HF 3756

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to local government aid; modifying the distribution of local government
aid; increasing appropriation limit; providing for a study; amending Minnesota
Statutes 2006, sections 477A.011, subdivisions 34, 36, by adding subdivisions;
477A.013, subdivisions 8, 9, by adding a subdivision; 477A.03, subdivision 2a.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2006, section 477A.011, subdivision 34, is amended to
read:

Subd. 34.

City revenue need.

(a) For a city with a population equal to or greater
than 2,500, "city revenue need" is the sum of (1) 5.0734098 times the pre-1940 housing
percentage; plus (2) 19.141678 times the population decline percentage; plus (3)
2504.06334 times the road accidents factor; plus (4) 355.0547; minus (5) the metropolitan
area factor; minus (6) 49.10638 times the household size. new text begin The city revenue need under
this paragraph may not be less than 290.
new text end

(b) For a city with a population less than 2,500, "city revenue need" is the sum of
(1) 2.387 times the pre-1940 housing percentage; plus (2) 2.67591 times the commercial
industrial percentage; plus (3) 3.16042 times the population decline percentage; plus (4)
1.206 times the transformed population; minus (5) 62.772.

(c) For a city with a population of 2,500 or more and a population in one of the most
recently available five years that was less than 2,500, "city revenue need" is the sum of (1)
its city revenue need calculated under paragraph (a) multiplied by its transition factor;
plus (2) its city revenue need calculated under the formula in paragraph (b) multiplied
by the difference between one and its transition factor. For purposes of this paragraph, a
city's "transition factor" is equal to 0.2 multiplied by the number of years that the city's
population estimate has been 2,500 or more. This provision only applies for aids payable
in calendar years 2006 to 2008 to cities with a 2002 population of less than 2,500. It
applies to any city for aids payable in 2009 and thereafter.

(d) The city revenue need cannot be less than zero.

(e) For calendar year 2005 and subsequent years, the city revenue need for a city,
as determined in paragraphs (a) to (d), is multiplied by the ratio of the annual implicit
price deflator for government consumption expenditures and gross investment for state
and local governments as prepared by the United States Department of Commerce, for
the most recently available year to the 2003 implicit price deflator for state and local
government purchases.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2009 and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2006, section 477A.011, subdivision 36, is amended to read:

Subd. 36.

City aid base.

(a) Except as otherwise provided in this subdivision,
"city aid base" is zero.

(b) The city aid base for any city with a population less than 500 is increased by
$40,000 for aids payable in calendar year 1995 and thereafter, and the maximum amount
of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also
increased by $40,000 for aids payable in calendar year 1995 only, provided that:

(i) the average total tax capacity rate for taxes payable in 1995 exceeds 200 percent;

(ii) the city portion of the tax capacity rate exceeds 100 percent; and

(iii) its city aid base is less than $60 per capita.

(c) The city aid base for a city is increased by $20,000 in 1998 and thereafter and
the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $20,000 in calendar year 1998 only, provided that:

(i) the city has a population in 1994 of 2,500 or more;

(ii) the city is located in a county, outside of the metropolitan area, which contains a
city of the first class;

(iii) the city's net tax capacity used in calculating its 1996 aid under section
477A.013 is less than $400 per capita; and

(iv) at least four percent of the total net tax capacity, for taxes payable in 1996, of
property located in the city is classified as railroad property.

(d) The city aid base for a city is increased by $200,000 in 1999 and thereafter and
the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $200,000 in calendar year 1999 only, provided that:

(i) the city was incorporated as a statutory city after December 1, 1993;

(ii) its city aid base does not exceed $5,600; and

(iii) the city had a population in 1996 of 5,000 or more.

(e) The city aid base for a city is increased by $450,000 in 1999 to 2008 and the
maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $450,000 in calendar year 1999 only, provided that:

(i) the city had a population in 1996 of at least 50,000;

(ii) its population had increased by at least 40 percent in the ten-year period ending
in 1996; and

(iii) its city's net tax capacity for aids payable in 1998 is less than $700 per capita.

