wadena Mayor Wayne Wolden, CGMC spokesperson and former CGMC president, issued the following statement:
“It is outrageous that all signs are pointing to local communities being asked again to disproportionately bear the burden of balancing the state’s budget. Communities are repeatedly targeted for cuts, yet the state’s long-term structural budget problems persist. It’s time to pursue meaningful solutions that actually improve the stability of Minnesota’s financial future.
“This news couldn’t come at a worse time for Minnesota cities. The result of additional cuts to LGA—on top of the $150 million cut from last June—will mean that Minnesota families will see even higher property taxes and deeper cuts to public safety, libraries, parks, winter snow plowing.
“Minnesotans have had it with the lack of leadership at the Capitol. It is long time for the governor and legislature to show some backbone and work together to address the state’s financial situation.”
City levy increases impacted unevenly by governor’s unallotment
The Minnesota Department of Revenue recently predicted that local property tax levies will increase statewide by a modest 3.5%. Depending on where you live, however, your city’s portion of your property taxes could increase more. Property owners with property in cities that received larger cuts through the governor’s unallotment will see higher increases in their city’s levy.
As part of the governor’s unallotment, cities could see a cut between 0% and 7.6% for 2010. Cities over 1,000 in population that are slated to see a reduction in state aids and credits larger than 3.3% of their levy plus aid will increase their levies by an average of 6.3% (most cities fewer than 1,000 saw no reduction in state aids and credits). Cities over 1,000 in population with cuts smaller than 3.3% will increase their levies by an average of 2.4%. The estimate is based on maximum levy amounts proposed by local governments prior to the truth-in-taxation hearings and may be reduced, but cannot be increased.
2010 CGMC policy positions now available
CGMC members approved the following policy positions at the organization’s annual fall conference. Click a link below to see the full positions.
