HF 68

as introduced - 84th Legislature, 2005 1st Special Session (2005 - 2005) Posted on 12/15/2009 12:00am

A bill for an act
relating to property tax aids; changing the city local
government aid formula; amending Minnesota Statutes
2004, sections 477A.011, subdivisions 34, as amended,
35; 477A.013, subdivisions 8, 9; 477A.03, subdivision
2a, by adding a subdivision.

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

Section 1.

Minnesota Statutes 2004, section 477A.011,
subdivision 34, as amended by Laws 2005, chapter 151, article 4,
section 7, 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.

(b) For a city with a population less than 2,500, "city
revenue need" is new text begin the greater of (1) $400 or (2) new text end 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 2006 and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2004, section 477A.011,
subdivision 35, is amended to read:

Subd. 35.

Tax effort rate.

"Tax effort rate" means the
net levy for all cities divided by the sum of the city net tax
capacity for all cities new text begin , unless the need increase percentage
determined under section 477A.013, subdivision 8, is 100
percent, in which case the tax effort rate is the rate needed so
that the total aid under section 477A.013, subdivision 9, equals
the total amount available for aid under section 477A.03, after
the subtractions in section 477A.014 new text end . For purposes of this
section, "net levy" means the city levy, after all adjustments,
used for calculating the local tax rate under section 275.08 for
taxes payable in the year prior to the aid distribution. The
fiscal disparity distribution levy under chapter 276A or 473F is
included in net levy.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with
aids payable in 2006.
new text end

Sec. 3.

Minnesota Statutes 2004, section 477A.013,
subdivision 8, is amended to read:

Subd. 8.

City formula aid.

In calendar year 2004 and
subsequent years, the formula aid for a city is equal to the
need increase percentage multiplied by the difference between
(1) the city's revenue need multiplied by its population, and
(2) deleted text begin the sum of deleted text end the city's net tax capacity multiplied by the tax
effort rate deleted text begin , and the taconite aids under sections 298.28 and
298.282, multiplied by the following percentages:
deleted 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 .

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

new text begin Notwithstanding any law to the contrary, local sales tax
revenues or an amount that could be raised from a local sales
tax base shall not be included in calculating the aid under this
subdivision.
new text end

The applicable need increase percentage must be calculated
by the Department of Revenue so that the total of the aid under
subdivision 9 equals the total amount available for aid under
section 477A.03 after the subtraction under section 477A.014,
subdivisions 4 and 5. new text begin The need increase percentage may not be
more than 100 percent.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids
payable in 2006 and thereafter.
new text end

Sec. 4.

Minnesota Statutes 2004, section 477A.013,
subdivision 9, is amended to read:

Subd. 9.

City aid distribution.

(a) In calendar year
2002 and thereafter, 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.

(b) deleted text begin The aid for a city in calendar year 2004 shall not
exceed the amount of its aid in calendar year 2003 after the
reductions under Laws 2003, First Special Session chapter 21,
article 5.
deleted text end

deleted text begin (c) deleted text end new text begin For aids in 2006 only, the total aid for any city shall
not exceed the sum of (1) 20 percent of the city's net levy for
the year prior to the aid distribution plus (2) its total aid in
the previous year. new text end For aids payable in deleted text begin 2005 deleted text end new text begin 2007 new text end and
thereafter, the total aid for any city shall not exceed the sum
of (1) ten 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.

deleted text begin (d) 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 deleted text begin 2005 deleted text end new text begin 2006 new text end 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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids
payable in 2006 and thereafter.
new text end

Sec. 5.

Minnesota Statutes 2004, section 477A.03,
subdivision 2a, is amended to read:

Subd. 2a.

Cities.

For aids payable in 2004, the total
aids paid under section 477A.013, subdivision 9, are limited to
$429,000,000. For aids payable in 2005 deleted text begin and thereafter deleted text end , the
total aids paid under section 477A.013, subdivision 9, are
increased to $437,052,000. new text begin For aids payable in 2006, the total
aids paid under section 477A.013, subdivision 9, are limited to
$485,552,000. For aids payable in 2007 and thereafter, the
total aids payable under section 477A.013, subdivision 9, are
limited to an amount equal to the total amounts certified to be
paid in the previous year, increased for inflation as provided
under subdivision 5.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids
payable in 2006 and thereafter.
new text end

Sec. 6.

Minnesota Statutes 2004, section 477A.03, is
amended by adding a subdivision to read:

new text begin Subd. 5. new text end

new text begin Inflation adjustment. new text end

new text begin In 2007 and thereafter,
the amount paid under each section to be adjusted for inflation
shall be increased by an amount equal to:
new text end

new text begin (1) the amount certified to be paid under that section in
the previous year multiplied by
new text end

new text begin (2) one plus the percentage increase in the implicit price
deflator for government consumption expenditures and gross
investment for state and local governments prepared by the
Bureau of Economic Analysis of 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 for taxes
payable in 2007 and thereafter.
new text end