(f) The city aid base for a city is increased by $150,000 for aids payable in 2000 and
thereafter, and the maximum amount of total aid it may receive under section 477A.013,
subdivision 9, paragraph (c), is also increased by $150,000 in calendar year 2000 only,
provided that:

(1) the city has a population that is greater than 1,000 and less than 2,500;

(2) its commercial and industrial percentage for aids payable in 1999 is greater
than 45 percent; and

(3) the total market value of all commercial and industrial property in the city
for assessment year 1999 is at least 15 percent less than the total market value of all
commercial and industrial property in the city for assessment year 1998.

(g) The city aid base for a city is increased by $200,000 in 2000 and thereafter, and
the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $200,000 in calendar year 2000 only, provided that:

(1) the city had a population in 1997 of 2,500 or more;

(2) the net tax capacity of the city used in calculating its 1999 aid under section
477A.013 is less than $650 per capita;

(3) the pre-1940 housing percentage of the city used in calculating 1999 aid under
section 477A.013 is greater than 12 percent;

(4) the 1999 local government aid of the city under section 477A.013 is less than
20 percent of the amount that the formula aid of the city would have been if the need
increase percentage was 100 percent; and

(5) the city aid base of the city used in calculating aid under section 477A.013
is less than $7 per capita.

(h) The city aid base for a city is increased by $102,000 in 2000 and thereafter, and
the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $102,000 in calendar year 2000 only, provided that:

(1) the city has a population in 1997 of 2,000 or more;

(2) the net tax capacity of the city used in calculating its 1999 aid under section
477A.013 is less than $455 per capita;

(3) the net levy of the city used in calculating 1999 aid under section 477A.013 is
greater than $195 per capita; and

(4) the 1999 local government aid of the city under section 477A.013 is less than
38 percent of the amount that the formula aid of the city would have been if the need
increase percentage was 100 percent.

(i) The city aid base for a city is increased by $32,000 in 2001 and thereafter, and
the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $32,000 in calendar year 2001 only, provided that:

(1) the city has a population in 1998 that is greater than 200 but less than 500;

(2) the city's revenue need used in calculating aids payable in 2000 was greater
than $200 per capita;

(3) the city net tax capacity for the city used in calculating aids available in 2000
was equal to or less than $200 per capita;

(4) the city aid base of the city used in calculating aid under section 477A.013
is less than $65 per capita; and

(5) the city's formula aid for aids payable in 2000 was greater than zero.

(j) The city aid base for a city is increased by $7,200 in 2001 and thereafter, and
the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $7,200 in calendar year 2001 only, provided that:

(1) the city had a population in 1998 that is greater than 200 but less than 500;

(2) the city's commercial industrial percentage used in calculating aids payable in
2000 was less than ten percent;

(3) more than 25 percent of the city's population was 60 years old or older according
to the 1990 census;

(4) the city aid base of the city used in calculating aid under section 477A.013
is less than $15 per capita; and

(5) the city's formula aid for aids payable in 2000 was greater than zero.

(k) The city aid base for a city is increased by $45,000 in 2001 and thereafter and
by an additional $50,000 in calendar years 2002 to 2011, and the maximum amount of
total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also
increased by $45,000 in calendar year 2001 only, and by $50,000 in calendar year 2002
only, provided that:

(1) the net tax capacity of the city used in calculating its 2000 aid under section
477A.013 is less than $810 per capita;

(2) the population of the city declined more than two percent between 1988 and 1998;

(3) the net levy of the city used in calculating 2000 aid under section 477A.013 is
greater than $240 per capita; and

(4) the city received less than $36 per capita in aid under section 477A.013,
subdivision 9, for aids payable in 2000.

(l) deleted text begin The city aid base for a city with a population of 10,000 or more which is located
outside of the seven-county metropolitan area is increased in 2002 and thereafter, and the
maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (b) or (c), is also increased in calendar year 2002 only, by an amount equal to
the lesser of:
deleted text end

deleted text begin (1)(i) the total population of the city, as determined by the United States Bureau of
the Census, in the 2000 census, (ii) minus 5,000, (iii) times 60; or
deleted text end

deleted text begin (2) $2,500,000.
deleted text end

deleted text begin (m) deleted text end The city aid base is increased by $50,000 in 2002 and thereafter, and the
maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $50,000 in calendar year 2002 only, provided that:

(1) the city is located in the seven-county metropolitan area;

(2) its population in 2000 is between 10,000 and 20,000; and

(3) its commercial industrial percentage, as calculated for city aid payable in 2001,
was greater than 25 percent.

deleted text begin (n) deleted text end new text begin (m) new text end The city aid base for a city is increased by $150,000 in calendar years 2002
to 2011 and the maximum amount of total aid it may receive under section 477A.013,
subdivision 9, paragraph (c), is also increased by $150,000 in calendar year 2002 only,
provided that:

(1) the city had a population of at least 3,000 but no more than 4,000 in 1999;

(2) its home county is located within the seven-county metropolitan area;

(3) its pre-1940 housing percentage is less than 15 percent; and

(4) its city net tax capacity per capita for taxes payable in 2000 is less than $900
per capita.

deleted text begin (o) deleted text end new text begin (n) new text end The city aid base for a city is increased by $200,000 beginning in calendar
year 2003 and the maximum amount of total aid it may receive under section 477A.013,
subdivision 9, paragraph (c), is also increased by $200,000 in calendar year 2003 only,
provided that the city qualified for an increase in homestead and agricultural credit aid
under Laws 1995, chapter 264, article 8, section 18.

deleted text begin (p) deleted text end new text begin (o) new text end The city aid base for a city is increased by $200,000 in 2004 only and the
maximum amount of total aid it may receive under section 477A.013, subdivision 9, is
also increased by $200,000 in calendar year 2004 only, if the city is the site of a nuclear
dry cask storage facility.

deleted text begin (q) deleted text end new text begin (p) new text end The city aid base for a city is increased by $10,000 in 2004 and thereafter
and the maximum total aid it may receive under section 477A.013, subdivision 9, is also
increased by $10,000 in calendar year 2004 only, if the city was included in a federal
major disaster designation issued on April 1, 1998, and its pre-1940 housing stock was
decreased by more than 40 percent between 1990 and 2000.

deleted text begin (r) deleted text end new text begin (q) new text end The city aid base for a city is increased by $25,000 in 2006 only and the
maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
by $25,000 in calendar year 2006 only if the city had a population in 2003 of at least 1,000
and has a state park for which the city provides rescue services and which comprised at
least 14 percent of the total geographic area included within the city boundaries in 2000.

deleted text begin (s) The city aid base for a city with a population less than 5,000 is increased in
2006 and thereafter and the minimum and maximum amount of total aid it may receive
under this section is also increased in calendar year 2006 only by an amount equal to
$6 multiplied by its population.
deleted text end

deleted text begin (t) deleted text end new text begin (r) new text end The city aid base for a city is increased by $80,000 in 2007 only and the
minimum and maximum amount of total aid it may receive under section 477A.013,
subdivision 9, is also increased by $80,000 in calendar year 2007 only, if:

(1) as of May 1, 2006, at least 25 percent of the tax capacity of the city is proposed
to be placed in trust status as tax-exempt Indian land;

(2) the placement of the land is being challenged administratively or in court; and

(3) due to the challenge, the land proposed to be placed in trust is still on the tax
rolls as of May 1, 2006.

deleted text begin (u) deleted text end new text begin (s) new text end The city aid base for a city is increased by $100,000 in 2007 and thereafter
and the minimum and maximum total amount of aid it may receive under this section is
also increased in calendar year 2007 only, provided that:

(1) the city has a 2004 estimated population greater than 200 but less than 2,000;

(2) its city net tax capacity for aids payable in 2006 was less than $300 per capita;

(3) the ratio of its pay 2005 tax levy compared to its city net tax capacity for aids
payable in 2006 was greater than 110 percent; and

(4) it is located in a county where at least 15,000 acres of land are classified as
tax-exempt Indian reservations according to the 2004 abstract of tax-exempt property.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2009 and thereafter.
new text end

Sec. 3.

Minnesota Statutes 2006, section 477A.011, is amended by adding a
subdivision to read:

new text begin Subd. 41. new text end

new text begin Small city aid base. new text end

new text begin "Small city aid base" for a city with a population
less than 5,000 is equal to $12 multiplied by its population. The small city aid base for
all other cities is equal to zero.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2009 and thereafter.
new text end

Sec. 4.

Minnesota Statutes 2006, section 477A.011, is amended by adding a
subdivision to read:

new text begin Subd. 42. new text end

new text begin City jobs base. new text end

new text begin (a) "City jobs base" for a city that receives disparity
reduction credits under section 273.1398, subdivision 4, and has a population of 10,000
or more, is equal to the product of (1) $75, (2) the number of jobs per capita in the city,
and (3) its population. For all other cities with a population of 5,000 or more the "city
jobs base" is equal to the product of (1) $55, (2) the number of jobs per capita in the city,
and (3) its population. For cities with a population less than 5,000, the "city jobs base" is
equal to zero.
new text end

new text begin (b) A city with a population greater than 15,000 but less than 30,000 that is located
outside of the metropolitan area shall have its city job base increased by $100,000. A city
with a population greater than 30,000 that is located outside of the metropolitan area shall
have its city job base increased by $350,000.
new text end

new text begin (c) No city's city job base may exceed $12,000,000.
new text end

new text begin (d) For purposes of this subdivision, "jobs per capita in the city" means (1) the
average annual wage and salary in the city based on the data from the Quarterly Census of
Employment and Wages, as reported by the Department of Employment and Economic
Development, for the most recent calendar year available as of January 1 of the year in
which the aid is calculated, divided by (2) the city's population for the same calendar year
as the employment data.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2009 and thereafter.
new text end

Sec. 5.

Minnesota Statutes 2006, section 477A.013, subdivision 8, is amended to read:

Subd. 8.

City formula aid.

In calendar year deleted text begin 2004 and subsequent years deleted text end new text begin 2009 new text end , the
formula aid for a city is equal to new text begin the sum of (1) its city jobs base, (2) its small city aid base,
and (3) new text end the need increase percentage multiplied by the difference between deleted text begin (1) deleted text end new text begin (i) new text end the city's
revenue need multiplied by its population, and deleted text begin (2) the sum of deleted text end new text begin (ii) new text end the city's net tax capacity
multiplied by the tax effort rate deleted text begin ; the taconite aids under sections 298.28 and 298.282 to
any city except a city directly impacted by a taconite mine or plant, multiplied by the
following percentages: deleted text end new text begin . For aids payable in 2009 only, a city's revenue need, population,
net tax capacity, and tax effort rate will be based on the data available for calculating these
factors for aids payable in 2008.
new text end

deleted text begin (i) zero percent for aids payable in 2004;
deleted text end

deleted text begin (ii) 25 percent for aids payable in 2005;
deleted text end

deleted text begin (iii) 50 percent for aids payable in 2006;
deleted text end

deleted text begin (iv) 75 percent for aids payable in 2007; and
deleted text end

deleted text begin (v) 100 percent for aids payable in 2008 and thereafter.
deleted text end

deleted text begin For purposes of this subdivision, "a city directly impacted by a taconite mine or
plant" means: (1) Babbit, (2) Eveleth, (3) Hibbing, (4) Keewatin, (5) Mountain Iron, (6)
Silver Bay, or (7) Virginia.
deleted text end

No city may have a formula aid amount less than zero. The need increase percentage
must be the same for all cities.

The applicable need increase percentage must be calculated by the Department of
Revenue so that the total of the aid under subdivision 9 equals t deleted text begin he total amount available
for aid under section 477A.03 deleted text end new text begin $575,052,000 new text end after the subtraction under section 477A.014,
subdivisions 4 and 5.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with aids payable in 2009.
new text end

Sec. 6.

Minnesota Statutes 2006, section 477A.013, subdivision 9, is amended to read:

Subd. 9.

City aid distribution.

(a) In calendar year deleted text begin 2002 and thereafter deleted text end new text begin 2009 new text end , each
city shall receive an aid distribution equal to the sum of (1) the city formula aid under
subdivision 8, and (2) its city aid base. new text begin In calendar year 2010 and thereafter, each city
will receive an aid distribution equal to the amount it received under this section in the
previous year multiplied by the inflation adjustment in paragraph (e).
new text end

(b) For aids payable in deleted text begin 2005 and thereafter deleted text end new text begin 2009 new text end , the total aid for any city shall
not exceed the sum of (1) deleted text begin ten deleted text end new text begin 75 new text end percent of the city's net levy for the year prior to the
aid distribution plus (2) its total aid in the previous year. For aids payable in 2005 and
thereafter, the total aid for any city with a population of 2,500 or more may not decrease
from its total aid under this section in the previous year by an amount greater than ten
percent of its net levy in the year prior to the aid distribution.

(c) deleted text begin For aids payable in 2004 only, the total aid for a city with a population less
than 2,500 may not be less than the amount it was certified to receive in 2003 minus the
greater of (1) the reduction to this aid payment in 2003 under Laws 2003, First Special
Session chapter 21, article 5, or (2) five percent of its 2003 aid amount. deleted text end For aids payable
in 2005 and thereafter, the total aid for a city with a population less than 2,500 must not be
less than the amount it was certified to receive in the previous year minus five percent
of its 2003 certified aid amount.

(d) If a city's net tax capacity used in calculating aid under this section has decreased
in any year by more than 25 percent from its net tax capacity in the previous year due to
property becoming tax-exempt Indian land, the city's maximum allowed aid increase
under paragraph (b) shall be increased by an amount equal to (1) the city's tax rate in the
year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease
resulting from the property becoming tax exempt.

new text begin (e) In 2010 and thereafter, the amount paid to each city under this section shall be
increased by an amount equal to: (1) the amount certified to be paid under this section
in the previous year, multiplied by (2) the percentage increase in the implicit price
deflator for government consumption expenditures and gross investment for state and
local government as prepared by the United States Department of Commerce for the
12-month period ending March 31 of the previous year. The percentage increase used in
this subdivision shall be no less than 2.5 percent and no greater than 5.0 percent.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with aids payable in 2009.
new text end

Sec. 7.

Minnesota Statutes 2006, section 477A.013, is amended by adding a
subdivision to read:

new text begin Subd. 11. new text end

new text begin 2009 aid adjustment. new text end

new text begin If the limit under section 477A.03, subdivision
2a, for aids payable in 2009 is less than $575,052,000, the aid paid to each city under
this section is equal to the sum of (1) the amount the city received under subdivision 9
in calendar year 2008 and (2) an adjustment percentage multiplied by the difference
between what the city received in subdivision 9 in calendar year 2008 and its aid in
calendar year 2009 under subdivision 9. The "adjustment percentage," which is the same
for all cities, is the percentage necessary for the total aids under this section to equal
the amount available under section 477A.03, subdivision 2a, after the subtraction under
section 477A.014, subdivisions 4 and 5.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2009.
new text end

Sec. 8.

Minnesota Statutes 2006, section 477A.03, subdivision 2a, is amended to read:

Subd. 2a.

Cities.

For aids payable in deleted text begin 2004 deleted text end new text begin 2009 new text end , the total aids paid new text begin to cities new text end under
section 477A.013, deleted text begin subdivision 9 deleted text end new text begin subdivisions 9 and 11 new text end , are limited to deleted text begin $429,000,000. For
aids payable in 2005, the total aids paid under section 477A.013, subdivision 9, are limited
to $437,052,000. For aids payable in 2006 and thereafter, the total aids paid under section
477A.013, subdivision 9, is limited to $485,052,000 deleted text end new text begin $575,052,000 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2009 and thereafter.
new text end

Sec. 9. new text begin STUDY OF AIDS TO LOCAL GOVERNMENTS.
new text end

new text begin The chairs of the senate and house of representatives committees on taxes shall each
appoint five members to a study group of the tax committees to examine the current
system of aids to local governments and make recommendations on improvements to
the system. Of the five members appointed by each chair, two must be members of the
tax committee, one who is a majority party member and one who is a minority party
member. The remaining members must represent local units of government. The chairs of
the divisions of the tax committees having jurisdiction over property taxes shall also be
members and shall serve as cochairs of the study group. The study shall include, but not
be limited to, consideration of existing disparities in the distribution of local government
aid, an analysis of current law need and capacity factors as well as alternative need factors,
alternative analytical methods for determining correlations between factors and need, the
formula used to calculate aid for small cities, and volatility in the local government aid
distribution. The group must report on its specific recommendations to the legislature
by December 15, 2010.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end